Constructive Trusts

Description: This quiz covers the legal concept of constructive trusts, which are imposed by courts to prevent unjust enrichment and ensure fair dealing.
Number of Questions: 15
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Tags: law equity constructive trusts
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What is the primary purpose of a constructive trust?

  1. To protect the rights of beneficiaries under a will

  2. To prevent unjust enrichment and ensure fair dealing

  3. To manage the assets of a bankrupt individual

  4. To resolve disputes between shareholders in a corporation


Correct Option: B
Explanation:

A constructive trust is imposed by a court to prevent unjust enrichment and ensure fair dealing in situations where one party has acquired property or benefits through fraud, breach of fiduciary duty, or other inequitable conduct.

Under what circumstances might a constructive trust be imposed?

  1. When a person makes an oral promise to transfer property

  2. When a person acquires property through fraud or misrepresentation

  3. When a person breaches a fiduciary duty

  4. All of the above


Correct Option: D
Explanation:

A constructive trust may be imposed in a variety of circumstances, including when a person makes an oral promise to transfer property, acquires property through fraud or misrepresentation, or breaches a fiduciary duty.

What is the role of a court in imposing a constructive trust?

  1. To determine whether the elements of a constructive trust are present

  2. To appoint a trustee to manage the trust property

  3. To distribute the trust property to the beneficiaries

  4. All of the above


Correct Option: D
Explanation:

A court's role in imposing a constructive trust involves determining whether the elements of a constructive trust are present, appointing a trustee to manage the trust property, and distributing the trust property to the beneficiaries.

What is the primary remedy available to a beneficiary of a constructive trust?

  1. Damages for breach of contract

  2. Rescission of the underlying transaction

  3. Imposition of a constructive trust

  4. Specific performance of the underlying contract


Correct Option: C
Explanation:

The primary remedy available to a beneficiary of a constructive trust is the imposition of a constructive trust, which vests legal title to the property in the trustee for the benefit of the beneficiary.

What is the difference between a constructive trust and a resulting trust?

  1. A constructive trust is imposed by a court, while a resulting trust arises by operation of law

  2. A constructive trust is based on fraud or breach of fiduciary duty, while a resulting trust is based on an implied intention

  3. A constructive trust is used to prevent unjust enrichment, while a resulting trust is used to correct a mistake

  4. All of the above


Correct Option: D
Explanation:

A constructive trust is imposed by a court, while a resulting trust arises by operation of law. A constructive trust is based on fraud or breach of fiduciary duty, while a resulting trust is based on an implied intention. A constructive trust is used to prevent unjust enrichment, while a resulting trust is used to correct a mistake.

Can a constructive trust be imposed on real property?

  1. Yes

  2. No

  3. Only if the property is held in the name of a trustee

  4. Only if the property is subject to a mortgage


Correct Option: A
Explanation:

A constructive trust can be imposed on real property, as well as on personal property.

Can a constructive trust be imposed on personal property?

  1. Yes

  2. No

  3. Only if the property is held in the name of a trustee

  4. Only if the property is subject to a lien


Correct Option: A
Explanation:

A constructive trust can be imposed on personal property, as well as on real property.

What is the statute of limitations for bringing an action to impose a constructive trust?

  1. The same as for breach of contract

  2. The same as for fraud

  3. The same as for unjust enrichment

  4. Varies by jurisdiction


Correct Option: D
Explanation:

The statute of limitations for bringing an action to impose a constructive trust varies by jurisdiction.

What are some common defenses to an action to impose a constructive trust?

  1. Laches

  2. Estoppel

  3. Statute of frauds

  4. All of the above


Correct Option: D
Explanation:

Common defenses to an action to impose a constructive trust include laches, estoppel, and the statute of frauds.

What is the effect of imposing a constructive trust?

  1. The trustee holds legal title to the property for the benefit of the beneficiary

  2. The beneficiary becomes the legal owner of the property

  3. The property is sold and the proceeds are distributed to the beneficiary

  4. The property is forfeited to the government


Correct Option: A
Explanation:

When a constructive trust is imposed, the trustee holds legal title to the property for the benefit of the beneficiary.

What are the duties of a trustee of a constructive trust?

  1. To manage the trust property in the best interests of the beneficiary

  2. To distribute the trust property to the beneficiary when the trust terminates

  3. To keep accurate records of all trust transactions

  4. All of the above


Correct Option: D
Explanation:

The duties of a trustee of a constructive trust include managing the trust property in the best interests of the beneficiary, distributing the trust property to the beneficiary when the trust terminates, and keeping accurate records of all trust transactions.

What happens if a trustee of a constructive trust breaches their duties?

  1. They may be removed from their position as trustee

  2. They may be held liable for damages

  3. The trust may be terminated

  4. All of the above


Correct Option: D
Explanation:

If a trustee of a constructive trust breaches their duties, they may be removed from their position as trustee, held liable for damages, and the trust may be terminated.

Can a constructive trust be terminated?

  1. Yes, by agreement of the parties

  2. Yes, by order of a court

  3. Yes, by operation of law

  4. All of the above


Correct Option: D
Explanation:

A constructive trust can be terminated by agreement of the parties, by order of a court, or by operation of law.

What is the difference between a constructive trust and an express trust?

  1. A constructive trust is imposed by a court, while an express trust is created by the parties

  2. A constructive trust is based on fraud or breach of fiduciary duty, while an express trust is based on an agreement

  3. A constructive trust is used to prevent unjust enrichment, while an express trust is used to achieve a specific purpose

  4. All of the above


Correct Option: D
Explanation:

A constructive trust is imposed by a court, while an express trust is created by the parties. A constructive trust is based on fraud or breach of fiduciary duty, while an express trust is based on an agreement. A constructive trust is used to prevent unjust enrichment, while an express trust is used to achieve a specific purpose.

Can a constructive trust be created orally?

  1. Yes

  2. No

  3. Only if the value of the property is less than a certain amount

  4. Only if the trust is for a charitable purpose


Correct Option: B
Explanation:

A constructive trust cannot be created orally. It must be created in writing.

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