Law: Australia : Equity & Trusts - see question below - Essay Example

This was what exactly what prompted the law of equity. It provided that the trustee and the person entrusting his property are both deriving benefit from the property. A situation where X gives his house to Y on rent, in natural law, for the period of the rent, the house belongs to Y and he may do to it as he pleases. But in equity, X has given the house to Y who becomes the trustee on that property and thus has the responsibility of maintaining the property on behalf of X. he also has the responsibility of paying his rent to X as at when due.

One of the modifications brought about by equity in the law is in relation to trust. Formerly (before the coming of equity) the trustee owned the trust property and could dispose of it at will. But when equity was applied, he was still seen as the owner of the trust property but subject to equity compelling him to use it for the benefit of the beneficiary i.e. cest equi trust. Trust is when one party gives out his property to another party (trustee) for the sake of safe custody, it is said that the property has been entrusted to the trustee who will administer the property for the benefit of the person who has given him to keep.

Fiduciary duties are properly characterized as applying in narrower circumstances than the broad language of judicial opinions suggests. Specifically, fiduciary duties arise only when one party delegates open-ended control over her property to another party. Extending fiduciary relationships beyond this specific situation increases litigation and contracting costs, decreases the effectiveness of owners governance rights, and dilutes true fiduciaries’ legal and extralegal incentives. Those that the law has classified as fiduciaries must deal with beneficiaries at a level high above ordinary commercial standards.

Probably the most famous judicial expression of fiduciary duties is Justice Cardozos lines from Meinhard v. Salmon1: “Joint adventurers,