Supreme Court restates that mere introduction is insufficient without valid agency agreement and agent’s active role in the transaction.
The Supreme Court has recently reaffirmed the “Effective Cause” rule, holding that an estate agent or professional valuer cannot claim commission merely for introducing a prospective buyer or tenant to a property.
The decision was delivered in Philip Kayode Olusegun Ojo v. SDV Nigeria Limited & Anor., where the Appellant, an Estate Surveyor and Valuer, claimed over ₦161 million in agency commission after introducing a 20-acre industrial property in Lagos to a company that subsequently purchased it directly from the owner. The Supreme Court unanimously dismissed the appeal, holding that an unsolicited introduction, without more, does not create a legal obligation to pay commission.
In reaching its decision, the Court reaffirmed that an agent’s entitlement to commission must be grounded in two essential elements: the existence of a valid agency agreement and clear evidence that the agent’s efforts were the proximate and effective cause of the concluded transaction. The voluntary provision of information, in the absence of a prior agreement, imposes no payment obligation on either party to the transaction.
This decision is a significant reminder that professional scales of fees do not, in themselves, create an automatic right to remuneration. It also reinforces protection against commission claims not founded on a valid contractual arrangement.
Property buyers, developers, investors, tenants, and stakeholders are advised to approach engagements with agents carefully. All such relationships should be documented through clear written agreements defining the scope of services and the conditions for payment, to avoid unnecessary disputes and potential liability.