Define: Certainty Of Intention

Certainty Of Intention
Certainty Of Intention
Quick Summary of Certainty Of Intention

Certainty of intention is a fundamental requirement in contract law that refers to the parties’ clear and unequivocal expression of their intention to create legal relations and be bound by the terms of a contract. It entails demonstrating that both parties intended to enter into a legally enforceable agreement rather than merely engaging in casual discussions or preliminary negotiations. Certainty of intention is essential for the formation of a valid contract and requires that the terms of the agreement are sufficiently definite and specific to enable a court to enforce them. Without certainty of intention, a purported agreement may not be legally binding, as it lacks the necessary intent to create contractual obligations.

Full Definition Of Certainty Of Intention

If the existence of a valid express trust is disputed, a factor that the court will consider is whether there was sufficient certainty of intention—that is, whether the settlor genuinely intended to create a trust (see also three certainties). The party that wishes to assert the existence of the trust must provide evidence of the settlor’s intention in the form of written documents, words spoken by the settlor, or the conduct of the settlor.

Whether there was certainty of intention is a question of fact, not a question of law, and falls to be determined on the evidence provided to the court. Earlier decisions are, strictly speaking, not binding. Moreover, ‘intention’ in the law of trusts is an inherently subjective matter, more like intention in criminal law than in the law of contract.

Consequently, the trial judge has a high degree of discretion in interpreting the evidence, and it is difficult (as well as risky) to read too much into the cases in this area of law. However, a few general principles are readily apparent.

Most importantly, it is not necessary that the settlor use the word ‘trust’, nor even that he knew what a trust was, provided the intention is clear. For example, in Paul v. Constance (1976), the words ‘This money is as much yours as mine’, combined with the behaviour of the settlor, were held to be sufficient to find that a trust had been created.

Where certainty of intention is evidenced by conduct, the conduct must manifest a clear intention to deal with the trust property in the form of a trust (re Kayford (1975)), although, again, no reference needs to be made specifically to a trust.

Although the word ‘trust’ need not be used, it must be clear to the court that the settlor’s intention was not to create an outright gift (Jones v. Lock (1865)). If the court cannot distinguish between an intention to make a gift and an intention to create a trust, then the result is that neither of these outcomes will be obtained, and the property will remain with the settlor (Milroy v. Lord (1862)).

At one time, it was the case that precatory words could create trust. The modern position is that the creation of a trust imposes a burden on the trustee, and so a trust should not be inferred from precatory words alone. However, it is still possible to find trust in the overall wording of a will or the conduct of the testator.

Not only is the word ‘trust’ not conclusive that a trust is to be created, but the presence of the word ‘trust’ does not necessarily imply a trust in the legal sense. For example, in Tito v. Waddell (no. 2) (1977), the words ‘held in trust for’, when used by the Crown, were held to mean that a certain legal obligation was to be imposed, not a trust in the textbook sense.

If the test for certainty of intention fails, there cannot be a valid trust, and the person to whom the property is transferred becomes the legal and beneficial owner.


In English trust law, the concept of certainty of intention is a fundamental principle that must be established for a trust to be valid. Trusts are a vital aspect of equity, serving as a mechanism to manage and protect assets. Certainty of intention pertains to the requirement that the settlor, the person creating the trust, must clearly manifest an intention to create a trust. This overview will explore the doctrine of certainty of intention, its significance, key case law, and its application in various contexts.

Understanding Certainty of Intention

Certainty of intention requires that the settlor’s intention to create a trust be unequivocally clear. This means that the language used by the settlor must demonstrate a clear and definite intent to impose an obligation on the trustee to hold property for the benefit of the beneficiaries. The intention must be clear to both the court and any other reasonable person.

Historical Background and Legal Basis

The principle of certainty of intention finds its roots in early equity cases. It has evolved through judicial interpretations over centuries. The foundational case in this context is Knight v Knight (1840), 3 Beav 148. In this case, Lord Langdale MR established the three certainties required for the creation of a valid trust: certainty of intention, certainty of subject matter, and certainty of objects. Certainty of intention was highlighted as the cornerstone without which a trust cannot be recognised.

Case Law on Certainty of Intention

Numerous cases have shaped the understanding and application of certainty of intention. Some of the pivotal cases include:

  1. Knight v Knight (1840) 3 Beav 148:
    • This case laid down the fundamental principles for the creation of a valid trust. It emphasised that the intention to create trust must be clear and unambiguous.
  2. Paul v Constance [1977] 1 WLR 527:
    • In this case, the Court of Appeal held that a trust had been created based on the conduct and spoken words of the parties. Mr. Constance had repeatedly stated to his partner that the money in his bank account was as much hers as his, demonstrating a clear intention to create a trust.
  3. Re Adams and Kensington Vestry (1884), 27 Ch D 394:
    • Here, the court had to interpret the words “in full confidence that she will do what is right as to the disposal thereof.” It was held that these words did not create a trust as they were not sufficiently certain to show an intention to create a binding obligation.
  4. Jones v Lock (1865) LR 1 Ch App 25:
    • This case involved a father who handed a check to his infant son, saying it was for him. The court ruled that the words used did not indicate a clear intention to create a trust, and thus, no trust was established.
  5. Comiskey v Bowring-Hanbury [1905] AC 84:
    • This case contrasted with Adams, as the words “in full confidence” were accompanied by additional language that indicated a clear intention to create trust. Therefore, the trust was upheld.

Express Trust and Certainty of Intention

Express trusts are those created intentionally by the settlor, either during their lifetime or through their will. Certainty of intention in express trusts is critical because it establishes the settlor’s deliberate action to create a trust relationship. The language used in the trust instrument must leave no doubt about the settlor’s intention.

  1. Formal Declarations:
    • The most straightforward way to establish certainty of intention is through formal declarations in written documents. For example, “I hereby declare that I hold this property on trust for X.”
  2. Precatory Words:
    • Precatory words, such as “hope,” “wish,” or “desire,” often create ambiguity. Historically, courts have distinguished between precatory and imperative language. For instance, in Re Adams and Kensington Vestry, the use of the phrase “in full confidence” was deemed precatory and insufficient to create a trust.

Resulting Trusts and Certainty of Intention

Resulting trusts arise when the settlor’s intention to create a trust is implied by law. This typically happens when there is a failure in the express trust or the property has been transferred without consideration. Certainty of intention plays a different role here, as the focus is on the implied intention from the circumstances surrounding the transaction.

  1. Voluntary Transfers:
    • In cases of voluntary transfers of property without consideration, courts may infer a resulting trust if it appears that the settlor did not intend to make an outright gift. For example, in Vandervell v IRC [1967] 2 AC 291, the House of Lords held that there was a resulting trust when shares were transferred without clear intention for an outright gift.

Constructive Trusts and Certainty of Intention

Constructive trusts are imposed by the courts to prevent unjust enrichment or fraud, regardless of the parties’ intentions. Here, the requirement for certainty of intention is not applicable in the traditional sense because the trust is not based on the settlor’s intention but on equitable principles to address wrongdoing.

Testamentary Trusts and Certainty of Intention

For testamentary trusts, which are created through wills, certainty of intention is equally critical. The language in the will must unequivocally show that the testator intended to create a trust. Courts interpret the words of the will in their entirety to discern the testator’s intention.

  1. Clear Language in Wills:
    • Phrases such as “I direct my trustee to hold” or “I give my property to X to hold on trust” are examples of clear language indicating an intention to create a trust.
  2. Ambiguity in Wills:
    • Ambiguous language can lead to litigation, as seen in Re Hamilton [1895] 2 Ch 370, where the court emphasised the need to interpret the words of the will as a whole to determine the testator’s intention.

Certainty of Intention in Commercial Contexts

In commercial contexts, certainty of intention is crucial in financial transactions involving trusts. The commercial environment often involves complex financial arrangements where the creation of a trust can have significant legal and financial implications.

  1. Trust Deeds in Finance:
    • Trust deeds are common in financing arrangements such as debenture trusts or securitization transactions. These documents must clearly establish the intention to create a trust to ensure the proper management and distribution of assets.
  2. Quistclose Trusts:
    • A Quistclose trust, named after the case Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, arises when money is lent for a specific purpose. If the purpose fails, the money is held on trust for the lender. Certainty of intention is vital here, as the lender’s intention must be clear that the money is not an outright loan but is to be used for a specific purpose.

Challenges and Judicial Interpretation

The courts often face challenges in interpreting whether certainty of intention exists, especially when the language is ambiguous or the circumstances are complex. Judges must balance the need to uphold the settlor’s intention with ensuring that trusts are not imposed inappropriately.

  1. Objective Assessment:
    • Courts use an objective assessment to determine whether a reasonable person would conclude that the settlor intended to create a trust. This involves examining the words used, the context, and the actions of the parties involved.
  2. Evidential Challenges:
    • Proving certainty of intention can be challenging, especially when dealing with oral declarations or informal writings. The burden of proof lies with the party asserting that a trust exists.

Conclusion

Certainty of intention is a cornerstone of trust law in the United Kingdom. It ensures that trusts are created only when there is a clear and unequivocal intention by the settlor to do so. This principle protects the interests of all parties involved and maintains the integrity of the trust mechanism. Through various case laws, the courts have developed a nuanced understanding of how to discern and establish this intention, ensuring that the doctrine of trust remains robust and equitable. As financial and personal arrangements become more complex, the principle of certainty of intention will continue to play a critical role in trust law.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 7th June 2024.

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