Equity and Trusts Exam Questions and Answers
Latest Update | Comprehensive Equity and
Trusts Law Study Guide, Practice Test Bank,
Verified Questions with Detailed Rationales for
Law Students Preparing for Equity, Trusts, and
Legal Principles Exams
Question 1: Which of the following best describes the primary function of equity in the common law
system?
A. To override all common law rules regardless of context
B. To provide remedies where the common law is inadequate or rigid
C. To create criminal liabilities for breach of contract
D. To replace the jury system in civil trials
**CORRECT ANSWER: B. To provide remedies where the common law is inadequate or rigid
RATIONALE: Equity developed historically to mitigate the rigidity and inadequacy of the common law,
providing flexible remedies such as specific performance and injunctions where damages were
insufficient.
Question 2: In the context of maxims of equity, what does "Equity will not suffer a wrong to be
without a remedy" imply?
A. Every moral wrong must be punished by imprisonment
B. Equity provides a remedy where the common law fails to address a grievance
C. Common law remedies are always superior to equitable remedies
D. Statutory remedies take precedence over equitable principles
**CORRECT ANSWER: B. Equity provides a remedy where the common law fails to address a grievance
RATIONALE: This maxim underscores the supplementary role of equity, ensuring that justice is
achieved even when common law procedures or remedies are insufficient.
Question 3: Which case established that "equity acts in personam"?
A. Earl of Oxford's Case
B. Penn v Lord Baltimore
C. Keech v Sandford
D. Saunders v Vautier
**CORRECT ANSWER: B. Penn v Lord Baltimore
RATIONALE: Penn v Lord Baltimore illustrates that equity binds the conscience of the individual, acting
against the person rather than directly against the property, though its effects may concern property.
Question 4: What is the effect of the Judicature Acts 1873-1875 on the administration of law and
equity?
,A. It abolished equity completely
B. It fused the administration of law and equity but not the principles themselves
C. It created a new court system solely for equitable claims
D. It made common law principles subordinate to equitable principles in all cases
**CORRECT ANSWER: B. It fused the administration of law and equity but not the principles
themselves
RATIONALE: The Judicature Acts merged the courts administering law and equity, allowing both to be
applied in the same proceeding, but the distinct principles of each remain identifiable.
Question 5: Which maxim applies when a plaintiff seeks equitable relief but has acted unfairly?
A. Equity follows the law
B. He who comes to equity must come with clean hands
C. Delay defeats equities
D. Equality is equity
**CORRECT ANSWER: B. He who comes to equity must come with clean hands
RATIONALE: This maxim bars relief to a plaintiff whose own conduct regarding the subject matter has
been improper or unconscionable.
Question 6: What is required for a valid express trust to be created?
A. Only the intention to create a trust
B. The three certainties and constitution
C. A written document signed by a judge
D. Registration with the government
**CORRECT ANSWER: B. The three certainties and constitution
RATIONALE: A valid express trust requires the three certainties (intention, subject matter, objects) and
must be properly constituted by transferring property to trustees.
Question 7: Which of the following is NOT one of the "three certainties" required for a trust?
A. Certainty of intention
B. Certainty of subject matter
C. Certainty of value
D. Certainty of objects
**CORRECT ANSWER: C. Certainty of value
RATIONALE: The three certainties are intention, subject matter, and objects. While value may be
relevant to administration, it is not a formal requirement for validity.
Question 8: In Knight v Knight, what was the primary issue regarding the creation of a trust?
A. The identity of the beneficiaries
B. The certainty of intention to create a trust
,C. The valuation of the property
D. The tax implications of the trust
**CORRECT ANSWER: B. The certainty of intention to create a trust
RATIONALE: Knight v Knight is a leading case establishing the requirement for certainty of intention,
distinguishing between moral obligations and legally binding trust obligations.
Question 9: What does "certainty of subject matter" require?
A. The trust property must be worth at least $10,000
B. The property held on trust must be clearly identifiable
C. The property must be real estate only
D. The property must be registered
**CORRECT ANSWER: B. The property held on trust must be clearly identifiable
RATIONALE: Certainty of subject matter ensures that the specific property intended to be held on trust
is defined enough to be enforced by the court.
Question 10: Which case illustrates the failure of a trust due to uncertainty of subject matter
regarding bulk goods?
A. Re London Wine Co
B. Saunders v Vautier
C. Re Denley
D. McPhail v Doulton
**CORRECT ANSWER: A. Re London Wine Co
RATIONALE: Re London Wine Co held that where bottles of wine were not segregated from a bulk,
there was no certainty of subject matter, preventing a trust from arising.
Question 11: What is the test for certainty of objects in a fixed trust?
A. The list test
B. The individual ascertainability test
C. The reasonable certainty test
D. The conceptual certainty test only
**CORRECT ANSWER: A. The list test
RATIONALE: For a fixed trust, the trustee must be able to draw up a complete list of all beneficiaries to
distribute the trust property equally.
Question 12: What is the test for certainty of objects in a discretionary trust?
A. The list test
B. The "is or is not" test (McPhail v Doulton)
C. The strict conceptual test
D. The administrative workability test only
, **CORRECT ANSWER: B. The "is or is not" test (McPhail v Doulton)
RATIONALE: McPhail v Doulton established that for discretionary trusts, it must be possible to say with
certainty whether any given individual is or is not a member of the class.
Question 13: What happens if a trust fails for lack of certainty of objects?
A. The trustee keeps the property
B. A resulting trust arises in favor of the settlor
C. The state confiscates the property
D. The beneficiaries choose new trustees
**CORRECT ANSWER: B. A resulting trust arises in favor of the settlor
RATIONALE: If an express trust fails, the equitable interest returns to the settlor via a resulting trust,
assuming the settlor is alive or their estate exists.
Question 14: Which principle allows adult beneficiaries to terminate a trust?
A. The rule in Saunders v Vautier
B. The rule in Keech v Sandford
C. The rule in Re Denley
D. The rule in Strong v Bird
**CORRECT ANSWER: A. The rule in Saunders v Vautier
RATIONALE: Saunders v Vautier allows beneficiaries who are of age, sound mind, and absolutely
entitled to the trust property to direct the trustees to transfer the legal title to them.
Question 15: What is required to constitute a trust of land?
A. Oral declaration
B. Writing signed by the settlor
C. Registration of the trust deed
D. Payment of a fee
**CORRECT ANSWER: B. Writing signed by the settlor
RATIONALE: Under the Law of Property Act 1925 (UK) or similar statutes, a declaration of trust
respecting land must be manifested and proved by writing signed by the settlor.
Question 16: What is the effect of an incompletely constituted trust?
A. It is valid and enforceable by volunteers
B. It is void ab initio
C. Equity will not assist a volunteer to enforce it
D. It automatically becomes a resulting trust
**CORRECT ANSWER: C. Equity will not assist a volunteer to enforce it
Latest Update | Comprehensive Equity and
Trusts Law Study Guide, Practice Test Bank,
Verified Questions with Detailed Rationales for
Law Students Preparing for Equity, Trusts, and
Legal Principles Exams
Question 1: Which of the following best describes the primary function of equity in the common law
system?
A. To override all common law rules regardless of context
B. To provide remedies where the common law is inadequate or rigid
C. To create criminal liabilities for breach of contract
D. To replace the jury system in civil trials
**CORRECT ANSWER: B. To provide remedies where the common law is inadequate or rigid
RATIONALE: Equity developed historically to mitigate the rigidity and inadequacy of the common law,
providing flexible remedies such as specific performance and injunctions where damages were
insufficient.
Question 2: In the context of maxims of equity, what does "Equity will not suffer a wrong to be
without a remedy" imply?
A. Every moral wrong must be punished by imprisonment
B. Equity provides a remedy where the common law fails to address a grievance
C. Common law remedies are always superior to equitable remedies
D. Statutory remedies take precedence over equitable principles
**CORRECT ANSWER: B. Equity provides a remedy where the common law fails to address a grievance
RATIONALE: This maxim underscores the supplementary role of equity, ensuring that justice is
achieved even when common law procedures or remedies are insufficient.
Question 3: Which case established that "equity acts in personam"?
A. Earl of Oxford's Case
B. Penn v Lord Baltimore
C. Keech v Sandford
D. Saunders v Vautier
**CORRECT ANSWER: B. Penn v Lord Baltimore
RATIONALE: Penn v Lord Baltimore illustrates that equity binds the conscience of the individual, acting
against the person rather than directly against the property, though its effects may concern property.
Question 4: What is the effect of the Judicature Acts 1873-1875 on the administration of law and
equity?
,A. It abolished equity completely
B. It fused the administration of law and equity but not the principles themselves
C. It created a new court system solely for equitable claims
D. It made common law principles subordinate to equitable principles in all cases
**CORRECT ANSWER: B. It fused the administration of law and equity but not the principles
themselves
RATIONALE: The Judicature Acts merged the courts administering law and equity, allowing both to be
applied in the same proceeding, but the distinct principles of each remain identifiable.
Question 5: Which maxim applies when a plaintiff seeks equitable relief but has acted unfairly?
A. Equity follows the law
B. He who comes to equity must come with clean hands
C. Delay defeats equities
D. Equality is equity
**CORRECT ANSWER: B. He who comes to equity must come with clean hands
RATIONALE: This maxim bars relief to a plaintiff whose own conduct regarding the subject matter has
been improper or unconscionable.
Question 6: What is required for a valid express trust to be created?
A. Only the intention to create a trust
B. The three certainties and constitution
C. A written document signed by a judge
D. Registration with the government
**CORRECT ANSWER: B. The three certainties and constitution
RATIONALE: A valid express trust requires the three certainties (intention, subject matter, objects) and
must be properly constituted by transferring property to trustees.
Question 7: Which of the following is NOT one of the "three certainties" required for a trust?
A. Certainty of intention
B. Certainty of subject matter
C. Certainty of value
D. Certainty of objects
**CORRECT ANSWER: C. Certainty of value
RATIONALE: The three certainties are intention, subject matter, and objects. While value may be
relevant to administration, it is not a formal requirement for validity.
Question 8: In Knight v Knight, what was the primary issue regarding the creation of a trust?
A. The identity of the beneficiaries
B. The certainty of intention to create a trust
,C. The valuation of the property
D. The tax implications of the trust
**CORRECT ANSWER: B. The certainty of intention to create a trust
RATIONALE: Knight v Knight is a leading case establishing the requirement for certainty of intention,
distinguishing between moral obligations and legally binding trust obligations.
Question 9: What does "certainty of subject matter" require?
A. The trust property must be worth at least $10,000
B. The property held on trust must be clearly identifiable
C. The property must be real estate only
D. The property must be registered
**CORRECT ANSWER: B. The property held on trust must be clearly identifiable
RATIONALE: Certainty of subject matter ensures that the specific property intended to be held on trust
is defined enough to be enforced by the court.
Question 10: Which case illustrates the failure of a trust due to uncertainty of subject matter
regarding bulk goods?
A. Re London Wine Co
B. Saunders v Vautier
C. Re Denley
D. McPhail v Doulton
**CORRECT ANSWER: A. Re London Wine Co
RATIONALE: Re London Wine Co held that where bottles of wine were not segregated from a bulk,
there was no certainty of subject matter, preventing a trust from arising.
Question 11: What is the test for certainty of objects in a fixed trust?
A. The list test
B. The individual ascertainability test
C. The reasonable certainty test
D. The conceptual certainty test only
**CORRECT ANSWER: A. The list test
RATIONALE: For a fixed trust, the trustee must be able to draw up a complete list of all beneficiaries to
distribute the trust property equally.
Question 12: What is the test for certainty of objects in a discretionary trust?
A. The list test
B. The "is or is not" test (McPhail v Doulton)
C. The strict conceptual test
D. The administrative workability test only
, **CORRECT ANSWER: B. The "is or is not" test (McPhail v Doulton)
RATIONALE: McPhail v Doulton established that for discretionary trusts, it must be possible to say with
certainty whether any given individual is or is not a member of the class.
Question 13: What happens if a trust fails for lack of certainty of objects?
A. The trustee keeps the property
B. A resulting trust arises in favor of the settlor
C. The state confiscates the property
D. The beneficiaries choose new trustees
**CORRECT ANSWER: B. A resulting trust arises in favor of the settlor
RATIONALE: If an express trust fails, the equitable interest returns to the settlor via a resulting trust,
assuming the settlor is alive or their estate exists.
Question 14: Which principle allows adult beneficiaries to terminate a trust?
A. The rule in Saunders v Vautier
B. The rule in Keech v Sandford
C. The rule in Re Denley
D. The rule in Strong v Bird
**CORRECT ANSWER: A. The rule in Saunders v Vautier
RATIONALE: Saunders v Vautier allows beneficiaries who are of age, sound mind, and absolutely
entitled to the trust property to direct the trustees to transfer the legal title to them.
Question 15: What is required to constitute a trust of land?
A. Oral declaration
B. Writing signed by the settlor
C. Registration of the trust deed
D. Payment of a fee
**CORRECT ANSWER: B. Writing signed by the settlor
RATIONALE: Under the Law of Property Act 1925 (UK) or similar statutes, a declaration of trust
respecting land must be manifested and proved by writing signed by the settlor.
Question 16: What is the effect of an incompletely constituted trust?
A. It is valid and enforceable by volunteers
B. It is void ab initio
C. Equity will not assist a volunteer to enforce it
D. It automatically becomes a resulting trust
**CORRECT ANSWER: C. Equity will not assist a volunteer to enforce it
