Resulting Trusts

Hello. My name is Gary Watt. I'm a Professor in the law school at the University of Warwick and the author of books for OUP on the subjects of trusts and equity. And I'm doing these very short videos just to give you a taste as to my method. I like to teach using pictures, and my books often use metaphors and images to help you understand the complex subject and complex concepts. I do think that a picture speaks louder than a thousand words.

So, I'm going to talk about another topic now. If you look at the other videos, you'll see we've covered generalities, equity, and the trust. And I want to talk about a specific concept: the resulting trust. To understand the resulting trust, the best clue is actually in the word: resulting means to jump back. You can think of somersaulting; that has the same root as resulting. It's jumping, it's a jumping trust, which is a fascinating idea to get us started. And I like to teach the concept of the resulting trust by using a bouncy ball, known scientifically as a resilient ball, because it bounces, or jumps, back.

So, how can a bouncing ball help us understand this complex legal equitable concept? Well, most people, when they make trusts, if they are thinking about trust, they are doing it expressly. But a resulting trust happens sort of non-expressly or accidentally sometimes—sometimes we say automatically. So we're starting to see, I think, a clue in the automatic bouncing back of a bouncing ball.

So, a resulting trust is not something we necessarily plan. An example would be this: if I give you some money and say, ‘I'd like you to go shopping, to the high street shop Woolworths. Here is some money, please buy me a toaster.’ What will happen? You will go away, you will go to the high street, and you'll realize that Woolworths, the high street store, no longer exists. Now you've got my money, but you cannot carry out my contract, my instruction, my agency. So, who keeps the money? Do you keep hold of it? Well, this is where a resulting trust can provide an answer.

If I give you money and it wasn't a gift and you cannot fulfill the contract for which it was given, where is it going to go? It's not yours. The benefit cannot stay with you. The benefit must come back to me. To the whole world you look as if you're the owner of that money, but equity looks to substance not to form and says no. The benefit must bounce back to the person who put it in.