Section 2 Law of Property (Miscellaneous Provisions) Act 1989 says that ‘a contract for the sale or other disposition of an interest in land can only be made in writing’. But, to what extent can s2 be avoided by a finding that there is a constructive trust? 


The answer is that a constructive trust will only arise where there is ‘certainty’; in addition, the parties must have agreed on all the terms and intend those terms to be immediately binding. Thus, there will not be a constructive trust if the parties intend to make a formal agreement setting out the terms of the deal, or if there are further terms that remain to be finalised, or if the parties did not expect their agreement to be immediately binding. If there is not sufficient ‘certainty’ then a mere oral agreement will be speculative and unenforceable. But, note also that in deciding whether the parties intended to make a formal agreement the court will consider that commercial parties are normally aware that an oral agreement will not meet the requirements of s2 of the 1989 Act (and thus not be binding). 


There was recently a case in which a binding constructive trust prevailed, even though there was no s2 written contract. It involved a property development that had encroached over parking spaces belonging to a neighbouring dental practice. The developer claimed that the dentists had entered into an oral agreement that they would swap some car-parking spaces and he argued that the contract should be binding even though it was oral (with no s2 written agreement). The High Court agreed on the basis that there was sufficient certainty; the terms were not subject to contract and were intended to be immediately binding. Moreover, the developer had relied on the agreement to his detriment by then carrying out the development. Thus, on the facts, there was a constructive trust. Needless to say, however, cases of that sort are few and far between. Herbert v Doyle [2010] EWCA Civ 1095 (access free at www.practicalconveyancing.co.uk).