vustudents
08-17-2012, 08:54 PM
2. Relevant Provisions:
Sec. 47 trusts act.
3. General rule:
It is a general rule that a trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger.
(a) Exceptions:
Following are exceptions to the general rule.
(i) Delegation is provided by the trust deed:
When the author of the trust has himself empowered the trustee to delegate his office or any of his duties there arises no question of any illegality or breach of trust by such delegation and therefor there will be no liability on the trustee for the consequential loss, if any to the trust property.
(ii) Delegation in the regular course of business:
Delegation may be made when there is moral or legal necessity. a trust can delegate his duties in such cases where a man of ordinary prudence mortgaging his own matters would do so in the ordinary course of business.
(iii) Delegation is necessary:
Where the delegation necessary or practically unavoidable, the trustee may justify their administration of the estate, through the agency of other.
(iv) It is consented to by the competent beneficiary:
Where the delegation is made with the consent of the beneficiary who is competent to contract, there will be no liability on the trustee for any loss caused to the trust property.
Conditions:
(i) Beneficiary must be competent to contract.
(ii) Beneficiary must give his consent to the trustee.
4. Case law:
Speight V/S Gaunt (1883 9 App. Cas 1)
It was held that delegation of power by trustee is permissible if he shows reasonable necessary in the circumstances or his delegation is in accordance with the ordinary business practise.
5. Liability of a trustee:
I. In case of proper delegation:
If delegation by the trustee is proper, he is no liable.
II. In case of not proper delegation:
If delegation by the trustee, is not proper he is liable. for any consequential loss to the trust property.
6. Important factors for proper delegation:
A proper delegation must pass through the following tests.
(i) Circumstances must justify the delegation:
Circumstances must justify the delegation. it must be allowed where a moral or legal necessity is required.
(ii) Behaviour of prudent person:
Trustee in employing an agent must behave as a prudent person.
(iii) Agent employed by trustee must be proper:
Agent employed by the trustee should be proper and fit for the job. he should be competent in his profession.
(iv) Proper period:
Delegation should be for a proper time and it must not last for a period longer than required.
7. Conclusion:
To conclude I can say that, a trustee is not allowed to delegate his duties or office to a stranger or an agent. there are some exceptional circumstances in which a trustee may lawfully delegate his office or duties but a trustee delegation his duties in contravention of the exceptional provisions will be liable for the breach of the trust and liable for any consequential loss or damage to the trust property.
Sec. 47 trusts act.
3. General rule:
It is a general rule that a trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger.
(a) Exceptions:
Following are exceptions to the general rule.
(i) Delegation is provided by the trust deed:
When the author of the trust has himself empowered the trustee to delegate his office or any of his duties there arises no question of any illegality or breach of trust by such delegation and therefor there will be no liability on the trustee for the consequential loss, if any to the trust property.
(ii) Delegation in the regular course of business:
Delegation may be made when there is moral or legal necessity. a trust can delegate his duties in such cases where a man of ordinary prudence mortgaging his own matters would do so in the ordinary course of business.
(iii) Delegation is necessary:
Where the delegation necessary or practically unavoidable, the trustee may justify their administration of the estate, through the agency of other.
(iv) It is consented to by the competent beneficiary:
Where the delegation is made with the consent of the beneficiary who is competent to contract, there will be no liability on the trustee for any loss caused to the trust property.
Conditions:
(i) Beneficiary must be competent to contract.
(ii) Beneficiary must give his consent to the trustee.
4. Case law:
Speight V/S Gaunt (1883 9 App. Cas 1)
It was held that delegation of power by trustee is permissible if he shows reasonable necessary in the circumstances or his delegation is in accordance with the ordinary business practise.
5. Liability of a trustee:
I. In case of proper delegation:
If delegation by the trustee is proper, he is no liable.
II. In case of not proper delegation:
If delegation by the trustee, is not proper he is liable. for any consequential loss to the trust property.
6. Important factors for proper delegation:
A proper delegation must pass through the following tests.
(i) Circumstances must justify the delegation:
Circumstances must justify the delegation. it must be allowed where a moral or legal necessity is required.
(ii) Behaviour of prudent person:
Trustee in employing an agent must behave as a prudent person.
(iii) Agent employed by trustee must be proper:
Agent employed by the trustee should be proper and fit for the job. he should be competent in his profession.
(iv) Proper period:
Delegation should be for a proper time and it must not last for a period longer than required.
7. Conclusion:
To conclude I can say that, a trustee is not allowed to delegate his duties or office to a stranger or an agent. there are some exceptional circumstances in which a trustee may lawfully delegate his office or duties but a trustee delegation his duties in contravention of the exceptional provisions will be liable for the breach of the trust and liable for any consequential loss or damage to the trust property.