On 22 January 1878, Sultan Jamalul Alam of Sulu executed a document, “with the expressed desire of all Datus in common agreement”, leasing (according to the English translation from the Malay in Arabic script used by the Philippines, but “grant and cede” according to the translation employed by the British) “to Gustavus Baron de Overbeck of Hong Kong, and to Alfred Dent … of London, … as representatives of a British Company, together with their heirs, associates, successors and assigns forever and until the end of time, all rights and powers which we possess over all territories and lands tributary to us on the mainland of the Island of Borneo, … together with all the islands which lie within nine miles of the coast”, defining the metes and bounds of the territory in question in terms of natural features and administrative subdivisions. In return, Overbeck and Dent were to pay the Sultan and “his heirs or successors” five thousand Malayan dollars (increased in 1903 to five thousand three hundred), “to be paid each and every year”. W. H. Treacher, Britain's Acting Consul General in Borneo, witnessed the Sultan's seal and signature on the document.

Six months later, Carlos Martinez, the Spanish Colonel-General (Governor) of Sulu, wrote to Baron de Overbeck informing him that Sultan Jamalul Alam of Sulu had on the same day, 22 July 1878, communicated in writing to the Spanish authorities his decision “to cancel the contract for lease of Sandakan and the rest” on account of Overbeck's failure “to fulfill the contract of lease”, as well as the fact that “the Crown of Spain has possession of all the territory of this Sultanate”. In his reply to the Governor of Sulu, Overbeck rejected the contract's cancellation. In a 2 July letter to the “Governor Captain-General of the Philippines”, the Sultan had claimed that he had been forced to sign the contract of lease — or cession — upon Overbeck's threat that the Captain-General would come, presumably with his forces, and “destroy everything”.

In December 1878, Dent and Overbeck recounted the grant of Borneo territories by the Sultan of Sulu and four previous grants by the Sultan of Brunei to a private association formed by Dent “for the purpose of acquiring territorial grants in North Borneo and developing its resources”.