Discussion paper on liability of trustees to third parties

This discussion paper deals with the contractual, delictual and other liability of trustees to third parties.

It is the third discussion paper to be published in Phase 2 of the Commission's review of trust law.

It covers the concept of dual patrimony. That is, that when a person becomes a trustee he acquires an additional patrimony to his private patrimony - a trust patrimony.

The private patrimony is the aggregate of personal legal rights and liabilities.

The trust patrimony consists of the trust property which is owned by the trustee and any obligations incurred in the proper administration of the trust.

If, as will usually be the case, there are two or more trustees, the trust patrimony is owned by them jointly.

Although owned by the same person the trustee's private patrimony is a separate legal entity from the trustee's trust patrimony.The paper includes discussion of: liability of trustees to third parties with whom they have contracted; ultra vires contracts, viz contracts that the trustees have no power to enter into or contracts that are at variance with the terms and purposes of the trust; execution of deeds by trustees; delictual and similar liabilities of trustees; and, expenses of civil litigation where trustees are unsuccessful pursuers or defenders.