TYPES OF CONTRACT OF SALE OF LAND IN NIGERIA

There are basically 3 (three) types of contract of sale of land. They are –

1.     Oral contracts;

2.     Open contracts; and

3.     Formal contracts.

ORAL CONTRACTS

This is a common method of acquiring land under native law. However, it is inconsistent with section 4 of the Statute of Frauds 1677, and other laws of similar effect which requires that there must be a memorandum or some note in writing in respect of contracts for the sale of land, otherwise such contract shall be unenforceable.

Though such contracts are unenforceable, it is not void. But where there is sufficient evidence of part performance, equity will decree specific performance. Though, it is risky for a purchaser to rely on the doctrine of part performance for the enforcement of a contract of sale of land because specific performance is a discretionary remedy.

The reason for the intervention of equity in granting specific performance is to help the plaintiff where he was assisted by the defendant to partly perform the contract, and to prevent the defendant from pleading that the contract was not in writing.

In International Textile Industries Nigeria Ltd. v. Aderemi (supra), the court stated thus:

“The ground on which the courts hold that part performance takes a contract out of the Statute of Frauds is that when one of the two contracting parties has been induced or allowed by the other to alter his position on the faith of the contract, as for instance by taking possession of land and expending money in the building or other like acts, there would be fraud in the other party to set up the legal invalidity of the contract on the faith of which he induced or allowed the person contracting with him to act and expend his money.”

Thus, the following are instances where the courts can specifically enforce a contract base on part performance –

1.     There is proper oral evidence to prove or establish the terms of the oral contract.

2.     The contract must be specifically enforceable, in the sense that it is not a contract for personal service.

3.     The act constituting part performance must be unequivocal and consistent with, or referable to the contract alleged to be breached.

4.     The plaintiff has wholly or in part of the oral agreement with the confidence that the defendant would do the same.

In Mohammed v. Klargester Nigeria Ltd. (2002) FWLR (Pt. 127) 1087 at 1095, it was stated that a claim for specific performance cannot be granted where the vendor sold a property that is family property and is jointly inherited and owned with other persons, since a court cannot compel a person to do that which is impossible for him to do.

However, where the sale of land is conducted under native law and custom of a particular community, such sale may be undertaken orally and a written document may not be required.

The minimum requirements for oral contracts are –

1.     Payment of the purchase price;

2.     Possession by the purchaser; and

3.     The presence of witnesses during the transaction – Adedeji v. Oloso (2007) All FWLR (Pt. 356) 610 at 640; Ogunmuyiwa v. Odukoya (2009) All FWLR (Pt. 454) 1526.

OPEN CONTRACT

An open contract is one that provides for only the minimum requirements of the Statute of Frauds. It –

1. Describes the property clearly.
2. States the parties clearly.
3. States the price. In Jodi v. Salami (2009) All FWLR (Pt. 458) 385, the court held that there can never be a sale of land on credit; that even where a person is in possession, there is no sale except the purchase price is paid.

An open contract is not oral, it is contained in note or memorandum in writing with the basic requirements of a contract of sale of land. It is called an open contract because all the other relevant terms and conditions which will give business efficacy to a contract for sale of land are implied by statutes, common law, equity and by conveyancing practice and custom, that is, it is implied that the vendor must show a good title within reasonable time and execute a conveyance to the purchaser on payment of purchase price.

In an open contract, it is implied by law that the vendor shall prove his title to 30 (thrity) years by virtue of section 70 of the PCL; and 40 (forty) years by virtue of section 1 of the Vendor and Purchaser Act.

A vendor can convey as: Trustee, Family head, and Administrator/Personal Representative of an Estate, Mortgagee, Beneficial owner etc.

In instances where a vendor conveys as a beneficial owner for valuable consideration, 6 (six) covenants are implied by law.  These are –

1.              Right to convey.

2.              Quiet enjoyment.

3.              Freedom from encumbrances.

4.              Further Assurances (that is, the seller ensures the buyer that he will do everything to obtain the Legal title of land in question).

5.              That the lease is valid and subsisting.

6.              That the rent has been paid and the covenants of the lease performed.

FORMAL CONTRACT

Formal contracts are a detailed contract of sale of land which provides for other agreed terms in details in addition to the parties, property and price. Thus, it sets out the rights and duties of the parties.

It is divided into 2 (two) namely –

1.     The particulars of sale dealing with matters affecting the property – This has to do with its nature, area (size), defects, benefits charges and liabilities to which it is subject.

2.     The conditions of the sale dealing with contractual terns which set out the terms by which the parties are to be bound – Terrance v. Bolton (1872) LR EQ 124.

The contract needs not be made in any particular way provided the parties intend to enter into a legally enforceable contract and there is agreement upon the essential terms for valuable consideration.  The contract needs not be in writing, a written evidence of it is sufficient – Re Holland (1902) 2 Ch. 360, the note or memorandum must be signed by the party to be bound.  This is to prevent fraud and perjury and to make it impossible for a contract for sale of land to be alleged on only oral testimony of witnesses who may just be perjuring. The statute aims to prevent any action unless the defendant had signed some paper containing the terms of the contract. The equitable doctrine of part performance was an intervention of equity to create and exception to the statutory requirement.

ADVANTAGES OF FORMAL CONTRACT

1.     The purchaser protects himself by having more time to investigate the title being transferred before the execution of the deed of conveyance.

2.     The death of either party to the transaction does not terminate the contract as their personal representatives can proceed with the transaction and complete the sale – Yusuf v. Dada (1990) 4 NWLR (Pt. 146) 657.

3.     None of the parties can withdraw from the contract in the last minute without being liable for breach of the terms of the contract.

4.     The terms of the contract having been expressly agreed to, the position and rights of the parties are express and not implied, which may otherwise make their positions uncertain.

5.     Fixtures and fittings may be transferred under a formal contract and need not be reflected in the deed of conveyance of the land.

6.     The vendor cannot unilaterally and subsequently increase the purchase price since this has already been fixed in the contract.

7.     Parties may take special advantages under the contract by providing for specific matters they may not otherwise be able to do.

It is easier to enforce the terms of the contract

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