Chapter 11 Multiple choice questions

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. Which of the following transactions is governed by the "fair-dealing rule"?

The purchase by a trustee of a beneficiary's beneficial interest. correct incorrect

The purchase by a trustee of property owned by another trustee. correct incorrect

The purchase by a trustee of property owned by the trust. correct incorrect

The purchase by a beneficiary of property owned by another beneficiary. correct incorrect

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. Which of the following best summarises the self-dealing rule?

If a trustee sells the trust property to himself the sale is voidable by the other trustees ex debito justitiae, however fair the transaction. correct incorrect

If a trustee sells the trust property to himself the sale is voidable by any beneficiary ex debito justitiae, however fair the transaction. correct incorrect

If a trustee purchases trust property from a beneficiary, the sale is voidable by any other beneficiary ex debito justitiae, however fair the transaction. correct incorrect

If a trustee sells the trust property to himself the sale is voidable by any beneficiary ex debito justitiae, unless the transaction was a fair one. correct incorrect

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. Which of the following statements accurately summarises the trustees' standard of care?

The duty of the trustee is to take more care than an ordinary prudent man of business would take. correct incorrect

The duty of the trustee is to take such care as an ordinary prudent man of business would take if acting when his own affairs. correct incorrect

The duty of the trustee is to take such care as an ordinary prudent man of business would take if he were minded to make an investment for the benefit of other people for whom he felt morally obliged to provide. correct incorrect

The duty of the trustee is to take such care as an experienced man of business would take if he were minded to make an investment for the benefit of other people for whom he felt morally obliged to provide. correct incorrect

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. Which of the following exemption clauses would certainly be ineffective in law?

A clause purporting to excuse the trustees from liability for losses caused by their negligence. correct incorrect

A clause providing that the trustees shall not be liable for all errors, omissions, or neglect of diligence. correct incorrect

A clause purporting to excuse the trustees from all liability apart from that which arise from their own actual fraud. correct incorrect

A clause purporting to excuse the trustees from liability for deliberate wrongdoing. correct incorrect

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. Which of the following is a dispositive discretion?

The trustees' choice to delegate trust functions to agents. correct incorrect

The trustees' choice as to how best to invest the trust property. correct incorrect

The allocation of income and capital under discretionary trusts. correct incorrect

The trustees' decision to sell trust property and reinvest the proceeds. correct incorrect

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. What is the key principle that will guide the court when considering a claim by beneficiaries for disclosure of a non-binding letter of wishes given to their trustees by the settlor?

To treat the wish letter as trust property belonging to the beneficiaries. correct incorrect

To protect the trustees' right to privacy. correct incorrect

To treat the question of disclosure as one subject to a broad discretion. correct incorrect

To respect the settlor's desire for privacy. correct incorrect

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. The _____________ requires that there should be full disclosure of the directors' interests (ss 177, 182), and it imposes a duty to avoid actual or potential conflicts between the directors' interests and those of the company (s.175), but s.175 does not apply to directors' transactions with the company and in relation to other transactions it permits directors of private companies to authorize conflicts with the interests of the company unless the company's constitution expressly prohibits the activity in question. Identify the missing statute.

Companies Act 2006 correct incorrect

Companies Act 1956 correct incorrect

Companies Act 1985 correct incorrect

Companies Act 2014 correct incorrect

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. To what duty was Millett LJ referring in Bristol and West Building Society v Mothew [1998] Ch 1 when he observed that "even if a fiduciary is properly acting for two principals with potentially conflicting interests he must act in good faith in the interests of each and must not act with the intention of furthering the interests of one principal to the prejudice of those of the other"

The no inhibition principle correct incorrect

The duty of good faith correct incorrect

The duty of care correct incorrect

The duty of fairness correct incorrect

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. In University of London v Prag [2014] EWHC 3564 the university successful defended a claim that it had breached its fiduciary duty to avoid conflict of interest. The claim alleged that the university had acted inappropriately in the way it had allocated central resources between the university as a whole and an institute of which the university was trustee. The court rejected the claim on the basis that when the trust was established it must have been intended that the institute would be funded as part of the university, so that any conflict was to that extent_______. What is the missing word?

harmless correct incorrect

authorized correct incorrect

legitimate correct incorrect

trivial correct incorrect

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. To whom does the old description "cestui que trust" refer?

Settlor correct incorrect

Testator correct incorrect

Trustee correct incorrect

Beneficiary correct incorrect