Law of Business Organisation: Types of Agency and Trust Creation

Business Law
Assignment
Running Head: BUSINESS LAW 0
Student’s Name

LAW OF BUSINESS ORGANISATION 1
Contents
Assessment Task 1...........................................................................................................................2
Assessment Task 2...........................................................................................................................6
References......................................................................................................................................10

LAW OF BUSINESS ORGANISATION 2
Assessment Task 1
In the emerging era of economy, there are various kinds of business structures. Trust is one of
them. As the name implies, trust is a type of obligation to work in favour and good faith of
others. As similar to other business structures, in trust also there are some parties, which are
described and discussed in the below analysis. Along with this there are some basic elements,
which are required to create a trust (Australian Government, 2018).
Whenever a trust is created, there must be three parties such as settlor, trustee and beneficiaries.
Sometimes trustee and beneficiary can be the same person, but trustee cannot be the sole
beneficiary in such case. He/she can hold interest in trust property along with other beneficiaries
(Legalvision, 2016)
Majorly there are two types of trust. One is implied and another one is expressed. When due to
requirement of law or nature of relationship among parties, a trust come into effect then the same
is known as “Implied Trust”. In such type of trust, there is no expression involved for creating a
trust (The Quinn Group, 2018); whereas on the other side, when a person either by words or
his/her actions expresses their intention to create a trust, such trust is treated as “Expressed
Trust” (Justia, 2018). It may be state that express trust, does not arise by law or facts or due to
the reason of nature of relationship in between or among parties. In such cases there must be a
certainty of intention.
The person who creates or establishes a trust is known as settlor. So in an express trust, settlor
must show his/her intention to create such trust. Here, it is important to mention that such
intention needs not to be in written, it can be verbal or it can be show by merely expressions.

LAW OF BUSINESS ORGANISATION 3
Such certainty of intention is need to be confirm so that it can be assure that settlor wants to put
some obligation on trustee in respect of trust property for the benefits of beneficiaries. In order to
be valid, a trust needs to fulfil three certainties in total. In conjunction to certainty of intention,
there are two more types of certainties which need to be ensuring, then only a trust can be held
valid in the eyes of law. These certainties are Certainty of Subject Matter and Certainty of
Objects (Findlaw Australia, 2018).
Here, subject matter is property of the trust, whereas objects reflect the motive and purpose for
which trust has been created. In certainty of subject matter, this is important to know that what
exactly trust property is and up to which extend each beneficiary is held his/her interest in it
(CraddockMurrayNeumann Lawyers, 2014a). In a trust, certainty of subject matter has high
importance. A trustee cannot properly perform his/her duty until, he/she is updated with the trust
property. Trust property must be certain and specific in nature instead general in nature. For
instance, if car is a trust property, it must be clear that which car exactly is this. Here it respect of
subject matter of trust, this is to mention that this can be anything but must not be illegal element
(Cambridge University Press, 2012).
Similarly, Certainty of object is also an important element. It is basic necessity to know that for
what reason a trust has established or in whose favour; a trustee need to deliver his/her duty is an
important aspect (Pont, 2011). There can be a number of beneficiaries in a single trust, but a
trustee must know that which beneficiary has how much interest in trust property. Object defines
the roles and responsibilities of trustee. The same also decide entitlement of beneficiaries.
In the given case, a person named Basil has declared himself as trustee in respect of 5% of total
issued share capital of Basil Electrical Co Pty Ltd. Total shares of the company were 1000 in