Exception to the rule that contracts for the sale of land must be in writing

Is there any exception to the rule that contracts for the sale of land must be in writing? Our litigators explore a recent decision.

Is there any exception to the rule that contracts for the sale of land must be in writing?  Our litigators explore a recent decision.

In short “yes”.  Section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989 states that the rule of law, which provides that land can only be sold through written contract does not affect the creation or operation of an implied or constructive trust.

What does this mean in real terms?

The exception was explored in Matchmove Ltd v Dowding and Another a 2016 decision.  This was a case between husband and wife Claimants and a Defendant developer.  The parties had discussed and agreed that the Claimants would purchase plot 1 together with a meadow.  The transaction for plot 1 was committed to writing and went through.  The parties then fell out with the developer arguing that the Claimants could only have half of the meadow.  The Claimants alleged that the Defendant held the meadow on trust for them.  The Defendant rejected that contention and said that because the agreement was not in writing, it was ineffective.

The Court of Appeal concluded that there had been an oral agreement between the parties that both sides intended to be ‘binding immediately’.  It held that the agreement was complete as to its main terms and the Claimants had relied on the agreement to their detriment (by purchasing plot 1).  The Court said that the Defendant therefore held the meadow on constructive trust for the Claimants and that the case fell within Section 2(5).

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