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Constitution Short Notes

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THE LAW ON CONSTITUTION OF TRUSTS EFFECTUAL AND INEFFECTUAL TRANSFERS

1. Modes of disposing property: three modes identified in Milroy v Lord [1862]: Medley tried to transfer shares to his niece (Milroy) but did not comply with requirements of Bank of Louisiana, instead transferred them to Lord to hold on trust for Milory; Medley died with the company formalities incomplete; Turner LJ: the transfer was incomplete, so the trust was not constituted)
 Transfer of legal ownership beneficially — if B provides no consideration and A fails to transfer, B generally can't rely on equity. (If there's consideration  contract law).
 Transfer on trust— A transferring to B to hold on trust for A or C
 Declaration of self as trustee

2. Constitution of the express trust
 Method 1: declaration of self as trustee o Key issue is whether A intended to declare self trustee: see for example Jones v Lock [1865]: Jones placed £900 cheque in hand of child and said that he was "going to put it away for him." Lord Cranworth: there had been no gift to the baby: "the case turns on the very short question of whether Jones intended to make a declaration that he held the property in trust for the child." o Where A intends others to be trustee as well as himself, no need to transfer title to the others too. Pagarani [2001]: donor established a philanthropic foundation on a trust; appointed himself one of the trustees then stated orally that he gave all his estate to the foundation. TCP died before deposit balances and shares had been transferred to the foundation. Lord Browne-Wilkinson (PC): this was a perfectly constituted self-declared trust and he was "bound by the trust and must give effect to it by transferring the trust property into the name of all the trustees."
 Method 2: vesting of title in trustees o Formalities might be required here — e.g. deed / registration in land; stocks by appropriate form of transfer and registration of title in share register. As long as the trustee receives legal title, the trust will be constituted, regardless of the reason why the title is vested. Re Rali's Will Trusts [1964]: H covenanted to transfer property she received under her father's will to the trustees of her marriage settlement. She never assigned this interest to the trustees; the property eventually vested in H after her death. The trustee of H's marriage settlement and the trustee of her father's will was the same person, so he was in the latter capacity holding on trust for her an interest which she should have assigned to him in the later capacity. Buckley J: the trust in favour of the marriage settlement had become completely constituted (by transfer) "the means by which he became so have no effect upon the quality of his legal ownership."

3. Incompletely constituted trusts
 Failed trusts: 'equity will not assist a volunteer' o Milroy: See above.
 Failed gifts: 'equity will not perfect an imperfect gift' o Richards v Delbridge [1874]: settlor attempted to assign a lease of business premises to his grandson (R). He gave the lease certificate to R's mother to hold on his behalf. The settlor died and his will made no mention to the premesis. Jessel MR: there was an imperfect gift to the grandson and, in the absence of a deed, there was no transfer. No trust had been created because "for a man to make himself a trustee there must be an expression of intention to become a trustee." FUTURE PROPERTY AND COVENANTS TO SETTLE

1. Covenants to settle
 Where A hasn't transferred title to B, but has covenanted to settle property either on a new or existing trust for C (beneficiary). C is not usually in a position to enforce this

2. Contracts (rights of third parties) act 1999
 s.1(5): If a contract "purports to confer a benefit" (s.1(1)(b)) on a third party, "there shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract (and the rules relating to damages, injunctions, specific performance and other relief shall apply accordingly)."
 This applies to contracts entered into after May 11th 2000.
 Has the effect of treating C (a volunteer and third party) as if he is a party to the agreement. C has a clear claim for damages, but there is a question as to whether C can claim an equitable remedy.
 NB: there may be situations where it is preferable for C to find a trust and not rely on the Act: i.e. a trust, once constituted, is irrevocable, but a C's rights under the Act might be extinguished by the parties to the covenant as provided for in s.2.

3. Definition of volunteer
 Equity doesn't treat a covenant in deed differently from any other covenant, even though this is a means for volunteers to enforce in contract law. I.e. being a party to a deed is sufficient consideration in law but not in equity.
 Consideration is defined more widely than at CL. E.g. includes 'marriage consideration' and 'issue' of marriage (i.e. children) but not next of kin. Pullen v Koe
[1913]: wife covenants to settle after-acquired property of £100 and over; receives gift of £285 from her mother; does not transfer to trustees (paid to husband, invested in bonds). Trustees claim bonds on behalf of children (beneficiaries of marriage settlement). Swinfen Eady J: when the money was received by the wife, equity assumed that it had already been transferred to the trust by virtue of the wife's covenant. Equity recognised that consideration had been given under the

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