Trustees and Self-Dealing Rule Quiz
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Questions and Answers

According to James LJ, why is the Court not entitled to receive evidence about whether the principal suffered an injury?

  • To ensure justice for the principal
  • To make the legal process more complex
  • To favor principals over agents
  • To protect agents from facing dangerous inquiries (correct)

What is the suggested way to relax the fiduciary rule in Murad v Al-Saraj?

  • Shift the burden of proof onto the principal
  • Allow the fiduciary to prove the conflict of interest did not harm the principal (correct)
  • Increase evidentiary complexity for fiduciaries
  • Impose stricter penalties on fiduciaries

According to Arden LJ, what effect would shifting the burden of proof to fiduciaries have?

  • Serve as a sufficient deterrence (correct)
  • Lead to unjust outcomes
  • Increase fiduciary responsibilities
  • Decrease evidential complexity

What is a common scenario where a constructive trust may arise?

<p>A holds funds given by mistake (D)</p> Signup and view all the answers

In what circumstances do fiduciary duties arise according to James Edelman?

<p>When there is a relationship of trust and confidence (B)</p> Signup and view all the answers

What is emphasized by Edelman as crucial in determining when fiduciary duties arise?

<p>&quot;Undertaking&quot; between parties (B)</p> Signup and view all the answers

Why is the Self-Dealing Rule significant for trustees?

<p>To prevent conflicts of interest as the trustee acts as both vendor and purchaser. (D)</p> Signup and view all the answers

What is the key exception to the Self-Dealing Rule as explained in the text?

<p>Holder v. Holder: Where a fiduciary purchases trust property in an auction. (A)</p> Signup and view all the answers

What is the Fair Dealing Rule, as described in the text?

<p>A rule that ensures beneficiaries receive full value when trustees purchase their beneficial interest. (A)</p> Signup and view all the answers

Why do innocent purchasers take good title before a voidable transaction is voided?

<p>Because they are unaware of the transaction being voidable. (D)</p> Signup and view all the answers

What are the reasons for the strict liability imposed by the Self-Dealing Rule?

<p>To deter trustees from engaging in questionable transactions and to reduce evidentiary complexity. (C)</p> Signup and view all the answers

According to Lionel Smith, why may the goal of deterrence not be considered worthy for private law?

<p>It may lead to an overly cautious approach among trustees. (B)</p> Signup and view all the answers

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