Court of Appeal affirms enforceability of oral land contracts

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The Court of Appeal has, in a landmark judgment, ruled that oral contracts for the sale of land are enforceable so long as there is clear part performance and a mutual contract between the parties.

The ruling arises from a long-standing legal dispute between former minister Israel Mayengo and businessman John Lwalanda over a 2009 oral land purchase agreement.

On September 30, 2016, Justice Eva Luswata ruled in favour of Lwalanda, prompting Mayengo to appeal against the decision.

In a ruling dated August 11, 2025, Justices Musa Ssekaana, Dr Asa Mugenyi and Stella Alibateese, citing the decisions in the cases of Kobaku Associate versus Owusu and Stanley Bainebabo versus Abaho Tumushabe, said oral contracts not reduced to writing are binding so long as there is clear evidence of the essential terms and the actual intention of the parties.

“I find that there was part performance of the said contract by both parties through their conduct. The appellant’s (Mayengo) attempt to rescind the contract was belated and in my view was an afterthought as the learned trial judge rightly found,” Ssekaana, who wrote the judgment, noted.

The justices observed that the negotiations between Mayengo and Lwalanda matured into an enforceable oral agreement despite the absence of a signed written contract.

“I agree with the findings of the learned judge that the respondent (Lwalanda) set out to purchase the land now demarcated and comprised in Block 244 plot 7781 at Muyenga. The said land is up to date vacant and the title is in possession of the respondent pending signing of transfer forms. Given that the respondent has not committed any breach, specific performance is hence the appropriate remedy in the circumstances,” Ssekaana said.

Absolving Justice Luswata of any wrongdoing, the justices said, “The learned trial judge was justified to grant the order of specific performance on the basis that on the facts before the court, it would neither be unjust nor unequitable to deny that relief.”

Specific performance is an equitable and discretionary remedy which the court considers in light of all the circumstances of the case.

While Mayengo said he was ready to refund the money earlier advanced to him by Lwalanda, the justices said compensation in damages would not be adequate relief in contracts for the sale of land, since land generally may have a peculiar and special value in the eyes of the purchaser and thus may not attain the object desired.

Commenting on the decision, city lawyer Abdul-Noor Kinene welcomed the ruling but said it conflicted with the Contracts Act, which requires every agreement with a monetary value of more than 500,000 shillings to be in writing.

“By equity, it is a good decision. However, this decision contradicts with the contract Act that requires every agreement with the monetary value of sh500,000 to be in writing,” Kinene said.

Background

In 2009, Mayengo entered into an oral agreement with Lwalanda for the sale of half an acre of land, comprised in Kyadondo Block 244 Plot 2611 at Muyenga.

Lwalanda argued that they agreed on a purchase price of sh110 million and an exchange of land valued at 60 million shillings at Bukasa.

He said he made a part payment of sh50 million to Mayengo and also gave him the certificate of title for his land in Bukasa.

Lwalanda added that Mayengo handed over both the certificate of title to the suit land and a signed mutation form to facilitate the subdivision of the land into two plots.

However, Mayengo declined to receive the outstanding balance when it was offered and refused to sign the transfer forms. Consequently, Lwalanda dragged Mayengo to the Land Division of the High Court seeking, among other remedies, an order for specific performance.

In his defence, Mayengo denied the contract for the sale of land, contending that the sale price quoted was only a negotiating figure, that the draft agreement was still open to negotiation, and that the land which Lwalanda offered him in Bukasa was unacceptable and unsolicited.

Regarding the mutation of the suit land, Mayengo argued that it was done prematurely and that he was prepared to refund any consideration paid towards the purchase price.