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The Legality of Trust Receipts in Nigeria

5 Pages Posted: 15 Mar 2012  

Aso Kalu Etea

Chartered Institute of Arbitrators (UK) Nigerian Branch; Association of Professional Negotiators and Mediators; Chartered Institute of Taxation of Nigeria

Date Written: March 13, 2012

Abstract

The use of trust receipts largely derives from the concept of trust and trust itself has been interpreted as a concept that may mean different things in different contexts. The concept of trust receipt operates as a variation of the principle of trust.

A trust receipt is a written legal document between two entities; the first who borrows money to finance some business venture ('the entrustee') and the other who advances the money needed ('the entrustor') and holds legal interest in the asset(s) acquired until such a time as when the debt is paid. The entruster, who owns or holds absolute title or security interests over certain specified goods, documents or instruments, releases the same to the possession of the entrustee upon the latter’s execution and delivery to the entruster of a signed document called a 'trust receipt' wherein the entrustee binds himself to hold the designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trust receipt. The paper examines the rights and obligations arising out of the use of trust receipts in Nigeria.

Keywords: trust

Suggested Citation

Etea, Aso Kalu, The Legality of Trust Receipts in Nigeria (March 13, 2012). Available at SSRN: https://ssrn.com/abstract=2020905 or http://dx.doi.org/10.2139/ssrn.2020905

Aso Kalu Etea (Contact Author)

Chartered Institute of Arbitrators (UK) Nigerian Branch ( email )

1A, Remi Oluwude Street, Lekki Phase1
Lagos Nigeria
Lagos, LA Lagos +234
Nigeria

HOME PAGE: http://www.ciarb.org

Association of Professional Negotiators and Mediators ( email )

DCON Consulting, Abuja
Abuja
Nigeria
08187996448 (Phone)

Chartered Institute of Taxation of Nigeria ( email )

Building, Plot 10, Nurudeen Olowopopo Avenue
Lagos
Alausa Ikeja, Lagos +234
Nigeria

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