, FBE2604 Assignment 2 (COMPLETE ANSWERS) Semester
2 2026 – DUE September 2026; 100% Correct solutions and
explanations.
Question 1
Introduction
A trust is a legal arrangement in which a founder transfers or undertakes to
transfer property to trustees, who must administer it for the benefit of
beneficiaries or to achieve a lawful objective. South African law requires
certain essential elements before a trust can come into existence. The courts
examine the wording of the trust instrument carefully to determine whether
the founder intended to create a legally binding trust or merely expressed a
wish or hope.
In this scenario, the issue is whether Mr Naidoo's statement created a legally
enforceable trust, despite the absence of an appointed trustee and the
discretionary wording used.
1. The intention required to create a trust
One of the most important requirements for the creation of a valid trust is the
founder's intention (animus contrahendi) to establish a legally binding trust.
The founder must clearly demonstrate an intention to create legal obligations
rather than merely expressing wishes, hopes, recommendations or moral
obligations.
South African courts apply an objective approach when interpreting the
founder's intention. They do not simply consider what the founder may have
privately intended but instead examine the wording of the trust instrument
and the surrounding circumstances.
The intention must indicate that:
• the founder wishes to establish a trust;
2 2026 – DUE September 2026; 100% Correct solutions and
explanations.
Question 1
Introduction
A trust is a legal arrangement in which a founder transfers or undertakes to
transfer property to trustees, who must administer it for the benefit of
beneficiaries or to achieve a lawful objective. South African law requires
certain essential elements before a trust can come into existence. The courts
examine the wording of the trust instrument carefully to determine whether
the founder intended to create a legally binding trust or merely expressed a
wish or hope.
In this scenario, the issue is whether Mr Naidoo's statement created a legally
enforceable trust, despite the absence of an appointed trustee and the
discretionary wording used.
1. The intention required to create a trust
One of the most important requirements for the creation of a valid trust is the
founder's intention (animus contrahendi) to establish a legally binding trust.
The founder must clearly demonstrate an intention to create legal obligations
rather than merely expressing wishes, hopes, recommendations or moral
obligations.
South African courts apply an objective approach when interpreting the
founder's intention. They do not simply consider what the founder may have
privately intended but instead examine the wording of the trust instrument
and the surrounding circumstances.
The intention must indicate that:
• the founder wishes to establish a trust;
