Law Of Property And Law Of Contract: Implications And Scenarios Essay.

The Law of Property has undertaken to provide guidelines regarding the implementation of any deed or written document related to matter of sale or rental activity of a property. Whereas, these deeds or written documents mostly create a contractual relationship between the party. There are so many facts that intersects between the law of property and law of contract (Farran, S. and Cabrelli, D., 2006).

This report shall enlighten the related facts that can affect both, Property Law as well as the law of contract. This report is about to discuss the relevant consequences of Law of property where the contractual exchanges of the property included. When a single case involves both these laws, different opinions and perspectives emerges from that and in every case, it gives a new face to the conclusion (Wolff, 2020). This study shall discuss some new aspects that relates the Law of Property to Law of Contract as discussed in Section 2 of Law of property (Miscellaneous Provisions) Act, 1989.

This section provides the provisions that gives the requirements that applied while entering into the contract for matters related to sale or disposition of a property. This section states that the contract must be in writing signed by the parties that include every clause related either to sale or to the constitution of any interest. In case where the particulars of sale or disposition have mentioned in any additional document, that document has to be signed by both the contracting parties (legislation.gov.uk, 1989).

The contracts resulting sale or disposition of interests of any property has different scenarios that shall be discussed in this report:

Section 1 of the act provides that the contract made for the sale or disposal of interests must be in writing including all material facts related to the sale or disposition.

This case established the ruling of section 2 by focusing on the implementation of written contract. The parties informally set the terms on a letter. The Court held that the contract is void-ab-initio as it was not in compliance with Section 2 of the Law of Property (Miscellaneous Provisions) Act, 1989.

The written deeds or instrument that authorises the company to rent or buy or create any interest over a land shall deemed to apply the provisions of the section 2 of the Law of Property (Miscellaneous Provisions) Act, 1989. It has to be in writing and executed with the common seal of the company (LC253, 2015).

Section 2(5) of the act provides different scenarios where section 2 does not apply. Any contract that took place in necessity replicate the requirements of section 2 of this act. There are following exceptions in which Section 2 is not applicable;

1925. where, the case is of short lease, as prescribed in section 54(2) of Law of Property Act, 1925.
1926. where, the contract has made in the course of public auction.
1927. where, the contract has made under the Financial Services and Markets Act, 2000.

Note: nothing shall have impact over the contracts resulting the constructive or implied trust (legislation.gov.uk, 1989).

This case has established a fact against section 2 of the act and for the aspect of equitable remedies. The judgement on this case stated the importance of the equity over the provisions of the common law. In this case the oral terms become valid and states the relation between law of property, constructive trust and propriety estoppel (Moore, 2000).

Section 2 of the Law of Property (Miscellaneous Provisions) Act, 1989

In case where, the statutory rule does not intersect and create clash between it’s applicability and equitable remedies, the overruling of section 2 shall not apply. If the intention of a contractual party is not to deceive the rights of the other party, and took a step according to the statutory rules, the rule of constructive trust shall not overrule the statutory provision. The availability of the principle of proprietary estoppel shall not be awarded in these cases (Moore, 2000).

This case has also ruled over the principle of implied and constructive trust over the statutory rule given in section 2 of the Law of Property (Miscellaneous Provisions) Act, 1989. In this case, Mr Stimson get the rights over the property as orally discussed with Mr Oates. The Court held that Mr Stimson has completed his part of obligations properly and has right to own the property. In this case, section 2 does not protect the person who is already a co-owner’s (Mr Oates) rights and give the judgement in the favour of Mr Stimson.

Section 2(1) provides a concrete provision that gives a clear view of contract. If the contract is in writing, less chances of frauds and mislead shall lead. A written contract in sale or disposition of interest make a clear arrangement for both the parties. It is more accurate and detailed in nature that protect the rights of the parties with complete written evidence and is certain about the obligations of the party (Case of Oates v Stimson).

Whereas, there are numerous advantages of it’s exceptions too. Section 2(5) provides guidelines that also talk about the scenarios where it is necessary to protect the rights of the party, going beyond the limitations of a contract. The equitable remedy could provide by the Court in exceptional cases. Principle of proprietary estoppel also helps the person to obtain his rights through overruling of the statutory rule (Case of Oates v Stimson).  

Section 2(5) also states that provisions of section 2 shall not apply on immediate contract that does not have any future application. This clause prevents the party from the vague attempts of creating obligations (legislation.gov.uk, 1989).

The concept of implied and constructive trust also have importance in this section. Hence, if the person is having any obligation or rights due to the orally spoken that builds the constructive trust shall be valid and could have equal legal validity as written contract (Haentjens, 2012).

Section 2 is dependent on the different scenarios. It is not specific and the judiciary shall decide where this section shall apply and where it’s exceptions shall apply as per the demand of the case. In many cases, the relationship of contract law and property law collides. The provisions of Section 2 also include the terms like implied and constructive trust. These concepts make this provision uncertain and relies on case to case (legislation.gov.uk, 1989).

The relationship of contract law and property law are relating as per section 2, whereas these two laws are very different in nature. This creates a confusion for the parties that on what law they need to rely on (Farran, S. and Cabrelli, D., 2006).

The purchaser while purchasing house in England and Wales has to be certain about the property. While purchasing the property, he/she has to keep the record on the owner of the property. He/she has to be take care of the property papers and has to check whether no obligation has remained partly performed by the owner towards the joint owners.

The purchaser after checking every aspect related to the property, shall demand for signing a written contract that includes every related material fact of the contract of sale. The purchaser should read every clause mentioned in the contract and then sign the contract. The contract must be specific about the sale price, term, property description, method of payment, instalments to be paid for purchasing the property and other details about the property.

The purchaser of the house must perform his/her part of obligation properly and should not state any false statement in front of seller. The purchaser has to make clear everything and understand every statement made by the seller so that he/she can claim the equitable remedies in case the seller is not sticking on his words and not transferring possession of the property.

Conclusion

Section 2 of the Law of Property (Maintenance Provisions) Act 1989, states that a written contract raising specific rights and obligation of the parties in the case of sale or disposition of interest of land is must to take place. It is conclusive in nature, still having exceptions mentioned in Section 2(5). The exceptions of section 2 protect the rights of the contracting parties in case they are being harmed through oral terms or part performance. Hence, section 2 could be overruled by the principle of equity and proprietary estoppel. From these sections it can be concluded that a purchase has to enter a written and valid contract while purchasing any property, so that he could protect his/her rights after performing his part of obligation.

References

Farran, S. and Cabrelli, D., 2006. Exploring the interfaces between contract law and property law: a UK comparative approach. Maastricht Journal of European and Comparative Law, 13(4), pp.403-443

Francis v F Berndes Limited (2011) EWHC 3377 (Ch)

Haentjens, M., 2012. Between Property Law and Contract law: the case of security. s.l.:Otto Schmidt/De Gruyter european law publishers.

Law of property (Miscellaneous Provisions) Act, 1989

LC253, 2015. The Execution Of Deeds And Documents By Or On Behalf Of Bodies Corporate, s.l.: The Law Commission.

legislation.gov.uk, 1989. Law of Property (Miscellaneous Provisions) Act 1989. [Online]
Available at: https://www.legislation.gov.uk/ukpga/1989/34/section/2
[Accessed 2022].

Moore, I., 2000. Proprietary Estoppel, Constructive Trusts and Section 2 of the Law of Property (Miscellaneous Provisions) Act, 1989. The Modern Law Review, 63(6), pp. 912-917.

Oates v Stimson [2006] EWCA Civ 548 (16 May 2006)

Singer, J.W., 2022. Property. Wolters Kluwer Law & Business.

Wolff, L.-C., 2020. The relationship between contract law and property law. Common Law World Review, 49(1), pp. 31-55.

Yaxley v Gotts [2000] ch 162