Article on The Performance Interest in the Law of Trusts

Lusina Ho and Richard Nolan recently published an article entitled, The Performance Interest in the Law of Trusts, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

This article examines the structures and remedies for breach of trust and contractual obligations and argues that the obligations of a trustee are fundamentally different from the obligations of a contracting party.

The obligations of a trustee give primacy to the “performance interest” of beneficiaries of that trust: that is, the interest of those beneficiaries in actual execution of the trust rather than compensation for loss resulting from the trustee’s failure to execute the trust. The obligations of a contracting party do not attach the same importance to the performance interest: the contracting party will generally perform, but if that party does not perform, the counterparty may, in the vast majority of cases, claim the monetary equivalent of the reasonably foreseeable loss that flows from breach of the contract.

After considering the case law establishing the axiomatic principle of trust law – that trusts must be performed, the article examines the mechanisms, structural features and remedies by which the law of trusts secures performance. It then compares trust principles with those in contract law, and sets out the implications, both theoretical and practical, of these important distinctions between the law of trusts and the law of contract.