Equity and Trusts Essay Example | Topics and Well Written Essays - 2500 words - 1

Equity and Trusts - Essay Example The difference arises because the common law only recognized legal ownership and gave no effect to trusts, which were enforceable only in equity. Legal interests in any assets are therefore rights in rem, enforceable against anyone; equitable interests were at first rights only in personam, enforceable against the trustee personally. Equity, however would not enforce a trust against any innocent buyer who knows nothing about the trust, as that enforcement would itself be inequitable, and so an equitable right is still not as strong as a legal right. These equitable rules became embodied in what is known as the doctrine of notice. This can be expressed as the following maxims: â€Å"Legal rights are good against the whole world; equitable rights are good against all persons except a bonafide purchaser of the legal estate for value without notice of the equitable interests in that land, and those claiming under him† This bonafide purchaser is often known as â€Å"equity’s darling†. The essential features of this privilege person are that he is: 1) Bona fide – Any dishonesty, sharp practice will forfeit equity’s protection. 2) Purchaser for Value – â€Å"purchaser† excludes those who inherit the property or acquire it by operation of law. â€Å"for value†, while it does not necessarily mean â€Å"full value†, means money or money’s worth or marriage. The decision of the House of Lords in Midland Bank Trust Co Ltd v Green 1981 AC 513 shows that the consideration need not be adequate. ... against the trustee personally. Equity, however would not enforce a trust against any innocent buyer who knows nothing about the trust, as that enforcement would itself be inequitable, and so an equitable right is still not as strong as a legal right. These equitable rules became embodied in what is known as the doctrine of notice. This can be expressed as the following maxims: "Legal rights are good against the whole world; equitable rights are good against all persons except a bonafide purchaser of the legal estate for value without notice of the equitable interests in that land, and those claiming under him"3 This bonafide purchaser is often known as "equity's darling". The essential features of this privilege person are that he is: 1) Bona fide - Any dishonesty, sharp practice or other inequitable practice will forfeit equity's protection. 2) Purchaser for Value - "purchaser" excludes those who inherit the property or acquire it by operation of law. "for value", while it does not necessarily mean "full value", means money or money's worth or marriage. The decision of the House of Lords in Midland Bank Trust Co Ltd v Green 1981 AC 5134 shows that the consideration need not be adequate. 3) Of a legal estate - This is essential; the purchaser of equitable interest5 is in general bound by prior equitable interests whether he had notice of them or not. 4) Without notice - The purchaser must have no knowledge of the equitable interest at the time he purchased his interest. There are three types of notices:a) actual notice - this must be within his own knowledge and must not be nearly a vague reference,