Chapter 7 Self-Test Questions

Why was the trust in Re Denley's Trust Deed valid?

It directly or indirectly benefited individuals.

It was a charitable trust.

It fulfilled the beneficiary principle.

It was not valid.

'Trustees of trusts of imperfect obligations are obliged to perform the purpose of the trust.'

True.

False.

What rules apply to the duration of trusts of an imperfect obligation?

The statutory rule on perpetuities.

The common law rule on the duration of trusts.

There are no rules that apply to the duration of trusts of an imperfect obligation.

Trusts of an imperfect obligation are limited in duration to twenty years.

'The creation of a non-charitable purpose trust is the only mechanism available which allows property to be transferred to another for non-charitable purposes.'

True.

False.

If a donor gives property to a donee subject to a power that the property should be used for a non-charitable purpose, what is the consequence if the donee fails to use the property for that purpose?

There is a moral obligation to use the property for the designated purpose, but there will be no consequences if the donee fails to do so, as there is no legal obligation.

The donee is free to use the property as they wish. It is their choice whether to respect the intention of the donor.

The donee would be personally liable to compensate the donor for breaching their expectations.

The gift would lapse, and the gift over would apply.

It is possible to give a gift to a donee who is appointed as an agent for the donor and has authority to apply the gift for a non-charitable purpose. If the agent fails to apply the gift for the designated purpose, what is the consequence?

The property is returned to the donor.

The property is held on resulting trust for the donor.

The agent is liable for breach of fiduciary duty.

The agent is liable for theft.

What is an unincorporated association?

A company which has lost its legal personality.

Two or more persons bound together for business purposes.

Two more persons bound together by identifiable rules for the purpose of making a profit.

Two or more persons bound together by identifiable rules for non-profit-making purposes.

Property appears to be held on charitable trust for an unincorporated association. The association has a rule that, on dissolution, the property will be divided between the members. What is the consequence on the charitable trust?

The charitable trust is valid until dissolution.

The charitable trust is void because the purpose is not exclusively charitable.

The charitable trust is void because it is not possible for property to be held on charitable trust for unincorporated associations.

The charitable trust is valid and will be applied cy-près on dissolution.

There might be circumstances under which property is held on trust for the purposes of an unincorporated association, even though those purposes are not charitable. Why?

There is a public benefit in encouraging people to join societies so trusts for unincorporated associations will be presumed valid as they are enforced by the public.

As unincorporated associations are not-for-profit, they qualify as charitable as they are not commercial and probably benefit the public in some capacity.

Unincorporated associations are exceptions to the rule against non-charitable purpose trusts.

If the trust is for the direct or indirect benefit of the members then it will be valid.

'A trust for the members subject to their contractual rights is preferable to a trust for the members at the time of the settlement because it prevents members severing their own interests and maintaining an interest even if they are no longer a member of the association.'

True.

False.

If property is held by an unincorporated association on the basis of contract-holding theory, then how are the assets divided upon the dissolution of the unincorporated association?

The assets are distributed among the members in relation to their rights at the time of dissolution.

The assets are held on resulting trust for all present members.

The assets are distributed among all members—both former and present.

The assets are transferred to the Crown.

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