EQUITY AND TRUSTS — Constructive Trusts — Vendor and Purchaser — Effect of Valid Contract for Sale
Ratio Decidendi
Per Fabiyi, JSC, quoting Jessel, MR in Lysaght v. Edwards (1876) CH.D 499, in Ibekwe v. Nwosu (2011) NLC-123-108-2006(SC) at p. 5; Paras A—C:
"What is that doctrine? It is that the moment you have a valid contract for sale, the vendor becomes in equity a trustee for the purchase of the estate sold and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase money, and a right to retain possession of the estate until the purchase money is paid in the absence of express contract as to the time of delivering possession... If anything happens to the estate between the time of sale and the time of completion of the purchase, it is at the risk of the purchaser."
Explanation / Scope
This principle establishes that upon a valid contract for sale, the vendor becomes a trustee for the purchaser, and beneficial ownership passes to the purchaser. The vendor retains a right to the purchase money and possession until payment. The principle applies in contracts for sale of land. It ensures that beneficial ownership passes. The principle reflects the doctrine in Lysaght v. Edwards. The court must apply the doctrine. The principle provides guidance on vendor and purchaser.