EQUITY AND TRUST

Equity and Trust

Law of Certainty in Express Trusts

Contracts

A contract is an agreement between two or more parties. Contracts usually consist of an exchange of promises of future performance; for example, one party promises to paint the other party's house, while the other party promises to pay a certain sum on completion.

The essence of contract is free exchange—each party freely decides what to promise and what to demand in return. Freedom of contract promotes mutually beneficial exchanges by willing parties. In interpreting ambiguous contract terms, courts attempt to determine the intent of the parties to carry out their will (Bayles, 2007, 33).

The question at the heart of contract law is, “Why does society enforce promises?” According to libertarians, the key is free choice: The purpose of the state is to secure individual liberty, and contracts embody the free choice of the parties. Others answer that contract is a form of economic exchange in a free market. Because contracts are free exchanges, each party to a contract believes it has benefited by the exchange—has gotten more than it has given—and, therefore, contracts increase the sum of society's wealth. Indeed, because the enforcement of contracts makes free exchange and, hence, business transactions possible, it is one of the law's most important functions. (Emery 1982 551)

In an influential work, Charles Fried argued that the promise principle is the moral basis of contract law. A person makes a promise to induce the promise to rely on it, thereby invoking the societal convention under which promises are binding. The utilitarian argues that the ability to rely on promises increases social utility by increasing free exchange. Fried, however, takes a Kantian approach; he asserts that respect for the other party to the contract demands that we fulfil the expectations our promise has created. (Parkinson 2002 102)

Three types of Certainties in the development of express trusts

With reference to the preparation of the law of certainty, there are three basic parameters that individuals need to consider while building and establishing an express trust. These are certainty of intention, subject matter and finally the object, with which an express trust will come into existence. (Parkinson 2002 102)

Certainty of Intention

Being a part of the law of certainty, one of the most important and primary facets of this law is the certainty of intention. Intention implies the will or wit with which an express trust is being built or coined. The intention needs to be in perfect alignment with all rules, regulations, policies and procedures need to be intended and provided for the purpose and objective of proper and effective establishment. In addition to this, the intention of both parties needs to be on clear in terms of all requirements, which need to be made. Use of precatory words that are being used in the establishment of the express trust, if used, can identify the presence of clear intentions. (Hardcastle 1990 24)

The second most important factor which needs to be discussed is the certainty of subject matter, which is ...