Deck 5: Formalities

Question 1

What is the following statements is correct about the operation of s.53(1)(b) in relation to trusts an estate or interest in land?

A) A transaction that is not made or evidenced in writing is void.
B) A declaration of a trust of land will only be valid if the written evidence contains all the material terms of the trust.
C) A transaction that is not made or evidenced in writing is voidable.
D) The declaration of the trust needs to be made in writing to be effective.

Answer 1

B

Question 2

Which of the following statements most accurately defines what is meant by a 'disposition' of an equitable interest, which is therefore required to be effected in writing?

A) Any transfer of a beneficial interest to another in any way whatsoever.
B) The word should be given its natural meaning, although there are some exceptions to this.
C) An assignment of a beneficial interest to another.
D) The term is defined in the Law of Property Act 1925 and should therefore follow the statutory definition.

Answer 2

B

Question 3

What is the impact of failing to effect a disposition in writing under s.53(1)(c) of a subsisting equitable interest?

A) The transaction is void.
B) The transaction is unenforceable.
C) The transaction is voidable.
D) The transaction is partially effective, but has to be completed later by writing.

Answer 3

A , B

Question 4

Why has the requirement of a written transfer to effect a disposition of a subsisting equitable interest caused such difficulties over the years?

A) Transferees were often simply unaware of the requirement, and made oral transactions.
B) Transactions involving equitable interests are complicated, so it was often difficult to effect a written disposition accurately.
C) Transactions involving beneficial interests are prone to fraud, so that many of the cases that came before court involved complex issues of fraudulent conduct.
D) Transferees were seeking to avoid paying tax on a written document of transfer by seeking to effect dispositions orally.

Question 5

Marlene entered into an oral agreement to transfer her beneficial interest in shares under an existing trust to Vicky. Which of the following statements is true?

A) Marlene has validly transferred her beneficial interest to Vicky, as shares do not require any special formalities to be transferred.
B) Marlene has failed to validly transfer her beneficial interest in the shares to Vicky, as the transfer of shares requires a properly executed share transfer document.
C) Marlene will have validly transferred her beneficial interest in the shares once she executes the agreement to transfer them to Vicky.
D) Marlene has failed to validly transfer her beneficial interest in the shares to Vicky, as the transfer was attempted orally.

Question 6

Lionel orally directed his trustees to hold his beneficial interest in some chattels on trust for his brother, Simon. The trustees should:

A) Hold the chattels on trust for Simon.
B) Continue to hold the chattels on trust for Lionel.
C) Transfer the beneficial interest to Simon, so that he holds the chattels as outright owner.
D) Hold the chattels on trust for both Lionel and Simon, as they are both now beneficially entitled to the chattels.

Question 7

Lionel orally directed his trustees to hold his beneficial interest in some chattels on trust for his brother, Simon. Lionel then evidenced the transaction in writing. The trustees should:

A) Hold the chattels on trust for Simon.
B) Continue to hold the chattels on trust for Lionel.
C) Transfer the legal title to the chattels to Simon.
D) Hold the chattels on trust for both Lionel and Simon, as they are both now beneficially entitled to the chattels.

Question 8

Which of the following statements best states the policy behind the need for a 'disposition' of a subsisting equitable interest to be in writing?

A) To establish good practice in dealing with intangible assets like beneficial interests.
B) To prevent fraud in hidden oral transactions.
C) To promote certainty in dealing with trust property.
D) Equity expects those who seeks its help to act sensibly, and evidence any transactions in writing.

Question 9

Martin was made a beneficiary of some shares under a trust. Martin issued a written statement to his trustees that he wished to transfer the whole of his interest under the trust to his sister, Ethel. The trustees have validly assigned the legal title to Ethel. Which of the following statements is correct in relation to the ownership of the shares?

A) Ethel is legally but not beneficially entitled.
B) Ethel is entitled as outright owner to the shares, holding both the legal and equitable interests.
C) Ethel has the legal interest in the shares, but the trustees hold the equitable interest on trust for her.
D) Ethel has the legal interest in the shares, but the trustees hold the equitable interest on trust for Martin.

Question 10

Marshall entered into an oral contract with his brother Harry to transfer his beneficial interest in a trust of a collection of Picasso paintings to Harry in exchange for a payment of £800,000. The payment was duly made. Marshall has:

A) Transferred part of his interest in the shares to Harry, but must complete the transaction in writing to transfer the remainder of his beneficial interest.
B) Validly transferred his beneficial interest in the shares to Harry.
C) Failed to transfer any of his beneficial interest to Harry, as he has only entered into an oral agreement.
D) Can be forced to transfer his beneficial interest, as Harry has paid under the oral contract.