Concept of Breach of Trust

Enactments, laws and acts that are passed by legislative bodies, deal with specific domains of laws, for example, the Contract act deals with legally enforceable contracts, or the Bill of Rights deals with fundamental rights of the citizens of the United States. Unlike the contract law or the Bill of Rights, there is no specific enactment that deals with the breach of trust.

Breach of trust is an intentional or unintentional negligence of duty, abuse of position or fraud of legally bestowed trust, by a person or persons or a body corporate. There are three likely parties who can come into the picture. A trustee, a testator and beneficiary who are all tied to each other by a relationship that is known as a ‘fiduciary’ relationship.

In such a scenario, the trustee is a guardian, regent, consultant or any person who is authorized by law to be a trustee. A beneficiary is a person whose interest is safeguarded by the trustee. A testator is a person who requests the trustee to perform a selected function. The term testator is usually used in cases where a person appoints some other person, in his/her will, as a trustee for his/her beneficiary (legal heir).

If you look around, you will notice that there are several different fiduciary relations that come into existence every second. For example, when you go to a physician to get examined, a fiduciary relation is established, and if the physician finds that you are suffering from any symptoms, then he/she is obliged to disclose the facts immediately. In case of non disclosure, a breach of trust is said to have occurred.

Unintentional Breach of Trust

The hurdle that any court of law might face is that whether the breach was intentional or unintentional, and whether the fiduciary relationship was of a legally enforceable nature or not. In most cases, where the breach occurs, as a result of carelessness and innocent mistakes, the court of law does not declare harsh punishments.

A legal guardian forgetting to pick his beneficiary from school is an unintentional breach. A credit card advertisement not disclosing some essential facts can also be an unintentional breach which may invite a compensation suit. In common parlance, a breach that involves monetary interest invites a lawsuit settlement.

Breach of Trust with Fraudulent Intent

A breach with fraudulent intent is immediately recognized by the court, as it is characterized by intentional non-disclosure. According to the penal code, such an abuse of position for fraudulent and criminal purposes, is dealt with harsh punishments. Non-disclosure by a company’s promoter, insider trading, forgery, personal and non-permitted use of given trust, and corruption in governmental or non-governmental organizations is termed to be a breach with fraudulent intent. Such breach is dealt in accordance with criminal proceedings doctrine.

Breach of trust in itself is quite a generic and larger study, and will have to consider many legal codes and enactments to have an in-depth and accurate insight of the concept.