A CRITIQUE OF THE LAW SOCIETY CONDITIONS OF SALE (1989)

1.0 INTRODUCTION.
The Law Society Conditions of Sale (the Conditions”) were prepared by the Law
Society of Kenya chiefly as an aid to the conveyancing process in the country by
providing a basic guide to lawyers on drafting of contracts for the sale of land.
The conditions of sale as drafted aim to provide a basic guideline to conveyancers on
the rudimentary terms, conditions and provisions that should preferably be included in
a contract for the sale of land. The conditions therefore were geared at acting as a
basic guide to lawyers and other lay persons i.e. their clients on what a contract for the
sale of land should ideally contain.

It should be noted however that parties are not mandated to utilize the conditions in
their respective sale agreements. Freedom of contract operates to allow parties to
enter into their own bargains and to term these as “the special conditions” whilst the
LSK conditions will operate as general conditions that can be included or excluded by
the parties.
This paper posits that conditions which were last reviewed in 1989 are in grossly
failing the very people whom they are meant to protect and guide. We therefore
identify as pertinent the following broad areas of the LSK Conditions that should be
included in any suggested reform of the Conditions:

1. ADAPTATION OF TECHNOLOGICAL ADVANCEMENTS

Currently, the conditions are two decades behind conveyancing practice in the field.
As explained above, the LSK conditions were last amended in 1989. In the time
since, a large number of both technological and legal developments have taken place
and they now surpass the simple rudimentary provisions in the Conditions.
It is trite that the law which is aimed at protecting individuals and setting out rights,
duties and responsibilities must as a general rule keep up with advancements in the
different areas of life including the socio political and economic changes as well as
the technological advances that are a present day reality. The information technology
age has arrived and it is here to stay1. These advances in new technology demand a
not only a new breed of lawyers but more importantly, a new set of laws that
understand and provide for the complexities in science and technology and can
effectively utilize these over a variety of issues to simplify how parties interact with
each other.
E- Conveyancing (EC) is now utilized in many jurisdictions the world over including
the USA, the UK, Australia and Canada to name but a few. EC eliminates the need for
paper-based settlements, drawing cheques and meeting to exchange documents on a
defined settlement day and place. In the EC system land transactions – including
exchange of copies of titles, payment of the purchase price, the payment of duty to the
relevant state tax or revenue office, the making of requisitions are all accomplished
electronically from personal computers.
For instance e-mail is now used by all and sundry as a daily means of communication.
E- mail notices have now been accepted by other jurisdictions as constituting a valid
means of communication for the purposes of the contract particularly if the parties
establish a pattern of conduct that uses e-mail as a form of communication for
contractual matters However the LSK conditions still contain the outmoded forms of
communication by for instance requiring that notices be sent vide post or fax only2 or
by stipulating that completion should take place at the vendor’s advocate’s offices
whereby parties will meet and exchange completion documents3. In practice, parties
more often than not send completion documents by post or by hand delivery without
necessarily meeting to finalize this as officially as required by the conditions.

Some definitions utilized in the Conditions do not reflect current practice and are in
our opinion in dire need of revamping. For instance the term “Purchase Money” 4is in
our view too narrow a definition of the consideration in a sale agreement and a
broader term is necessary to encompass the diverse modes of consideration utilized by
purchasers in sale agreements. For instance parties may agree to do a form of barter

1 Also commonly known as the Computer Age or Information Era. This is an idea that the
current age will be characterized by the ability of individuals to transfer information freely,
and to have instant access to knowledge that would have been difficult or impossible to find
previously. http://en.wikipedia.org/wiki/Information_Age
2 See Condition 4 “Completion’

3 As above.
4
See Condition 1 on Interpretation
trade where chattels such as vehicles, share warrants, or even other properties etc are
utilized after being valued and assigned monetary worth. The term “purchase price”
should be considered as an alternative as it incorporates within it different forms of
consideration.
The term property is defined to mean the subject-matter of the sale. This definition is
clearly not sufficient in exhaustively describing the property that is the subject matter
of the sale.
In Kenya Re-Insurance Corporation Vs. Joseph N.K. Arap Ngok 5, Justice Ochieng
held that a sale agreement is only enforceable if the property is certainly defined so as
to include its registration/title number. In this case the defendant alleged that the
plaintiff lacked locus standi to enforce the contract for sale as the registration number
utilized did not exist at the time of sale. The suit property in question was simply
described as “House No 8, Karen.” The judged however declined to find that the
plaintiff had misrepresented its ownership of the suit property to the defendant.

This means therefore that the conditions ought to be reformed to reflect jurisprudence
that is springing forth from the court and redefine the terms that have fallen subject to
legal scrutiny due too ambiguity.
Finally in regards to modernization of the Conditions, we recommend that modern
payment methods such as Electronic Transfer of Funds (EFT’s) and direct credit be
recognized by the conditions as valid and encouraged means of payment of the
purchase price and the deposit instead of constraining parties to cheques or bankers
drafts6 as being the only accepted methods of tendering consideration under the
conditions. .

2. REFLECT LEGAL REFORMS WITH RESPECT TO

CONVEYANCING.
By a series of legal notices issued in 2005, the Government promulgated a novel legal
requirement requiring both parties to a transaction provide their Personal
Identification Numbers (PIN) as well as colored passport size photographs and
National Identification documents for purposes of verification that the parties are
indeed whom they claim to be.

5
HCCC 776 of 2003 [2006] eKLR
6 See Note 4 above.
 The rationale for this was two fold:
• To curb fraudulent dealings in land which had at the time become
rampant.
• To facilitate revenue collection by the government prior to transferring
the land to the purchaser.
The introduction of these stipulations has created a paradigm shift in the law of
conveyancing in Kenya today. However this is not reflected in the conditions of sale
though they are meant to be the basis upon which parties’ contract in land
transactions. This should be remedied with immediate effect.
We suggest in this same vein that in order to offer a clear guideline, the conditions
should detail the completion documents per reach system of registration as the
numbers and types of these consents and clearance certificates are now known.

3. ENFORCEMENT OF ADVOCATE’S PROFFESSIONAL

RESPONSIBILITY
The role of an advocate is said to be multifarious, encompassing his duty to the court,
the profession, the society at large and that to his client7.
The conveyancer’s duty to his client requires him to be meticulous in the preparation
of conveyancing documents and to safeguard his client’s position to the best of his
ability. This duty also places an obligation upon the conveyancer to advice his client
on the consequences of contractual terms in the contract of sale in the event of a
dispute and to ensure that the client understands this prior to executing any document.
In the field the situation prevailing is pathetic to say the least. There is lack of
innovation by a population of advocates to include express terms that govern their
client’s contracts and that protect the client’s legal position. Rather, most
conveyancers adopt age old precedents which inevitably have a clause incorporating
the Conditions without stopping to consider or advice on the effect that this will
ultimately have on their client’s legal position in the event of a dispute. For instance,
many a purchaser is unaware of the fact that he will lose his entire deposit should he
fail to complete.
The failure by the LSK in general and conveyancers in particular to educate their
clients and the general public on the ramifications of the Conditions once

7 Rondel vs Worsely per Lord Denning

incorporated, has meant that parties are ignorant of their legal position in the event of
disputes.
The danger of this “cut and paste” practice is clearly illustrated in the leading case of
Kenya Re-Insurance Corporation Vs. Joseph N.K. Arap Ngok 8 where the court held
that a contract for the sale of land which incorporates the conditions will be construed
in light of its specific terms and given its ordinary meaning.
This prompted the court in interpreting Condition 8(1) of the LSK conditions which
deals with interest on purchase money, to hold that the defendant did not accrue any
interest in his favour with respect to the deposit paid to the vendor under the sale
agreement. The Court also interpreted Condition 6(1) that deals with the rights of a
purchaser who takes possession before completion against the defendant by holding
that he was a mere licensee and if the sale fell through, his continued occupation of
the suit premises would be unlawful. However, in this case, the court held that the
defendant’s defence raised triable issues and declined to strike it out.
We recommend therefore that the conditions stipulate in clear and unambiguous
terms that the parties advocates be enjoined to explain to them the ramifications of the
Conditions on the contract and to require the client to aver prior to contracting that he
has so understood9.
Due to the caveat emptor principle that is the backbone of contracts for the sale of
land, the Conditions stipulate that the purchaser is deemed to purchase the property
with full knowledge of its conditions. This sadly is not always the case. The advocate
should therefore carry out the proper searches and requisitions and advice his client to
physically inspect the property either by himself or by an authorized person.
Failure to give this advice should lie as against the advocate in professional
misconduct.
Another aspect of professional irresponsibility that arises is with respect to the
handling of deposits by the vendor’s advocate. The deposit is provided for by the
Conditions as a means to secure completion by the purchaser by binding him in
earnest to the contract. In practice, more often than not, the advocate will
immediately pay it out to his client who will proceed to utilize it prior to completion.

8 See Note 5 above

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The provisions of Section 69 of the ITPA with respect to mortgages and that of the RLA with respect
to charges can be utilized in this regard.
In the event that the sale falls through, the purchaser will have to go through a very
onerous process to recover his money.
We suggest therefore that parties’ advocates hold these sums in a joint account
pending completion of the sale transaction. This will ensure that the sums are held in
trust for either party so that if the vendor defaults, the purchaser will get repaid his
money and the converse will be true i.e. the vendor will be allowed to forfeit the
deposit should the purchaser default and fail to complete.

4. ENHANCE MENT OF THE PURCHASER’S LEGAL RIGHTS

Our analysis of the LSK conditions in their totality, points to the fact that the vendor
appears to enjoy a higher degree of protection than the purchaser. We consider that
this is inappropriate given the fact that the law is by its very nature an impartial
protector of rights10.
As has been explained above, factors such as forfeiture of deposit by the vendor and
denial of interest on deposit in favour of the purchaser all put the purchaser in a very
precarious legal position during the period of contract.
In this regard, we recommend that a second look be taken at the purchaser’s legal
rights in cases where he has indeed defaulted but no loss is incurred by the vendor. In
most cases, land appreciates in value from one day to the next so it is in our view,
highly unlikely that any loss will be incurred by the vendor. We propose that cases
where profit is made or even where the vendor breaks even, the deposit in its entirety
or a substantial portion thereof should be released to the buyer.
This is because the provision of forfeiture of the deposit is meant to cushion the
vendor from any losses that may be incurred by him/her as a result of an aborted sale.
Where no loss is incurred but gains result, it will be inequitable for the vendor to
retain the purchaser’s deposit as this would be synonymous with unjust enrichment
which equity shall not allow.

5. THE ROLE OF THE LSK CONVEYANCING COMMITTEE

10
See Part V of the Constitution which at Section 82 outlaws any law that is discriminatory in nature.
In conclusion, we wish to call for the complete overhaul of the LSK Conveyancing
committee in terms of its objects and constitution. The Conveyancing Committee is
mandated to originate proposals on reform of the law and practice in relation to the
alienation of interests in land11. However as has concisely been shown above, this
committee is failed in its duty to keep current, the backbone of its existence.
We recommend that it be mandated by activist members to overhaul LSK Conditions
of Sale without undue delay.

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