THE LAW OF TRUST 365
of the property as a result of the trust notwithstanding he is under an obligation to deal with the property in a certain specified manner.
Trust distinguished from Gift
Ordinary contract differs from a trust. Contract which confers a benefit on a third party closely resembles a trust.
There is a similarity between a Trust and a Gift inasmuch as in both the transfer results in ownership. The Trustee and the Donee both become owners of the property.
But there is a difference between the two. In a gift the donee is free to deal with the property in any way he likes. In a Trust the trustee is under an obligation to use the property in a particular manner and for a particular purpose.
Trust distinguished from Contract
- That there is a distinction between trust and contract is evident from the existence of differing legal consequences attached to a trust and to a contract:
(i) A trust, if executed, may be enforced by a beneficiary who is not a party to it whilst only the actual parties to a contract can, as a rule, sue upon it.
(ii) An executed voluntary trust is fully enforceable while a contract lacking consideration is not.
- However, the determination of the question whether a given set of facts gives rise to a trust or a contract is not easy. What is the test ?
Keetan—pp. 5-6 (1919) A. C. 801 38 Bom. S. R. 610.
(1926) A. C. 108
It is a question of intention.
Trust distinguished from Power
The term “power” in its widest sense includes every authority given to a person (called the donee of the power) to act on behalf of or exercise rights belonging to the person giving him the authority (called the donor of the power).
Powers are of many kinds e.g.
(i) The common law power of an agent to act for his principal, given sometimes by a formal “power of attorney”.