CONTRACT OF SALE AGREEMENT: EVERYTHING YOU NEED TO KNOW.
What is Contract Of Sale Agreement?
Contract of sale transaction over a property is not a conclusive transfer of interest over the property. It is a commercial term that depends on the ordinary rules of contract. It merely signified the interest of a purchaser to acquire the property from the vendor upon completion or complying with certain terms. In most situation, contract of sale transaction always requires the purchaser to pay deposit or part payment, by the said payment, the purchaser acquire equitable right over the transaction. Contract of sale of land is therefore a preliminary step in the transfer of interest in land from a vendor to a purchaser whereby the purchaser acquires an equitable interest in the property while the legal interest is acquired later at completion.
As stated earlier, contract of sale is a commercial agreement governed by rules of contract like offer, acceptance, consideration, intention to create legal relation, etc. Contract of sale agreement can be oral or open.
Oral contract of sale is often applicable in customary law system where transactions are being done without documenting or parties signing binding agreements. In practice, oral contract of sale is very difficult to prove because the vendor can easily rescind or deny the existence of the contract. However, Supreme Court in Ajayi v. Jolaosho (2004)2 NWLR pt. 856 p.89 has outlined 3 essential ingredients of oral contract of sale, which are;
- The purchase price must have been paid;
- The Purchaser is put in possession of the land;
- The transaction is witnessed by third party.
Open contract of sale on the other hand is the one that provides for minimum requirement of law on the formulation of contract of sale of land transaction. Section 67 of Property Conveyance Law provides that no action shall be brought upon any contract for the sale or other disposition of land or any interests in land, unless the agreement upon which such action is brought or some memorandum or note thereof is in writing and signed by the party to be charged.
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Unfortunately, the law did not define what constitutes memo or what should be the content of the memo to be enforceable. Courts in plethora of cases like Okoro v. Ogara (1964) ENLR p. 99 have held that Receipt of payment, letters by the parties, entry in an Auctioneer’s book, etc constitutes memorandum under section 69. This implies that, a receipt issued to you by the seller can evidence contract of sale of land agreement.
However, in practice, the followings are the facts we often put in our contract of sale agreements.
- The description of the parties.
- History/Recital of the land.
- Payment of initial deposit, balance and interest on unpaid purchase price
- Payment for chattel and fixtures
- Possession before completion
- Date of completion
- Exceptions and reservations
- Force Majeure
- When necessary, make the sale subject to mortgage and
- Subject to governor’s consent.
There is no laid down rules as to how a contract of sale agreement may be drafted, lawyers draft base on their drafting skills. Since it is a contract, parties might agree to some terms that not common or regular in property agreements. The sacrosanct part is that, description of the parties, descriptions of the property and signature of the parties to the agreement must be stated.
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