A Research On The Trustee’s Civil Liability

Along with the social and economic development, Trust can effectively realize thesystematic function such as investment and wealth management. In modern market economy,Trust plays an important role. In recent years, economic development of China boosts theneed of wealth management, accelerates the development of the trust industry rapidly. But thedevelopment of China’s trust industry is still faces the anxiety resulting from not completelegislation of Trust Law and inadequate research of Trust.The tough contradiction betweenrapid development of trust industry and inadequate supply of trust legislation leads to anobstacle to the further development of trust industry. Moreover, there are still uncertainties inthe further perfection of the financial market in China. The unclear position of the trustee’scivil liability of Trustee will make the trust industry lacking of legal protection whenconfronting with industry risks. Facing with the upcoming industry risks,China urgently needsto improve the trustee’s civil liability system.The essence of the civil liability of trustee onthe one hand is the adverse legal result for the trustee’s misconduct causing incompleteimplementation of the purpose of the trust, and on other hand it is also a relief mechanism forthe rights of other parties in trust relationships.As an institutional property arrangements,thecore of Trust is to realize the function of trustee to achieve the purpose of wealthmanagement,which means ‘entrusted by the others, manage the others’properties on behalfof the others.’ Therefore, the cause of the civil liability of the trustee is his misconduct whichleads to the loss of Trust property or the reduction of Trust interests. By the analysis of thecharacteristic of Trust property and Trust beneficiary, the object of legal remedies of Trustee’s responsibility is actually the Trust beneficiary owned by Beneficiary in the common lawsystem. Trust beneficiary should be the comprehensive rights of both property rights andcreditor’s rights in Chinese civil rights system.Therefore, the nature of trustee’s misconducttriggering the trustee’s responsibility is a comprehensive responsibility involving both TortLiability and liability for Breach of contract.The foundation from which this responsibilitygenerates is the Fiduciary duty which is the core of the Duty of loyalty and Duty of care.Themain body of this article is made up of four parts, about forty thousand words.The first part of the article introduces the history of trust system in China, thedevelopment of trust and trust system, and the research direction. Behind the titanic asset management of trust business is industry crisis under the shadow of concentrated paymentrisk because of the incomplete trust law system. The most outstanding problem is that the lackof civil liability of trustees in trust laws leads to difficulties to get remedies in disputes. Thisdoes nothing helpful on the security of investors’ rights and the rectification of trust hindersthe development of trust.At first, the writer clarifies the trustee’s civil liability with acompound characteristic of both breach of contract and tort. Then, the writer points out thatthe civil liability the trustee would bear is a legal consequence, which is the result of violatingthe trust obligation.The second part analyzes the foundation of trustee’s responsibility. The trust obligationis divided into a general obligation (including duty of loyalty and duty of care) and a specificobligation aiming at realizing the general obligation.The third part analyses the natures of trust property and beneficial rights of the trust,clarifying that the ownership of trust property belongs to the trustee, so the object of the rightthat trustee civil liability relieves is not the property right of the beneficiary but the beneficialright. This beneficial right is a compound right of both property right and creditor’s right. So,the civil liability of trustee caused by the violation of trust duties has acompound characteristic of breach of contract and tort.The fourth part discusses the ways to construct and to improve the system of trustee’scivil liability on the basis of compound characteristic of trustee’s civil liability identified inthree parts above and the situation of trust and relevant civil laws in China.