EQUITY AND TRUST (LAW) Case Study Example | Topics and Well Written Essays - 1500 words

EQUITY AND TRUST (LAW) - Case Study Example The law requires that a trustee exercises the same degree of diligence that a man of ordinary prudence would exercise in the management of his affairs. In this report we shall examine the role of the trustees and the standard care he is required to take in some specific instances and also the reasons for the difference in the standards of care in such instances in the light of established case laws and the provisions of the Trustee Act 2000. " As a general rule, a trustee sufficiently discharges his duty if he takes, in managing he trust affairs, all those precautions which an ordinary prudent man of business would take in managing similar affairs of his own"- this was the court ruling in the appeal case of Speight v. Gaunt as early as in the year 1883. According to this settled law the standard care that a trustee is expected to take is limited to the extent that the trustee takes all precautions in administering the trust assets by taking such care which an ordinary prudent man of business would be taking in his own case. The trustee is exonerated from his liability so long as he proves that he has strictly followed the covenants of the trust deed and there is no willful deviation from the purposes for which the trust properties were put to use. The trustee is not expected to use any special skill or expertise with regard to the investment of the trust properties. As has been decided in the case of Fales v. Canada Per manent Trust Co.(1977) 2 SCR 302 "that of a man of ordinary prudence in managing his own affairs and traditionally the standard has been applied equally to professional and non-professional trustees. The standard has been of general application and objective". Hence traditionally there had been no distinction between professional and non professional trustees in the matter of deciding on the standard care to be exercised by the trustees with regard to the trust properties. This was the legal position at a time when the investment opportunities that were available for the trust properties were limited and hence there was no major problem encountered with the administration of the trust properties. However with the passage of time the possible avenues for investments had increased and this has created additional responsibilities for the trustees to consider the portfolios or assets in which they contemplate to invest the trust properties and decide whether the properties would be safe in such investments. Case of Learoyd v. Whiteley (1887) 12 App. Cas.727: "When the trustee serves both a life tenant and a remainderman beneficiary, the trustee must invest impartially and balance the preservation of the property for the remainderman with the need to produce a reasonable income for the life tenant"- this was the observation made in the case of Learoyd v. Whitely (1887) as regards the fiduciary position of the trustees. This ruling altered the degree of the standard care to be exercised by the trustees in that the responsibility of the trustee is extended to ensure that the safety of the investments is also taken into account while investing the trust property, so that the capital is not eroded. The argument of reliance by the trustee on a third person supposed to be an expert on the investments of the sort covered by the case will not exonerate the trustee from his fiduciary liability to the

Monetary Policy in an economy Essay Example | Topics and Well Written Essays - 2000 words

Monetary Policy in an economy - Essay Example However, the effectiveness of monetary in controlling the economy is real terms remains to be a debatable issue. If Central bank attempts to control economy by implementing monetary policy through varying interest rates, it can have some indirect impacts on the overall economic activities that might lead to problems. This paper illuminates the theoretical foundations upon which the monetary policy rests. It discusses the various methods utilised to determine and implement the monetary policy in an economy on the part of Central banks. The paper also elaborates the effectiveness of monetary policy in controlling economy and critically discusses its effectuality in meeting the intended economic ends such as controlling inflation and maintaining price stability. Developing and implementing monetary policy happens to be the most crucial responsibility of a Central Bank. Monetary policy refers to the strategies of Central Banks implemented for the purpose of controlling various economic factors such as inflation and employment etc. Bofinger, Schchter and Reischle propound that "the main aim of monetary policy is a control of final targets of the economic process (price stability, real growth, full employment), which have been set in such a way as to maximise the ultimate goal of social welfare."1 Theoretically, there are four equations that are used to evaluate the impact of money or monetary policy on the overall economy. The aggregate demand function emphasises the impact of total demand on interest rates which consequently affects inflation. The 'Philip-Lucas supply curve' or the supply function relates the total output in an economy to the rate of inflation. The third equation relates the demand of money in an economy to total expenditure as well as the interest rates. The fourth equation of monetary policy relates it to the supply of money in the economy on the part of Central Bank.2 The theoretical foundations of monetary policy rest on the fact that money plays a great role in the economy of a country. Therefore, various economic factors, in particular, the inflation rate and employment level can be controlled by an effective monetary policy. King also propounds that "money growth is higher, the higher is the inflation rate".3 The growth of money or credit in an economy goes a long way in determining the prevailing inflation rate and employment level in the long run. Monetary policy helps Central banks to achieve the goal of economic stability and inflationary targets. Mahadeva says that "Central banks have always been in the forefront of those that promote low inflation or price stability as a or the goal of monetary policy."4 It is because of the fact that controlling inflation or maintaining a desired level of prices is considered to be the important functions of monetary policy and crucial aims of a Central bank. Central banks influence the supply and growth of money in the economy by changing interest rates in order to affect the aggregate demand. Arestis and Sawyer delineate the rate of interest as, "the Central Bank rate can be viewed as the key rate on which all other interest rates are based-often explicitly so as in the case of the interest rates charged by banks on loans and paid by banks on deposits" (2004, p443). Hence the Central bank influences the supply of mon