Equity: Trust Law

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1. Introduction 1. Equity and Trusts * Equity is a particular body of law, consisting of rights and remedies, which evolved historically through the Courts of Chancery to mitigate the severity of the common law. * The trust has been characterised as the greatest and most distinctive achievement in equity although an exact definition of the trust has proven difficult. * Equity would recognise and enforce rights and duties that were not known to the common law. * E.g. the common law protects the trustee’s legal interest in the property, thus facilitating their dealings with 3rd parties, but if the beneficiaries of the trust wanted to enforce their rights, equity will provide equitable proprietary interest. The Fusion…show more content…
| Fiduciary duties. | * Distinction is that the principal-agent relationship is primarily a debtor-creditor relationship while the trust relationship is proprietary as the trust property is vested in the trustee. * Principal’s action against the agent means that he is a judgment creditor. * Principal only has a personal right of action against the agent. * However, there are exceptions because an agent can be a constructive trustee – imposition of a trust, converting the right from a personal right to a proprietary right. * Difference between agency and bailment is that a bailee does not represent the bailor and cannot enter into a contract with a 3rd party on the bailor’s behalf. Bailment * Bailment is a relationship recognised by the common law. * Chattel owned by bailor is in the possession of the bailee with the bailor’s permission. * There is no transfer of ownership (legal or equitable, unlike the trust) and the entirety of the title remains with the bailor. * The relationship is governed by the common law. * Bailee’s duties are minimal in character (c.f. trustee’s duties). * Duty to re-deliver property on demand or on terms of the bailment. * Bailee requires special authorisation from bailor if he seeks to pass title to the property. * Failure to do so will render the bailee liable in conversion. * Bailor can commence action of economic tort
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