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View the related practice notes about The genuine transaction rule

Trustees—self-dealing, unauthorised profits and conflicts of interest

The self-dealing ruleThe self-dealing rule is connected to, but distinct from, the fair dealing rule as well as the genuine transaction rule. There is authority that the rules are not, on a correct analysis, part of the duties or discretions of a trustee; rather they are restrictions which inhibit a trustee from acting in certain ways. This has important consequences in terms of limitation of any action against trustees by beneficiaries.The rule against self-dealing encompasses several slightly different rules which were considered in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe:•a trustee cannot make a contract with themselves (subject to statutory exception) so any attempt to do so is ineffective—this was described in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe as the primitive self-dealing rule, although it has also been described as the two-party rule•a trustee's power of sale cannot validly be exercised in their own favour (subject to any contrary provision in the trust instrument)—this was described in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe as the...

Overreaching—sales by trustees of land

Overreaching—sales by trustees of land Broadly, the doctrine of overreaching enables purchasers (which includes tenants and mortgagees) in good faith for money or money’s worth to rely solely on the legal title. In the case of registered land, this means the entries entered on the register of title, as it records ownership of the legal estate and is not concerned with equitable interests. A buyer of a legal estate in land from trustees will not be affected by any of the trusts on which the land is held if the purchase price is paid to all the trustees (of whom there must be at least two) or to a trust corporation. Payment of the price in this manner means that the interests of the beneficiaries are said to be ‘overreached’. This is commonly known as the 'two trustee' rule. Overreaching also occurs in sales: • under the powers of the Settled Land Act 1925 • by a mortgagee (see Overreaching by a mortgagee) or personal representative...