• In the case of Lysaght v Edwards 1876 2 Ch d 499, a new principle was created, known as the vendor-purchaser constructive trust

Facts of the Case

  • The Claimant, Lysaght (C), entered into a contract for the purchase of a farm.
  • Before the sale could be finalised the vendor (seller) died, and the farm was passed under a will to a trustee.

Issues in Lysaght v Edwards 1876 2 Ch d 499

  • The claimant, who was attempting to buy the property sued stating that he had an equitable interest in the property.

Held by High Court Chancery Division

  • Once a contract becomes enforceable the buyer (Lysaght) has an equitable property right and the vendor obtains a right to the money agreed upon.
  • The trustee, then. holds the farm on an equitable trust and has the right to possession until they get the money.
  • Thus, the vendor holds the estate on trust for the buyer.

Sir George Jessel MR

  • Creation of a contract for the purchase of land, results in the purchaser acquiring an immediate equitable interest in the land. The vendor becomes a constructive trustee for the purchaser the moment the contract is entered into.