Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
6 Cards in this Set
- Front
- Back
|
17. Breach of fiduciary duty/Explain what fiduciary obligations are, and distinguish them from other obligations a trustee might have
|
1. A fiduciary must not place herself in situations where her own interests conflict with those of her principal.
2. The fiduciary requirement is general in nature and applies to all exercise of discretion by the principal whereas other obligations are specific in nature. |
|
|
17. Breach of fiduciary duty/Describe the consequences which attach to the receipt by a fiduciary of an unauthorised profit
|
1. A Constructive trust may be set up in favour of the principal; or
2. The trustee will be personally liable to the principal for the profits (debate about which one in Lister v Stubbs (1890) 45 Ch D 1 and A-G for Hong Kong v Reid [1994] 1 AC 324) 3. A trustee is stripped of any profit earned in competition with the trust 4. A trustee is stripped of any bribe received for carrying out duties to the advantage of the bribe payer |
|
|
17. Breach of fiduciary duty/Explain what happens when a trustee purchases trust rights or sells rights to the trust
|
1. The fair dealing rule applies.
2. Rationale: the trustee is in a better negotiating position having dealt with the trust rights in the past. |
|
|
17. Breach of fiduciary duty/Describe the circumstances in which a trustee may safely purchase the interest of a beneficiary
|
1. The fair dealing rule applies. The fiduciary must show the following:
2. That she has not taken advantage of her position. 3. That she has disclosed all relevant information to her principal. 4. That the beneficiary did not rely solely on her advice in entering into the transaction, and 5. That the price was fair. |
|
|
17. Breach of fiduciary duty/Explain and apply the law governing equitable compensation for breach of fiduciary obligation
|
1. The first approach is to try to reverse the offending transaction.
2. Or, the client can make a claim for ‘equitable compensation’, the equivalent to damages at common law for a tort or breach of contract. |
|
|
17. Breach of fiduciary duty/explain the uncertainty regarding the application of trustee exemption clauses
to a breach of a trustee’s fiduciary obligation. |
The limits of the application of trustee exemption clauses remains uncertain.
|
