In real estate or commercial transactions, there is a common misconception that simply introducing a buyer to a seller acts as a golden ticket to a commission fee. Many agents believe that simply introducing a buyer to a seller is a “golden ticket” to a commission. However, under Nigerian Agency Law, an introduction alone isn’t enough. To earn your fee, you must prove you were the “efficient cause” of the transaction.
Case Study:
PHILIP KAYODE OLUSEGUN OJO v. SDV NIGERIA LIMITED & ANOR (2014) LPELR-23035(SC)
Facts
Mr. Ojo a professional Estate Surveyor and Valuer, claimed that he was commissioned by the managing director of SDV NIGERIA LIMITED to source for a property to be purchased by the company. Acting on this commission, he introduced a property situate in Lagos and owned by SCOA NIGERIA LIMITED. He alleged that despite introducing the property to SDV NIGERIA LIMITED, the parties (SDV NIGERIA LIMITED and SCOA NIGERIA LIMITED) concluded the transaction behind him without paying his commission. Consequently, Mr. Ojo instituted an action for his commission as well as damages. He argued that since he provided the initial introduction that led to the sale, he was entitled to be paid commission.
At the trial, it was established that after the initial introduction, negotiations seemingly stalled but were later handled independently and the property was eventually sold to SDV NIGERIA LIMITED but without further active participation from Mr. Ojo.
Decision
The high court dismissed his claims. The court found that Mr. Ojo failed to prove that he was the effective cause of the sale. The court held that while Mr. Ojo may have introduced the parties, the actual sale was concluded through different channels and negotiations to which he played no part and that without a solid contractual basis or proof that his actions directly resulted in the sale, his claim for commission could not stand.
Dissatisfied, Mr. Ojo took the matter to the Court of Appeal; who also agreed with the High Court. The Court of Appeal emphasized that for an agent to earn a commission, they must show that the transaction was a direct result of their intervention. The court further stated that “mere introduction” is insufficient if the chain of causation is broken or if the sale would have happened regardless of the agent’s involvement. Dissatisfied with the decision of the Court of Appeal, Mr. Ojo further appealed to the supreme court. The Court while dismissing the appeal held that for an agent to be entitled to commission, they must show that their intervention was the effective cause of the sale.
The court noted that an agent must do more than just mention a name or show a property, they must stay involved in the negotiations or be the reason the deal actually crossed the finish line.
The court further stated that if the chain of causation is broken (for instance, if the parties later reach a deal through entirely different means or after the agent’s mandate has lapsed) the agent loses the right to the commission fee.
Conclusion
As an agent, your commission depends on your involvement. To ensure you get paid, document everything (sign a contract clearly stating your role and agreed commission). Don’t just introduce the parties and disappear; you must facilitate meetings, negotiate terms, and stay active until the contract is signed.
On the other hand, a property owner or buyer is generally not liable for commission if an agent provides only a mere introduction and leaves the principal to handle the substantive work of negotiating and closing the deal themselves. But where the agent’s efforts go beyond a simple referral and serves as the primary catalyst for the transaction, they are legally and professionally entitled to their fee.
Remember, Mere introduction without more is legally viewed as a mere gratuity. To get paid, you must be the engine of the deal, not the signpost!
