There is as yet no judicial pronouncement in England that an exculpatory clause in a trust is to be interpreted in the same manner as a contract. Instead, it has been assumed in all trusts texts that there are trust obligations which can never be excluded as a matter of law. This will be the position of a trustee of a non-authorized unit trust. A trustee of an authorized unit trust will also be subject to section 84 of the Financial Services Act 1986. Read the rest of this entry »
As the manager is in a contractual relationship with the unitholders, it may have a contractual duty of care under the express or implied terms of the contract as contained in the unit trust deed. Historically, the court has chosen the contract as a medium of control over the conduct of people giving professional services. Invariably, the court will imply a duty of skill and care into a contract for professional services. However, as Deane J in Hawkins v. Clayton has reminded us, the preconditions for implying a term into a contract include that the term must be necessary for the efficacy of the contract, and the term must have been intended by the parties to form part of the contract. Read the rest of this entry »
- The trustee must not follow a direction of the manager if such direction is in breach of the express provisions of the unit trust. This is so irrespective of whether the power in question is beneficial or fiduciary. If it were otherwise, the duty of supervision would be completely hollow.
In respect of every investment proposed by the manager, this means that the trustee has to check each proposal against the letter of the unit trust deed. Read the rest of this entry »
The power is to direct the investment of the capital in such investments as the testatrix’s son may from time to time direct. Upon the language of the power as a whole, in my judgment, provided he acts in good faith, [the son] is entitled to give directions to the trustees to realise any investments constituting the trust fund which they from time to time may hold. In my judgment, upon the language of the clause, the trustees are bound to comply with those directions save that they are to satisfy themselves, the shares not being shares in which there is a free and open market, that the price which they pay for them is a reasonable and proper price at the time they make the purchase. Read the rest of this entry »
