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LAW8500 Australian Commercial and Corporations Law, University of Southern Queensland, Australia


Task 1: Trusts

Is there sufficient certainty for the creation of a trust?

Answer: Registering trusts is very common practice all over the world under which the trust settlor would hand over the rights of owning and managing the trust property to the trustees for the ultimate benefit of the designated and identified beneficiaries. However, the trust despite being a registered in law would not be recognized as a separate legal entity. However, for paying taxes, the trust would be regarded as a taxable entity which is working for the economic benefit of the beneficiaries. The trustee isappointed bythe trust settlor and the trustee can be defined as an individual who is put in the charge of managing the trusts defined assets for the intended benefits of the identified beneficiaries and also is tasked with the management of the trust properties for ensuring a good return to the beneficiary and also for making timelypayments of taxes if any.

Thus trusts are created to benefit the beneficiaries who were identified by the makers of the trust and the trustee is put in a fiduciary relationship with the trust property and is given the tasks of managing the trust property but not taking economic advantage of the trust properties and working solely for the economic benefit of the identified beneficiaries. Until the trust is dissolved under legal provisions, the trustee would be the sole custodian of the properties entrusted to him and is also to be regarded as the legal owners of the properties and would be required to manage the properties without any input from the beneficiaries but aimed to benefit the beneficiaries. However it must be noted that there can be a number of trustees for trust but if there is only one trustee then the trustee must not be the beneficiary for the trust operations to be valid in law (Clarkson, 2012).

However, there are some defined certainties which must be present in every trust to be capable of being enforced in law. The same is discussed in detail:

1) Certainty of Intention: The trust makers must have demonstrated a clearintention to maketrust and make it operable. Thetrust settlors primary intention would be examined by the court of law if there was any ambiguity. The settlors must have demonstrated a clear intention to havea trust for the benefit ofsome identified beneficiaries and the words either in writing or spoken must be clear and concise. If there was no intention on the part of the part of the settlers then the trust becomes inoperative and invalid (Hargovan, 2014). 

The intention is only one part and the same withoutthe ownership of the properties to be transferredto the trust is not legal. This means the trust can only be legally created only if the settlor's intention is coupled with the ownership of the property as well. This means the settlor'sintention would be legal and effective only the properties being transferred is owned by the settlers and if the property is not owned by the settlers then the trust becomes inoperable. Further, theintention of the trust makers is not required to be demonstratedin written format and mere spoken words might be sufficient for trust being created.

2) The certainty of subject matter: The next certainty is the certainty and definitiveness of the assets put under the trust. As the trust would operate solely taking these assets under its wing, these assets would be needed to be not only definite but also identifiable. If the trust property is not clearly identifiable then the trust won't exist(Hemmens v Wilson Browne (a firm) [1995]

3) The certainty of the Object

The certainty of the objects refers to the definite assessment of who the beneficiaries are and from their the spoken words or the written documents, the individuals who were intended to be the beneficiaries must be clearly identifiable. If the objects are not clear and not definitive and their identities can't be ascertained with certainty then the trust would become inoperable (Clarkson, 2012).

Analysis and Opinion to the Question Raised

For the given case study, Basil is the settlor of the trust and at the same time, he is also the designated trustee. As the trustee has attained the age of legal validity and has a sound mind, the creation of the trust is valid as there is a certainty of intention for the creation of the trust.

The second intention is that of property which is being transferred to the trust. As the trust would operate solely taking these assets under its wing, these assets would be needed to be not only definite but also identifiable. If the trust property is not clearly identifiable then the trust won't exist. For the legal creation of the intended trust by basil, it is required that the trust settlor must transfer identifiable and owned properties to the trust. Basil is the settlor and also the trustee but the trust property is not identified with legal clarity. There is absolutely no information regarding the shares which were intended to be the trust property and hence the second intention is not duly satisfied and fulfilled.

The third certainty is the definitiveness of the trust object and if the trust objects (beneficiaries) are not clearly identifiable thenthe trust won't be operative. If the beneficiaries are identified with clarity thenthe trustee can proceed to operate the trustproperty for the benefit of the trustobjects.

In the case of Basil creating the trust, it appears that both the second and third certainties are not valid and operable. First of all the trust property is not identified and the sameis not certain (Bredeson, 2013). Also, the trust settled by Basil does not have identifiable beneficiaries. The intention to create was a present bit the intention of the object and the certainty of the subject is not clearly present and defined by Basil. As two of the certainties are not present the trust created by Basil is not legally operable.


Task 2: Agency

Is the company liable for the architect's fees?

Answer: Under the agency law regulations, the relationships between the principal and the agent are of vital importance. These are the two primary constituents of the agency. The principal can be described as the person or the entity for which and under whose instruction others ( agents) undertakes work and deal with third parties mainly for business purpose and otherwise. The agent in this aspect is described as the individual or the agent who works under the direct supervision and undertheinstruction of the principal andworks for thegeneraleconomic benefit of the principal. For legally creating relation of agent and principal it is required that:

1) The principal istheone who has gone on to hire the services of the agent for compensation or otherwise.

2) An agent can be either a natural person or it can also be a legal entity undertaking to work on behalf of the principal.

3) The agent who has been appointed is required to undertake the desired works under mutually agreed terms.

4) The working relationship between the agent and the principal is that of a fiduciary relationship and he can't be allowed to make a profit at the expense of the principal.

5) The agent in this aspect is described as the individual or the agent who works under the direct supervision and under the instruction of the principal.

As the agent is legally mandated to work for the principal and must beexpected to follow direct instructions given by the principal, the agent is thus a subordinate of the principal, for which he is acting only for undertaking some economic objectives.Hence the Principal is also expected to be held liable for acts of omissions and commissions and legally can be asked to pay for the liabilitiesincurred by the agent. However, it must be noted that ifthe agent has illegally acted and not followed the specific instructions of theprincipal then the agent would be held personally liable to thethird parties for such acts of omissions and commissions (Clarkson, 2012).

The Authorityof the agent to bind the principal for the activities undertaken by the agent is crucial. If the acts of the agent are authorized by the agents principal then the acts and its results would make sure the principal is bound to be held liable for the consequences. This shows that the principal is going to be held liable for acts of the agent if the agent is acting under specific guidelines and not violate instructions. It must be remembered that the agent's authority varies greatly for one act to another and it would be futile to think his authorities remains the same in all circumstances.

The authority of the agent can either be Express or implied authority: The authority of the agent would be deemed to be express when the same is bestowed upon the agent specified by the principal under specific instructions and for specific acts. This involves the principal asking the agent to undertake acts and the agent undertakes the activity as instructed by the principal. If the agent undertakes the act without violating the instructions and as mentioned thenthe principal is bound by the act of the agentto the eventual third parties (Kenneth W. Clarkson, 2014).

In many cases however, the instructions might not be sufficient to carry out the tasks by the agent and the agent would have to act in a reasonable manner. Further agent cab is also construed to have undertaken acts in the desired manner if the same is not prohibited by the principal separately. As the principal involved cant be present in the business meetings all the times, the agene thus to take certain decisions for competing for the contracts and which are of reasonable nature and involves rational choice(Pentony, 2013).. These activities are implied authorities provided to the agent for carrying out tasks not specifically instructed and not specially barred from undertaking (Dean, 2011).The same has been seen the case of (Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992) ). further, it must be noted that the agents implied authorities can also be reasonably derived from prevailing trade-related culture and carrying out similar acts would involve similar actions(Sweeney, 2013).


The third case involves the special signs shown by the principal to the third parties which demonstrate apparent authority enjoyed by the agent from the actions, worlds, etc. thus if through specific acts the principal has demonstrated the fact that the agent has apparent authority then the acts of the agent would bind the principal for liabilities incurred

From the case analysis, it can be observed that through the activities undertaken by Tina upon which the other directors had no objection demonstrated to the third parties involved and they formed the opinion that Tina wasauthorized to carry out the contract on behalf of the company and others involved. Susie who was the other person involved in decision making never contemplated action against Tina and thus the third parties would be perfectly correct in assuming that Tina had the necessary authority and thus Tina's actions and consequent liabilities incurred would bind the whole company (Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964).thus the company would be asked to pay the fees agreed by Tina to the architects(Dean, 2011).

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