Duhaime's Law Dictionary

Breach Of Trust Definition:

Any act or omission on the part of the trustee which is inconsistent with the terms of the trust agreement or the law of trusts.

Any act or omission on the part of the trustee which is inconsistent with the terms of the trust agreement or the law of trusts.

Also, a distinctly defined regulatory or criminal offence in some jurisdictions as in serious misconduct of a public duty (see below) or such other failure to exercise a fiduciary duty and indeed, is sometimes referred to as breach of fiduciary duty in respect to an employee benefit plan as at §1109 of the 2008 US Code entitled "Liability for breach of fiduciary duty":

"Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary...."

In trust law, a prime example is the redirecting of trust property from the trust to the trustee, personally.

Halsbury's Laws of England (2007, Volume 48: Trusts) and Canadian authority Waters on Trusts both defer to an absolute catch-all-conduct definition ("where a trustee fails to carry out his obligations...."), but while this may "cross the t's and dot the i's" for law students, the law is more practical as suggested by Judge Huband of the Manitoba Court of Appeal in Glenko:

"... the mere fact of depositing trust funds along with other funds in a general account is not necessarily a breach of trust.  It becomes a breach of trust only where the trust funds are at risk, as where the contractor operates on bank credit, or where the trust funds are used to pay obligations of the contractor other than the obligation to its trust beneficiaries."

Even Halsbury retreats from the onerous definition given by adding:

"A trustee may be relieved from liability by the provisions of the instrument creating a trust or by statute, or by the that the breach of trust has been occasioned by necessity or some other adequate cause, or has been authorized or condoned by the beneficiary injured by it, or has been due to an innocent mistake. A mere error of judgment does not in itself constitute a breach of trust, and a trustee is presumed to have dealt honestly and properly with the trust estate until the contrary is shown."

In Canada, for example, the Criminal Code defines breach of trust as:

"Every one who, being a trustee of anything for the use or benefit, whether in whole or in part, of another person, or for a public or charitable purpose, converts, with intent to defraud and in contravention of his trust, that thing or any part of it to a use that is not authorized by the trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years."


Categories & Topics:

Always looking up definitions? Save time with our search provider (modern browsers only)

If you find an error or omission in Duhaime's Law Dictionary, or if you have suggestion for a legal term, we'd love to hear from you!