Chapter 9 Self-Test Questions

Which of the following statements are accurate?

Unconscionability can be used to explain the recognition of all constructive trusts.

Unconscionability cannot be used to explain the recognition of any constructive trusts.

Unconscionability is significant but cannot be used to explain all constructive trusts.

There is no such thing as a constructive trust.

'It is not possible to identify an exhaustive list of all the circumstances under which a constructive trust will be recognized.'

True.

False.

'Constructive trusts arise due to an absence of intent.'

True.

False.

How do constructive trusts operate?

Constructive trusts are created in different ways to express trusts, but once in existence they operate in the same way.

Constructive trusts are created in the same way as express trusts, but once in existence they operate in a different way.

Constructive trusts are created in different ways to express trusts, but once in existence they operate in a different way.

Constructive trusts are created in the same way as express trusts, and once in existence they operate in the same way.

'The remedial constructive trust and the use of the constructive trust as a remedy are virtually the same, both involving judicial discretion.'

True.

False.

How is the 'liability to account as a constructive trustee' characterized?

The liability is personal.

The liability is proprietary.

The liability is a mixture of personal and proprietary.

The nature of the liability is unclear.

'There are no circumstances in which a constructive trust arises in relation to the intentions of the parties.'

True.

False.

In Westdeutsche, why did Lord Browne-Wilkinson think Goulding J was wrong in Chase Manhattan Bank to conclude that the claimant had an equitable proprietary interest in the money from the moment it was received by the defendant?

The claimant retained the legal title to the money.

The payment of money by mistake is not sufficient to create an equitable interest.

A constructive trust would arise only once the defendant's conscience was bound by knowledge of the mistaken receipt.

The claimant had an equitable proprietary interest prior to the mistaken transfer of the money as when individuals own property outright they hold both the legal and the equitable title.

What is the problem with recognizing a thief as holding the stolen property on constructive trust?

The thief does not hold the legal title; they have only an equitable interest in the stolen property.

The thief does not hold the legal title; they have only a possessory title to the stolen property.

The trust is better characterized as a resulting trust due to the victim's absence of intent.

The victim has only a personal claim in unjust enrichment.

What is the test for determining whether a constructive trust will arise?
There might be more than one correct answer.

Objective knowledge of the defendant.

Actual unconscionable conduct.

Potential unconscionable conduct.

Objective dishonesty of the defendant.

'The cases are clear that the trust arising on the rescission of a contract is a constructive trust.'

True.

False.

How does the constructive trust between vendor and purchaser, which arises following a contract for the sale of land, differ to other constructive trusts?

It is not founded on unconscionability.

It is actually a resulting trust.

The trustee automatically has an interest in the trust property.

The beneficiary does not have an interest in the trust property.

What is the purpose of the remedial constructive trust?

The remedial constructive trust arises in relation to pre-existing proprietary rights.

The remedial constructive trust creates proprietary rights.

The remedial constructive trust does not relate to proprietary rights.

The remedial constructive trust concerns personal rights.

'As Equity is founded on flexibility and does not use rules in the same way as the Common Law, it is only logical that we should recognize the remedial constructive trust.'

True.

False.

Which of the following are concerns with recognizing the remedial constructive trust?

Insolvency concerns.

Unfettered discretion.

Lack of principle.

Creation of property rights should be a matter for the courts.

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