Constructive Trust

What is a Constructive Trust in Equity Law?

Quick Definition

A constructive trust is an equitable remedy imposed by a court to address situations where someone has wrongfully obtained or holds property. It ensures that the property is managed or transferred in a way that reflects fairness and justice, even if there is no formal trust agreement.

In Context

Constructive trusts often arise in cases of fraud, breach of fiduciary duty, or unjust enrichment. For example, if someone acquires property through deceit, a court may impose a constructive trust to ensure the property is returned to the rightful owner. A landmark case is Chase Manhattan Bank NA v Israel-British Bank (London) Ltd (1981), where a constructive trust was recognised to rectify unjust enrichment. In exams, you might be asked to identify when a constructive trust is applicable and discuss its impact on the parties involved.

See Also

• Resulting Trust

• Fiduciary Duty

• Unjust Enrichment

Learn More

Check out our Tort Law Notes for deeper case law, examples, and revision tips.