CILEx L3 Equity & Trusts Introduction 1 — Questions and Answers
Question 1: What is the historical origin of equity in the English legal system?
- Equity developed from petitions to the Lord Chancellor for relief where the common law was inadequate or too rigid (Correct answer)
- Equity was created by the Judicature Acts 1873-75
- Equity was enacted by Parliament as a supplement to common law
- Equity developed from Roman law principles applied by church courts
Correct answer: Equity developed from petitions to the Lord Chancellor for relief where the common law was inadequate or too rigid
Equity developed from petitioners approaching the Lord Chancellor (originally a clergyman with a conscience) for relief where the common law courts provided inadequate remedies. The Court of Chancery emerged as a separate court administering equitable principles.
Question 2: What did the Judicature Acts 1873-75 achieve in relation to equity and common law?
- They fused the administration of law and equity into a single court system, though the bodies of law remain distinct (Correct answer)
- They abolished equity as a separate body of law
- They established that common law always prevails over equity
- They created a separate Supreme Court for equitable matters
Correct answer: They fused the administration of law and equity into a single court system, though the bodies of law remain distinct
The Judicature Acts 1873-75 merged the common law courts and Courts of Chancery into a unified court structure (the Supreme Court of Judicature), so that any court could apply both law and equity. The substantive bodies of law, however, remained distinct.
Question 3: What is a 'trust' in equity?
- An arrangement where one person (trustee) holds property for the benefit of another (beneficiary) (Correct answer)
- A contract between two parties to manage property
- An agreement to share the use of property without transferring ownership
- A testamentary disposition taking effect on death
Correct answer: An arrangement where one person (trustee) holds property for the benefit of another (beneficiary)
A trust is an equitable obligation binding a person (the trustee) who holds property (the trust property) to deal with it for the benefit of another (the beneficiary) or for a valid purpose. It separates legal title (in the trustee) from beneficial ownership (in the beneficiary).
Question 4: Who are the parties to a trust?
- The settlor (who creates the trust), the trustee (who holds and manages the property), and the beneficiary (who benefits) (Correct answer)
- The donor, the administrator, and the recipient
- The testator, the executor, and the legatee
- The grantor, the holder, and the creditor
Correct answer: The settlor (who creates the trust), the trustee (who holds and manages the property), and the beneficiary (who benefits)
A trust typically involves three parties: the settlor (who declares the trust or transfers property to the trustee), the trustee (who holds legal title and manages the property), and the beneficiary (who holds the equitable interest and for whose benefit the trust is held).
Question 5: What is the 'maxim' that equity follows the law?
- Equity will generally conform to the rules of common law unless there is good reason to depart from them (Correct answer)
- Equity replaces the law in all cases of conflict
- Equity only applies when common law provides no remedy
- Equity must always mirror statute law
Correct answer: Equity will generally conform to the rules of common law unless there is good reason to depart from them
The maxim 'equity follows the law' means that equity generally operates within the framework of common law and supplements rather than contradicts it. Courts of equity would respect legal rights but could intervene where conscience required.
Question 6: What is the 'maxim' that equity will not suffer a wrong without a remedy?
- Where a legal wrong exists and common law provides no adequate remedy, equity will intervene to provide relief (Correct answer)
- Equity provides a remedy in every case of injustice
- Any wrong may be brought to a court of equity
- Equity allows all legal claims to be retried
Correct answer: Where a legal wrong exists and common law provides no adequate remedy, equity will intervene to provide relief
This maxim expresses equity's role as a supplement to common law — where a legal wrong exists but common law provides no adequate remedy, equity will step in with its own remedies such as injunction, specific performance, or account of profits.
CILEx L3 Equity & Trusts Introduction 1
What is the historical origin of equity in the English legal system?