Trust Law and Third-Party Liability

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What is the primary reason for the distinction between equitable compensation and disgorgement?

Due to evidential difficulties in calculating losses (correct)

To deter fiduciaries from engaging in fraudulent activities

To punish fiduciaries for their dishonesty

To protect the principal's rights and interests

What is the rationale behind the strict application of disgorgement in cases of secret profits?

To punish fiduciaries for their dishonesty

Because the principal's consent is irrelevant in such cases (correct)

To deter fiduciaries from engaging in fraudulent activities

Because human nature is prone to dishonesty

In the case of Lister v Stubbs (1890), what was the court's decision regarding the defendant's fiduciary duty?

The defendant was liable for disgorgement of profits

The defendant was liable for equitable compensation

The defendant was not liable for any breach of fiduciary duty

The defendant was under a fiduciary duty in personam to pay over the money to the plaintiff (correct)

What is the purpose of constructive trusts as an equitable remedy?

To provide a remedy for breach of fiduciary duty Signup and view all the answers

What is the significance of the 'but for' test in equitable compensation?

It is used to determine the amount of equitable compensation Signup and view all the answers

What is the remaining amount of money left after fraud proceedings, according to Barnes v Addy (1874)?

A fund in the hands of receivers or liquidators Signup and view all the answers

What is the key difference between a trustee and a non-trustee in terms of responsibility, according to Baden v Societe Generale (1983)?

Legal power and control over trust property Signup and view all the answers

What is the term used to describe the situation where an individual willfully shuts their eyes to the obvious, according to the Baden Knowledge Scale?

Wilful blindness Signup and view all the answers

What is the condition that must be met for an agent to be held liable as a constructive trustee, according to Baden v Societe Generale (1983)?

Receiving and becoming chargeable with some part of the trust property Signup and view all the answers

What is the level of knowledge required for an individual to be held liable as a third party, according to the Baden Knowledge Scale?

Knowledge of circumstances that would indicate the facts to an honest and reasonable person Signup and view all the answers

What is the main consideration in determining whether a constructive trust can be imposed over profits generated from misappropriated funds?

The traceability of the profits to the original misappropriated funds Signup and view all the answers

In what type of situation is a constructive trust typically used to address?

A situation where someone has wrongfully benefitted at another's expense Signup and view all the answers

What is the effect of a constructive trust on the wrongdoer?

The wrongdoer is required to hold the assets for the benefit of the rightful owner Signup and view all the answers

What is the significance of the Sinclair Investments case in the context of fiduciaries and constructive trusts?

It highlighted the importance of tracing profits to misappropriated funds Signup and view all the answers

What is the relationship between a fiduciary and a constructive trust?

A constructive trust is imposed on a fiduciary who has misappropriated funds Signup and view all the answers

What is the primary principle of Equity in the Earl of Oxford's case?

Equity handles the rights and conflicts of the parties Signup and view all the answers

In the Insurance Society v Argyll Stores case, what was the remedy granted instead of Specific Performance?

Damages Signup and view all the answers

What is the principle that prevents a claimant from obtaining Equitable relief if their claim is tainted by illegality?

Clean hands Signup and view all the answers

What is the test for granting Injunctive Relief in the American Cyanamid case?

Establishing that there is a ‘serious issue to be tried’ Signup and view all the answers

What is the purpose of the Mareva Injunction?

To freeze all or some of the defendant's assets Signup and view all the answers

In which scenario is the concept of unconscionability most relevant?

When one party is in a weak position due to urgent needs Signup and view all the answers

What is the primary characteristic shared by the five historical categories of unconscionability?

Inequality of bargaining power Signup and view all the answers

In the case of National Westminster v Morgan (1985), what was the court's finding regarding bank managers?

They are not usually in a position of trust and confidence Signup and view all the answers

What is the role of a court in exercising its equitable jurisdiction, according to Lord Scarman?

To act as a court of conscience Signup and view all the answers

What is the result when a party enters into a contract without independent advice, and the terms are very unfair for a grossly inadequate consideration?

The law relieves the party from the contract Signup and view all the answers

What is the essential element in determining whether a lender's reliance on a security given by a wife is unconscionable?

The lender's knowledge of the husband-wife relationship Signup and view all the answers

In what type of relationship is the bank presumed to have constructive notice of possible undue influence?

Non-commercial relationships Signup and view all the answers

What is the consequence for a lender that fails to take reasonable steps to ensure it is not bound by the wrongdoing in a surety transaction?

The lender is bound by the equity and cannot enforce the security Signup and view all the answers

What is the significance of the 'put on inquiry' test in surety transactions?

It determines whether the lender has constructive notice of the wrongdoing Signup and view all the answers

In what circumstances will a lender be able to enforce a security against a surety wife?

If the lender has taken reasonable steps to ensure it is not bound by the wrongdoing Signup and view all the answers

What is the primary reason for voiding an agreement due to misrepresentation and exploitation of a person's vulnerabilities?

To ensure fairness and transparency in contracts Signup and view all the answers

In the case of Credit Lyonnais v Burch (1997), what was the basis for avoiding the transaction?

Undue influence and constructive notice Signup and view all the answers

What is the definition of unconscionable dealing in Australia?

A situation where a party retains the benefit of a dealing with a person under a special disability Signup and view all the answers

What is the requirement for unconscionable bargain in Canada?

Inequality of bargaining power, but no knowledge required Signup and view all the answers

What is the effect of an unconscionable bargain on a contract?

The contract is voidable Signup and view all the answers

What is the significance of the case of Commercial Bank of Australia v Amadio (1982) in relation to unconscionable bargain?

It highlighted the importance of fair dealing in contracts Signup and view all the answers

What is the main difference between unconscionable bargain in Australia and Canada?

Australia requires knowledge of the inequality of bargaining power, while Canada does not Signup and view all the answers

What is the remedy for an unconscionable bargain?

Set aside of the contract Signup and view all the answers

What is the significance of the case of Uber Technologies v Heller (2020) in relation to unconscionable bargain?