The Situation
A local developer was preparing to enter a joint venture on a ₦100,000,000 project in Ikeja. The landowner proposed that the developer fund the build in full and that proceeds be split evenly. The draft documents read as conventional.
Our legal review addressed capacity before it addressed terms, which is the correct order.
- The land was family property, and disposal or encumbrance required the consent of all principal members. Those consents had not been obtained, so the landowner could not validly enter the arrangement he was proposing.
- The draft terms were asymmetric. Escape provisions allowed the landowner to exit a failed project intact while the developer carried the funding already sunk.
Our client renegotiated the commercial terms and required documented principal consent before committing funds.
In a joint venture the developer's capital goes in first and comes out last, which makes counterparty capacity the first question rather than a closing formality. An agreement signed by someone without power to bind the land does not convert into one later.