On The Trustee's Duty Of Loyalty On The Trust Law In Britain

The person holding property in trust is the trustee. The overriding duty of a trustee is the duty of loyalty. The principle of equity is that a trustee must not benefit from his position as trustee. He must not put himself in a position in which his duty to the trust may conflict with his personal interest. This, as will be seen, is manifested in various ways. A trustee must not trade in the trust estate, nor take profits or commissions. A purchase of trust property by a trustee is voidable ex debito justitiae, however fair the price, at the instance of and beneficiary, unless authorized by the trust instrument, or by the court, etc. A trustee is strictly liable to account for any profit made by using trust property or his position as trustee, unless authorized. On the other hand, a trustee has always been entitled to reimbursement of out-of-pocket expenses properly incurred. And there is no objection to a provision in the trust instrument that the trustees shall be remunerated. In addition, the trustee may not, after accepting a trust which comprises a business, set up a business which competes or may compete with the business of the trust, if he did so, his interest would conflict with his duty. This article, based on the origin country of the law of trusts, and through research on some British leading cases, sums up the contents of the trustee's duty of loyalty.