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EQUITY AND TRUST Critically examine the contribution made by the trust to the following area of law Unauthorised profits made by a fiduciary - Essay Example

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EQUITY AND TRUST Critically examine the contribution made by the trust to the following area of law Unauthorised profits made by a fiduciary

This is a right in property that is held in a fiduciary relationship by one party for the benefit of another. The person or the organization who/that holds the title to the trust property is trustee and the person who receives benefits is the beneficiary. The creation of trusts is generally a conjunction with a will and other elements of estate planning. There is a frame work for the validity and limitations of a trust. There is a code that governs the affairs of the estates of deceased owners and intestate properties. This even determines the place, the intestate properties have to go thus enabling the importance of trusts and making the limitations as guidelines. 2
The concept of trust is widely used in charity purposes. According to Charity Act 2006 in UK, the charity organization is the one that is established for charitable purposes or the one which falls to be subject to the control of the high court in the exercise of jurisdiction with respect to charities. 3
According to public benefit test of the charities act 2006The concept of trust involves public benefit also. The charitable organisations need to be delivering public benefits. This should be according to the guidance of charity commission for England and persuaded by them. The public benefit nature of the trusts may result in the unauthorised benefits or profits for the fiduciary. 4

4. Fiduciary Duty
Fiduciary duty contains obligations regarding loyalty and faithfulness. The execution of duties regarding loyalty and faithfulness may result in accruing unauthorised profits for fiduciary. As there is a chance of making unauthorised profit from the property, the fiduciary should be in a position to avoid potential conflict. To avoid unauthorised profits, the fiduciary duty should restrain unconscious abuse of legal power and position. This is due to the fact that the profits accrued by fiduciary by exploiting the legal power and position will erode the benefits of the beneficiaries. This concept makes a rule of public policy necessary that can be strictly applied against trustees to encourage good behaviour in them. According to James LJ in the case Parker v Mc Kenna in 1874 the strict enforcement of exemplary fiduciary propriety is required for the safety of mankind.
4.1 Commercial Use of Property: The commercial use of property by a fiduciary can be seen in large organisations and public companies. The companies that do business and mobilise capital from public come under fiduciary for the funds gathered from the public. The governance issue will be entwined in the commercial fiduciary. As the virtues regarding social welfare are minimised there is a chance of unauthorised profits for the commercial fiduciary in the absence of transparency and strict guidelines about the usage of property. Some experts opine that the shareholder supervision and control is necessary for good governance by a fiduciary. As there is a widespread view that there the execution of the work by a fiduciary cannot be judged by just shareholder value, the voting of the shareholder in company's general meetings is made compulsory for institutional investors. This makes the beneficiaries (shareholders) as the owners of ...Show more


The equity and trust law deals with public benefit charities like hospitals, schools and other trusts. This involves the equality law that deals with regulation of trustees, landlords and tenants. This explains the joint ownership of the property. This may deal with land, property law and trust law and serves the needs of joint ownership and guardian ship on any type of property…
Author : jmueller
EQUITY AND TRUST Critically examine the contribution made by the trust to the following area of law Unauthorised profits made by a fiduciary essay example
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