[TYPE THE COMPANY NAME]
CLA2601
Assignment 2
Semester 1 |
Due 16 April
2025
NO PLAGIARISM
[Pick the date]
[Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
, Exam (elaborations)
CLA2601 Assignment 2 Semester 1 | Due 16
April 2025 Course
Commercial Law IIA (CLA2601)
Institution
University Of South Africa (Unisa)
Book
General Principles of Commercial Law
CLA2601 Assignment 2 Semester 1 | Due 16 April 2025. All questions
answered.
Question 1 Lesego and Phumudzo are the trustees of the Build Your Own
Home Trust, which carries on its business in the construction industry. Even
though the trust deed of Build Your Own Home Trust does not explicitly
authorise the trustee/s to purchase a back actor to excavate and prepare
building sites for construction, Lesego and Phumudzo purchase a back actor
for the Trust. Considering the requirement that trustees must preserve trust
assets, discuss whether Lesego and Phumudzo have acted lawfully. 5 marks
Have Lesego and Phumudzo acted lawfully?
Trustees have a fiduciary duty to act in the best interests of the trust and its beneficiaries and
to preserve and protect trust assets. They are also bound to act within the powers granted to
them by the trust deed. If the deed is silent on a specific action, trustees must consider whether
that action is reasonably necessary for achieving the trust’s objectives.
In this case:
The trust deed does not explicitly authorise the purchase of a back actor.
However, the business of the Trust is construction, and a back actor is a machine
typically used in construction for excavation and site preparation.
Buying the back actor could be seen as a necessary and reasonable step to preserve and
enhance the trust’s assets by enabling more efficient business operations, thereby
benefiting the trust.
Therefore, even without explicit authorisation in the trust deed, Lesego and Phumudzo likely
acted lawfully because:
Their action is in line with the trust’s purpose (construction business),
It was a reasonable and prudent investment aimed at enhancing the trust's operations,
And it can be argued that they acted in good faith to preserve and grow the trust assets.
CLA2601
Assignment 2
Semester 1 |
Due 16 April
2025
NO PLAGIARISM
[Pick the date]
[Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
, Exam (elaborations)
CLA2601 Assignment 2 Semester 1 | Due 16
April 2025 Course
Commercial Law IIA (CLA2601)
Institution
University Of South Africa (Unisa)
Book
General Principles of Commercial Law
CLA2601 Assignment 2 Semester 1 | Due 16 April 2025. All questions
answered.
Question 1 Lesego and Phumudzo are the trustees of the Build Your Own
Home Trust, which carries on its business in the construction industry. Even
though the trust deed of Build Your Own Home Trust does not explicitly
authorise the trustee/s to purchase a back actor to excavate and prepare
building sites for construction, Lesego and Phumudzo purchase a back actor
for the Trust. Considering the requirement that trustees must preserve trust
assets, discuss whether Lesego and Phumudzo have acted lawfully. 5 marks
Have Lesego and Phumudzo acted lawfully?
Trustees have a fiduciary duty to act in the best interests of the trust and its beneficiaries and
to preserve and protect trust assets. They are also bound to act within the powers granted to
them by the trust deed. If the deed is silent on a specific action, trustees must consider whether
that action is reasonably necessary for achieving the trust’s objectives.
In this case:
The trust deed does not explicitly authorise the purchase of a back actor.
However, the business of the Trust is construction, and a back actor is a machine
typically used in construction for excavation and site preparation.
Buying the back actor could be seen as a necessary and reasonable step to preserve and
enhance the trust’s assets by enabling more efficient business operations, thereby
benefiting the trust.
Therefore, even without explicit authorisation in the trust deed, Lesego and Phumudzo likely
acted lawfully because:
Their action is in line with the trust’s purpose (construction business),
It was a reasonable and prudent investment aimed at enhancing the trust's operations,
And it can be argued that they acted in good faith to preserve and grow the trust assets.
