A seller becomes a trustee once there is a valid contract of sale until the sale is fully completed. This principle was recently tested in the case of Binez Hotels Limited v. Bureau of Public Enterprises & Anor, where the Appellant, Binez Hotels Limited, entered into an agreement to purchase 13,000,000 ordinary shares in Nigerian Cement Company Nkalagu Plc.
The shares were owned by the Federal Government of Nigeria and were listed on the Nigerian Stock Exchange. The Appellant paid the agreed purchase price of ₦7,020,000.00 by cheque, and the Bureau of Public Enterprise conveyed the approval of the transaction by the National Council on Privatisation.
Contract of Sale and Trustee Obligations
Before the transaction could be perfected, the necessary share transfer forms required to effect the transfer of the shares were never executed. The National Council on Privatisation subsequently cancelled the ongoing negotiations for the sale pursuant to its statutory powers.
The shares were then sold to the Ebonyi State Government in accordance with the applicable privatisation framework, and the Appellant’s cheque was promptly returned without value. The Appellant commenced an action by originating summons seeking declarations that it had acquired a valid interest in the shares and challenging the Respondents’ actions.
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The trial Court ruled in favour of the 1st Respondent and dismissed the suit in its entirety. The Appellant appealed to the Court of Appeal, which likewise dismissed and affirmed the decision of the trial Court. The Appellant further appealed to the Supreme Court for a final determination of the dispute.
Supreme Court Ruling
Learned Senior Counsel for the Appellant argued that a valid and binding contract for the purchase of the shares was concluded once the Appellant paid the agreed purchase price and the transaction received the requisite governmental approval.
Learned counsel for the 1st Respondent argued that no concluded sale ever came into existence, and the transaction never progressed beyond negotiations.
Implications of the Ruling
The Appellant’s failure to complete the transaction meant that it did not acquire a valid interest in the shares.
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The case was fully reported at (2026) 6 CLRN in association with ALP NG & Co. Chief Chijioke Okoli, SAN, represented the Appellant, while Ayo Olanrewaju, Esq. represented the 1st Respondent. Uwaifo L. Ogedengbe, Esq. represented the 2nd Respondent.
They were involved in the case.
Contract law is complex.