According to George W.

Keaton in his book ‘Law of Trusts’ he distinctively defines a

‘trust ‘ as ‘ A relationship which is recognized by equity and arises where property is
vested in a person of persons known as trustees, under a duty to hold for the benefit of
other persons known as cetuis que trust or beneficiaries. ‘

And in the case of Re Scott, the aforementioned definition is broader to mean some
purpose that the law shall enforce and recognize.

Trusts are creatures of equity created for the purpose of holding property for those
who cannot for example children and still in this regard to benefit the settlor’s
offspring in succession and significantly protect property from wasteful relatives or
children.

There are some other legal relationships at common law that ably appreciate the
uniqueness and complexity of a trust such as ;

Bailment;

According to Section 88 of the of 2010 “bailment” ‘means the delivery of goods by

one person to another for some purpose, upon a contract that the goods shall when the
purpose is accomplished, be returned or disposed of according to the direction of the
person who delivered them’ essentially bailment is an agreement where the bailor
under contract for the payment of a fee places property in physical control or
possession of a bailee who then assumes responsibility.

Therefore the bailee in popular sense is entrusted with goods for the bailor
temporarily however no trust is created. Because bailment is a delivery of personal
chattels upon a condition express or implied that they may be delivered to the bailor.

In a trust the trustee can pass title or more particularly mortgage property of the settlor
or develop it for the benefit of the Cetuis que trust which is envisaged in the old case
of Pilcher v Rawlins where one of the trustees was the uncle of the beneficiaries and
committed fraud with R by mortgaging property which was already subject to a
mortgage that had allowed the uncle and the other trustees advance money to R. It
was held that even though the beneficiaries had interest in this property the trustee had
not brought the mortgagees to the notice of these interests and the mortgagees had
acted diligently and reasonably believed that they had taken good title, they had
‘neither knowledge nor means of knowledge’ of the trust. (at 274, per Mellish LJ)

But with bailment seen in Section 95 of the Contracts Act the bailee cannot make use
of the chattels for which he or she is in possession temporarily contrary to the
conditions of the bailment. The bailee must compensate the bailor if any damage
comes of the goods as he or she uses them.

A bailee at the end of the contract for which chattels are the subject matter, returns
them back to the bailor, but a trustee under trusts holds property but not for the settlor
and certainly does not return this property to the settlor but only as the trust guides,
accords the beneficiaries of the trust their benefits.

According to 28 of the Sale of Goods Act, under bailment , goods sold remain at the
seller’s risk until ownership is transferred to the buyer where as under trusts the risk
that comes with the property is transferred to the trustee as soon as the trust comes
into force usually after the settlor’s death.
A bailment happens with contractual dealings that involve chattels for example
logistics which involves warehousing and temporary possession of a client’s goods,
importation and exportation service companies. However a trust comes into existence
usually as an insulation by the settlor against the uncertainties that come with death
such as greedy relatives looking for a quick steal especially when the beneficiaries are
minors.
Lastly contracts

Contracts;
Contracts are creatures of common law while trusts are creatures of equity.
Section 10 of the contracts Act says that a contract is usually a bargain between the
contracting parties giving each of them an advantage or consideration or benefit.
Where as George W Keaton in his book law of trusts emphasizes that under a trust
the beneficiary does not have to provide consideration since he or she is a volunteer
and the trustee himself usually obtains no benefit from the trust as well. *Section 1 of
the Trustees Act

Typically a contract is a bilateral event involving exchange on both sides

fundamentally different from creation of a trust which is a unilateral proceeding
where a settlor transfers property to a another without anything in return.
In the case of Beswick v Beswick no trust was created for Mrs Beswick as a
beneficiary and reaffirmed in the house of appeals under contracts she wasn’t privy to
the agreement between Mr Beswick and his nephew, as a third party. But she could
force the nephew’s promise to pay as an administratrix of her husband’s estate. This
case clearly shows the distinction between trusts and contracts.

Another groundbreaking distinction is unveiled in Twiddle v Atkinson, that in trusts a

settlor has no power to enforce the trusts and only the beneficiaries can bring an
action against the trustee compelling him to carry out his fiduciary duty. Under
contracts a person transferring his property would have power because of the
consideration provided, to enforce the contract incase there is a breach.

Agency;
Under agency an agent acts on behalf of the principle and his interests.
Both agents and trustees hold a fiduciary duty to their principle and beneficiary
respectively. Therefore their personal relationships are immaterial to the agency or
trust.

The relationship between an agent and his principle is derived from a contract while
that of a trustee and his beneficiaries is born of a trust.

Where as an agent acts on behalf of the principle who appointed him, a trustee doesn’t
act on behalf of the settlor who appointed him but on behalf of the beneficiaries for
whom the trust was created in the first place.

A trustee does not represent the beneficiaries but only performs his duties for their
benefit whereas an agent represents the principle.

In that light the trustee doesn’t involve the beneficiaries in any contractual
relationships with third parties such as mortgages and so the trustee executes solo
until the trust says he should involve the beneficiaries. However the agent must
involve his principle in a all contractual dealings.
Seen under imputed notice in the doctrine of notice in the case of Zabwe v Orient
Bank relying on the authority of Sejjaka Nalima v Rebecca Musoke the court stated
that where a purchaser employs an agent to act on his or her behalf the notice the
agent receives whether actual or constructive is imputed on the principle since the
agent is assumed to have informed the principle.

The distinction with respect to property is that an agent does not hold any property for
the principle as agents rarely obtain any property at all and for those who do so obtain
possession but not title. But there can be no trust unless the title to the trust property is
vested in the trustee. Hence trustees own trust property legally while agents only
represent and possess temporarily.

An agent is under control of his principle, but trustees are not controlled by their
beneficiaries and can only be compelled by them through court to carry the terms of
the trusts.

Agency is terminated with the death of the principle or agent and when the principle
acts unilaterally but death with concern to a trust is the basis of most and the trust
cannot be revoked unless the settlor reserves power of revocation.
Mallot v Wilson [1930] 2 CH 494

Debt;
With respect to a debt, liability cannot on its own be the subject matter of a trust. But
by placing conditions a debtor could create a trust particularly by segregation of an
appropriate sum from his other assets making an express declaration of trust in respect
of the segregated amount.
Fundamentally such a trust gives priority to its beneficiary over other creditors in the
even of a debtor being declared bankrupt.
However not all debts are trusts which is envisaged in Potters V Loppert where a pre-
contract deposit for the purchase of a prosthetic was received subject to this money
being paid back to purchaser on request. The recipient could use it and make a profit,
only being obligated to report it incase the money was lost.
It was held that there was no trust created because firstly, there was no fiduciary
relationship, secondly the recipient could use it however he wanted to make a profit
and only report if he lost it which is contrary to the obligation a trustee has to the
beneficiaries to hold trust property for their benefit and be liable incase he
misappropriated it for his own interests.

However it has been established that a debt can be a trust as well.

A decision in the House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd.,
where a loan for a specified purpose was accorded to the the debtor on condition that
the sum would be held on trust for the creditor until the specified purpose of the loan
is carried out. Incidentally making the bank or creditor a beneficiary to the trust.This
type of trust makes sure purposes for which money is lent out are fulfilled. And if not
there comes into play a resulting trust or in this case a ‘Quistclose Trust.’

Powers;

According to Graham Moffat in ‘Trusts Law,’ a power is “Authority to deal in certain

ways with property where the person authorised does not own the property and indeed
may not have any entitlement to it or proprietary interest in it”

The distinction here is that a trust is imperative and compulsorily carried out by the
trustee but a power is discretionary hence a donee can choose to carry it out or not
unless it is a trust power which may require the donee to carry out his function and
when he fails, court shall take it on.

A bare power of appointment could be confused with a trust because here a donee is
authorized to appoint part or all of the property of the testator at his own discretion for
a specified period. And when this period elapses there shall be a resulting trust where
the property reverts back to the testators estate.

However instead of a bare power of appointment, a trust power can be created where
a fund is given to trustees to divide among an ascertainable class of persons. This puts
them under duty not discretion to perform that division. And the law, that is court, in
case the trustees fail shall see the general intention through.

This view was asserted in Barrough v Philcox (1840) 41 ER 299 where the issue of
whether the settlor intended for the property to be kept in trust for the nephews and
nieces or great nephews and nieces or if it was merely a power that the children may
grant to the nephews and nieces or their grand nephews and nieces arose.
The Court determined that the testator's desire to help his nephews, nieces, or their
children went beyond a simple power of appointment and included a desire to create a
trust in their best interests.
Giving effect to the trust basing on the fact that equity is equality.
Hence the general intention of the settlor was to help his greater family.

As well as in Re Baden’s Trust, it was held that Mr Baden had created a trust and not
just a bare power, by use of the word shall and that a trust would not fail just because
it is impossible to ascertain members of a certain class.

In Re Gestnets settlements, Herman J assented that with bare powers a donee doesn’t
have to know all of the objects to appoint property hence discretion, but with trusts a
trustee must review everything in order to exercise judgement properly.

Charges (Conditions)
According to Re Frame, the apparent gift on condition can be construed as a trust. A
condition precedent is one that must be made before the gift takes effect and a
condition subsequent defeats what has already been made the gift reverts to the donor.
Sometimes as seen in Re Frame the gift is not one on condition but is really a trust.
Here a testator bequeathed money to a legatee upon a condition that he adopted his
youngest daughter. Although the legatee’s adoption claim was dismissed it was held in
court that although maintenance and adoption of his daughter was expressed as a gift
on condition, it was an enforceable trust and the legatee was bound to provide
maintenance at the very least if the adoption claim failed. All she had to do was take
on the daughter as her own, even without adopting her legally.
However the use of the word “charge” in his will in Re Oliver, the testator
featuring lands twice with one instance seeming as a trust and the second using the
word charge. It was a charge and court held that the use of the word removed a
personal obligation which was intended.
Re Cowley

Personal Representatives
In respect to estates of deceased persons. An executor appears where there is a will
nominating him and an administrator or administratrix appears where the deceased
dies intestate. Both executors and administrators act as trustees with respect to
beneficiaries and creditors claiming under the deceased. Holding property for their
benefit and not themselves. Section 1 the Trustees Act, a personal representative is
considered to be a trustee but not exactly the same.
In Adenji v Probate Registrar, the applicant an executor applied to have his
executorship discharged. The probate registrar informed him that the procedure he
was using was improper and that he had revoke the probate grant. Basing on Section 2
and 26 of the Nigerian Trustees Act he argued that he could be discharged from
executorship. The courts ruling was that section 2 and 26 were not applicable to the
applicant since the position and duties of an executor are not the same as a trustee’s
this enunciating the trustees Act of Uganda Section 1, that a personal representative is
considered to be a trustee but not exactly the same.
In Altenborough v Salomon

In Cocburns Trust v Louis it was held that administrators and executors having
completed their duty become acting trustees of the property holding for the
beneficiaries either on intestatcy or terms of the will, although the courts cannot
compel them to continue acting indefinitely because they are entitled to appoint new
trustees in their place and clear themselves from the duty of trustee which is not
expressly conferred on them by the testator’s will.