BPP GDL Study Notes: Chapter 1

Question 1

Between the 17th and 19th centuries, how did equity and the common law systems relate to each other?

Answer 1

equity did not act as a complete system of law but rather supplemented the common law by filling in the gaps in a too rigid system.

Question 2

What new procedure did the equity system develop before the C19?

Answer 2

the use of subpoenas, forcing people to come to court (and sometimes bring specific documents) or forcing them to answer specific interrogatories (requests for further information)

Question 3

What new remedies did the equity system develop before the C19th?

Answer 3

SPIRR

• Specific Performance (eg of contracts for the sale of land or other unique items)
• Injunctions restraining defendants from certain activities (or occasionally compelling them to perform certain acts)
• Rescission of a contract or deed (eg for fraud or mistake or undue influence)
• Rectification of a document not recording what had been agreed

Question 4

What new rights did the equity system develop before the C19th?

Answer 4

• equity of redemption: protected borrowers from unscrupulous mortgage lenders
• recognised equitable mortgages, leases or easements when created for value but without proper legal formalities
• rights under trusts: protected beneficiaries against unscrupulous trustees, and protected donees from those who would otherwise claim the relevant property from the beneficiary.

Question 5

What is someone who transfers property to someone else called?

Answer 5

a feoffer

Question 6

If property is transferred to someone to treat as their own until someone else comes of age, what is the person holding the land called?

Answer 6

a feoffee

Question 7

S transfers land to T to be used for the benefit of B. How do common law and equity law view this situation? How would you describe each person’s relationship with the land?

Answer 7

• Common law treats T as the owner and B as having no rights.
• Equity recognises B’s rights and would compel T to hold the land for the benefit of B.
• T is the owner at law”and has “legal ownership”
• B is the owner in equity and has “equitable (or ‘beneficial’) ownership”.

Question 8

How would equity laws view feoffees using land until another party comes of age?

Answer 8

as the legal owner with exclusive rights to bring actions as landlord in the common law courts. It would also hold the feoffees to hold the land for the benefit of the future beneficiary.

Question 9

What is equitable or beneficial ownership?

Answer 9

Where a person will inherit the ownership of a property when they come of age or upon another party’s death.

Question 10

If a trustee sells a house that is trust property, uses the money to buy a different home and then declares bankruptcy, what happens?

Answer 10

As the trustee never owned the original house beneficially, so the new house never belonged beneficially to him and was instead the property of the beneficiaries.

Question 11

What happens if a trustee gives away trust property to someone else in an improper fashion?

Answer 11

That person, upon being made aware of the situation, would have to transfer the property back to the beneficiaries or to a replacement trustee for them.

Question 12

If equity recognises the holder of property in trust for someone else as the owner of legal title of property, what does it recognise the benefactors as?

Answer 12

the legal beneficial owner.

Question 13

When the beneficiary title is vested in persons other than the sole legal owner, what do those persons have in the property?

Answer 13

equitable interests in the trust property as beneficiaries.

Question 14

If T holds property on trust for A and B (or for A for life, remainder to B absolutely), what powers do A and B have over the property?

Answer 14

Between them they are the absolute beneficial owners of the property and can therefore direct T as to what to do with it eg transfer it to A and B or X etc

Question 15

Essentially, what is a trust a method of doing?

Answer 15

dividing ownership of a property by separating the duties and obligations in relation to managing the property from the benefits and rights of enjoyment of the property.

Question 16

What role does the trustee perform?

Answer 16

they take over the duties and obligations of managing the property in trust

Question 17

What does the beneficiary gain?

Answer 17

the benefits and rights of enjoyment of the property

Question 18

What interest does the beneficiary have in a trust property?

Answer 18

an equitable or beneficial interest.

Question 19

What interest does a sole absolutely entitled legal owner of a property have? What interest do they not have?

Answer 19

A beneficial interest only - not an equitable interest. An equitable interest requires one person to have a right and another to have a corresponding duty.

Question 20

What obligation is imposed on the conscience of the trustee?

Answer 20

the obligation to carry out the terms of the trust for the benefit of the beneficiary

Question 21

What is the “settlor”

Answer 21

the person who creates the trust by transferring property to the trustee.

Question 22

What is a “testator”?

Answer 22

Someone who creates a testamentary trust.

Question 23

What are the main categories of property?

Answer 23

1) realty and personalty
2) land and pure personalty
3) chattels real and chattels personal
4) tangible and intangible property

Question 24

What is “realty”?

Answer 24

“real property” ie freehold land. Develops from a “real action” ie an action to recover land.

Question 25

What is “personalty”?

Answer 25

personal property - all property other than freehold land. Technically, this includes leasehold land.

Question 26

What are leases technically known as? Why?

Answer 26

“chattels real.” Because originally only personal remedies were available to leaseholders as opposed to the right of freehold owners to recover the land itself through a “real” action. Leased land was therefore a hybrid of personalty (“chattel”) and land (“real”)

Question 27

What does “land” refer to?

Answer 27

freeholds and leaseholds

Question 28

What word shouldn’t be used to refer to land and its fixtures? Why?

Answer 28

“property”. Many particular rules apply to land but not to other forms of property.

Question 29

What is “pure personalty”?

Answer 29

• all personal property other than leaseholds (which are technically a part of “personalty”)
• divided into “choses in possession,” and “choses in action.”

Question 30

What are “choses in possession”? Give examples.

Answer 30

tangible personal property. eg furniture, books, cars etc. Because they are tangible it is possible to assert rights over them by physical “possession”.

Question 31

What are “choses in action”? Give examples.

Answer 31

intangible personal property. eg shares, cheques, insurance policies and IP. Impossible to assert your rights to them through physical possession, so rights have to be asserted through taking “action” in court

Question 32

What are tangible or intangible rights over land?

Answer 32

corporeal hereditamants (the land itself and the things attached to it or growing in it etc) and incorporeal hereditaments (intangible rights eg mortgages, easements, profits etc).

Question 33

What are the differences between trust law and contract law?

Answer 33

• contracts are between two or more parties, whereas a trust will often arise from a unilateral decision by the settlor. They can be created without any knowledge on the behalf of the beneficiary.
• In contract law enforceable legal rights are only conferred on parties to the contract, with a few exceptions. Under trust law beneficiaries always obtain enforceable rights against the trustee, regardless of whether they had a hand in making the trust.
• contractual rights are personal so the remedy for a breach is damages. Beneficiaries in trusts have the right to physically claim back misapplied trust property.

Question 34

What are the differences between the beneficiary to a will and the beneficiary to a trust?

Answer 34

• beneficiaries to a trust have enforceable rights as soon as the trust is created, but beneficiaries under an estate (ie to a will) have no right to the deceased’s property until the administration of the estate is complete
• personal representatives (ie the executors of a will) have a much shorter responsibility than trustees.

Question 35

Give four examples of how trusts are used today.

Answer 35

• pension schemes
• investments
• shared lands
• charitable trusts

Question 36

How are trusts often used in terms of loaning money to an unstable party?

Answer 36

Lenders use trusts to ensure that if the other party declares bankruptcy they will have first priority to reclaim their money, ahead of other creditors.

Question 37

What is the main advantage for a settlor in using a trust to give a gift?

Answer 37

the settlor can control when and how the beneficiary will receive the gift in a way that just giving them it would not.

Question 38

Give three advantages of using trusts in everyday life.

Answer 38

1) often lower taxation
2) provides security and easier to get money back if the trustee becomes insolvent
3) allows more competent people to beneficially control property belonging to less competent people

Question 39

What is a gift?

Answer 39

a gratuitous transfer of property

Question 40

What is a bequest?

Answer 40

a gift of personalty in a will

Question 41

What is a legacy?

Answer 41

a gift of personalty in a will

Question 42

What is a devise?

Answer 42

a gift of freehold land in a will

Question 43

What is a will?

Answer 43

a document disposing of the estate of a deceased person and which takes effect on that person’s death.

Question 44

What are personal representatives?

Answer 44

persons who administer the estate of a deceased person

Question 45

What is an executor?

Answer 45

A personal representative appointed by will

Question 46

What is an administrator in the context of wills?

Answer 46

A personal representative where a person dies without a will or without effectively appointing executors in his will

Question 47

What is a testator? What is the other form of this?

Answer 47

a person who makes a will. A woman is a testatrix

Question 48

What is intestacy?

Answer 48

the situation of someone dying without a will

Question 49

What is a testamentary gift?

Answer 49

a gift by will

Question 50

What is an inter vivos gift?

Answer 50

a lifetime gift

Question 51

What is a deed?

Answer 51

a written document that is stated to be a deed and has been signed, sealed and delivered.