Mistake Flashcards
Q1. In Jersey trust law, what is the general principle allowing a trust or transfer to be set aside for “mistake”?
A1. A trust or disposition can be declared void or voidable if the settlor or power-holder made a serious mistake inducing the transaction. The court can unwind it if it would be unjust otherwise.
Q2. How does Article 47B(2) define “mistake”?
A2. It includes any error about:
Fact (existing before or at the time),
Law (including foreign law),
The effect, consequences, or advantages of the transfer or power-exercise.
Q3. Does the Jersey law concept of “erreur” in contract apply to these trust-law mistakes?
A3. No. Article 47C explicitly says the customary law concept of erreur (in contracts) does not apply here.
Q4. Under Article 47E, what three elements must be shown to void a transfer into a trust for mistake?
A4.
A mistake about the disposition,
“But for” that mistake, it wouldn’t have happened,
The mistake is so serious it’s just for the court to set the transfer as
Q5. Can a trustee or power-holder also have a transaction set aside for mistake?
A5. Yes, under Article 47G, the same test applies if someone exercising a power over the trust mistakenly did so and would not have done it but for the error.
Q6. What does Article 11(2)(b)(i) deal with, and how does it differ from Article 47E?
A6. Article 11 invalidates the entire trust if it’s established by mistake. Articles 47E/G let the court set aside specific dispositions or power-exercises within an otherwise valid trust. Q6. What does Article 11(2)(b)(i) deal with, and how does it differ from Article 47E?
Q7. What two main points must be proved for a mistake to justify setting aside a disposition?
A7.
Causation (“but for” the error, the person wouldn’t have acted),
Seriousness (the mistake is major enough that it’s unjust not to grant relief).
Q8. Does a misunderstanding of the tax consequences count as a valid mistake?
A8. Yes. Misapprehending or being unaware of a significant tax liability often qualifies, especially if the person wouldn’t have proceeded had they known.
Q9. Is it still a mistake if the settlor knew there was some tax risk and took a gamble?
A9. Typically no. Courts are reluctant to help someone who knowingly ran a risk. By contrast, genuine unawareness or misadvice about the risk can justify relief.
Q10. Do Jersey courts follow English distinctions like “incorrect tacit assumption” vs. “mere causative ignorance”?
A10. No. Jersey courts reject those narrow categories; the broad statutory definition of mistake suffices under Articles 47B-E.
Q11. Can the court also void other, connected documents in a broader scheme involving the trust?
A11. Yes, if they are part of one overall transaction. The court may set aside multiple linked instruments if they all stem from the same fundamental mistake.
Q12. Once a serious mistake is proven, can the court partially or wholly unwind the transaction?
A12. Yes. Under Articles 47E/G, the court has flexibility to declare it void ab initio or voidable to whatever extent is just, considering impacts on other parties.
Q13. Why do lawyers often invoke both Article 11 and Article 47E in mistake cases?
A13. Because if the only property in the trust is set aside under 47E, the trust effectively collapses anyway. Similarly, an invalid trust under Article 11 accomplishes the same result.
Q14. Summarize the essentials of mistake relief under Jersey law.
A14.
Serious, causative mistake = ground to set aside.
Applies to transfers (Article 47E) and power-exercises (Article 47G).
Broad scope: tax or legal errors count.
Courts can grant flexible remedies and have discretion to consider fairness for all parties.
