Constructive trusts-trusts laws and accounts, Financial Accounting

Assignment Help:

CONSTRUCTIVE TRUSTS

A constructive trust is a trust imposed by equity regardless of the intention of the owner of the property: it arises by operation of law.  The concept has been applied in a number of situations:
 
1. It is a rule of equity that a trustee must not permit his interests to conflict with his duties: note particularly, a trustee may not profit from his trust:  where he does so he holds the gains on a constructive trust (Keech v Sandford);

2. If a person who is not a trustee obtains information with the help of a trustee which enables him to make a profit, he holds the proceeds on constructive trust: (Boardman v Phipps);

3. If a person receives trust property with knowledge (actual or constructive) that it is trust property, and it is transferred to him in breach of trust, he holds the property as trustee;

4. A person who does not actually receive trust property but assists a trustee to fraudulently dispose of it is liable as a trustee.
 
Note:
Strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, e.g a solicitor who creates a fraudulent document on the instructions of the trustee. They will be liable only if:-

  • They receive the trust property; or
  • Act in a manner consistent with that of a trustee; or
  • Assist with knowledge in a dishonest and fraudulent design on the part of the trustees.

Related Discussions:- Constructive trusts-trusts laws and accounts

Montana''s capital lease, Montana Company signs a five-year capital lease w...

Montana Company signs a five-year capital lease with Elway Company for office equipment. The yearly lease payment is $20,000, and the interest rate is 8%.   1. Compute the cu

Stock splits stock dividends, Q. Stock dividends and stock splits have the ...

Q. Stock dividends and stock splits have the following effects on retained earnings: Stock Splits Stock Dividends a. Increase No change b. No change Decrease c. Decrease Decrease d

Impairment of Long-lived assets, How to calculate fair value of long-lived ...

How to calculate fair value of long-lived asset when the information about fair value is not available?

The common stock of warner inc, The common stock of Warner Inc. is currentl...

The common stock of Warner Inc. is currently selling at $114 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share

Cumulative nature of the returns on the predilection shares, A changeable ...

A changeable instrument is deemed part liability and part equity. IAS 32 necessitate that each part is measured individually on initial recognition. The liability element is

What do you mean by fiscal year, Q. What do you mean by Fiscal Year? Fi...

Q. What do you mean by Fiscal Year? Fiscal Year - Period of 12 consecutive months chosen by an entity as its ACCOUNTING period that may or may not be a calendar year. Fixed Ass

What do you understand by measurement date in stock option, Q. What do you ...

Q. What do you understand by Measurement Date in stock option? Measurement Date - The date at which equity share price and other pertinent factors, like expected volatility tha

Which is not necessary in order for corporation to pay cash, Q. Which one o...

Q. Which one of the following is not necessary in order for a corporation to pay a cash dividend? a. Adequate cash b. Approval of stockholders c. Declaration of dividends by the bo

Renfro rentals has issued bonds, a) The actual risk-free rate is 3%, and in...

a) The actual risk-free rate is 3%, and inflation is usual to be 2% for the next 2 years. A 2-year Treasury security yields 6.7%. What is the maturity risk premium for the 2-year s

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd