Parties’ liabilities in contract of sale

Chief Oladele (not real name) is a business man who invests in property. He got information from a property consultant that a property in Abuja was for sale. He entered into negotiations with the owner’s agents and eventually paid for the property. Unfortunately, some days after the payment was made and after due execution of the documents evidencing transfer of title, there was a fire incident, which burnt the greater part of the property. The second incident had to do with the sale of a vehicle by the owner to the buyer. The buyer brought a mechanic to the place where the vehicle was parked. As the mechanic was checking the car to kick-start same, he touched a wire on the battery of the vehicle and fire engulfed the engine of the car and burnt the whole car almost completely before people could rally round to put out the fire. The common issue in controversy in the two incidents briefly narrated above is who should be held liable for the damages arising from what happened to the subject matters in the two cases- the buyers or the sellers? In the ordinary law of contract, offer, acceptance and consideration are major determinants of valid contracts, including contract of sale. The presence or absence of these three ingredients would determine who the law would hold liable. Let us do a legal analysis of each of the incidents. Contract would appear to have been concluded in the first scenario, as Chief Oladele has paid the consideration for the contract. Arguments would only ensue on the legal implication for the parties in view of fact that the subject matter of the contract of sale got burnt. Generally speaking, legal title in the property passes to the buyer the moment he pays for the property. For the period between when the buyer pays for the property and when he is able to exercise his legal right, constructive trust or implied trust is created between the parties. The Seller is the trustee who holds the property in trust for the benefit of the buyer. The law is that whatever happened to the property after legal title has passed to the buyer would be the sole responsibility of the buyer except it is proven that the seller was responsible for whatever happened to the property, in which case the seller would be held liable. If the fire that burnt the property was not caused by the seller or his agent, the law appears to be that the buyer, having acquired legal title to the property and in the absence of any agreement to the contrary, is to bear the loss. In IBEKWE V NWOSU (2011) All FWLR(Part 582)1653@1661, the Supreme Court quoted with approval the English decision in Lysaght v. Edwards in which the doctrine of constructive trust was described thus: “What is that doctrine? It is that the moment you have a valid contract for sale, the vendor becomes in equity a trustee for the purchase of the estate sold and the beneficial ownership passes to the purchaser, the vendor having a right to the money and a right to retain possession of the estate until the purchase money is paid in the absence of express contract as to the time of delivering possession… If anything happens to the estate between the time of the sale and the time of completion of the purchase, it is at the risk of the purchaser; if it is a house to be sold and the house is burnt down, the purchaser losses the house…If it is a garden and river overflows its bank without any fault of the vendor, the garden will be ruined but the loss will be the purchaser’s.”]]>