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Report No. 66

8.6. Voluntary settlements.-

As regards voluntary settlements-that is to say, settlements made without consideration-there were certain special rules in equity. In the first place, where the trust is not completely constituted by reason of the ineffectual method of its creation, the maxim that equity will not assist a volunteer applied. Apart from the fact that specific performance would not be allowed in favour of volunteers, there was the other aspect, namely, that under a statute1 of 1571, a voluntary settlement could be set aside even if the beneficiaries were entirely ignorant of the settler's intent to defraud the creditors.2 The Act of 1571 was, in England, later replaced by section 122 of the Law of Property Act, 1925. In addition, a voluntary disposition of land, made with intent, to defraud a subsequent purchaser is voidable at the instance of that purchaser; this was provided in England, by an Act of 1585.3

Again, under the Bankruptcy law,4 a voluntary settlement may, in certain Cases, be avoided on the subsequent bankruptcy of the settler, even if it is not fraudulent.5

Section 6 was intended to avoid all these complications. Before discussing it in detail, it will be convenient to note the English Statutory provision on the subject.

1. 13 Eliz. 1, Ch. 5 (1571).

2. Snell Equity, (1966), p. 141.

3. 27 Eliz. 1, Chapter 4, later replaced by 173(1), Law of Property Act, 1925.

4. Now section 42, Bankruptcy Act, 1914 (Eng).

5. Macadam (in re:), (1950) 1 All ER 303.



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