I am Sorry, Said the Trust Exculpation Clause


1. Exculpation clauses: an overview – 2. Ouster clauses: scope and effects – 3. Exemption clauses: Armitage v Nurse – 4. Exemption clauses: an assessment – 5. Conclusion

1. Exculpation clauses: an overview

When discussing exculpation clauses, it is first necessary to have an accurate understanding of the limitations of the matter. The picture is rather complex, indeed. Introductorily, it is possible to identify three main legal tools whereby the trustee’s liability can be dealt with: (i) extension clauses, (ii) ouster clauses and (iii) exemption clauses.

Even though the aforementioned clauses can, in the end, produce similar results (that is, weakening, to a certain extent, the beneficiaries’ position and strengthening the trustees’), the legal mechanisms respectively triggered are fundamentally different. Roughly speaking, extension clauses confer or enlarge trustee’s powers; ouster clauses limit or negate the trustee’s duties; and exemption clauses limit or negate the trustee’s liability for damages caused by his/her breach.

In the present work we will leave aside the first category (extension clauses), which plays a role somehow at a different level, and we will consider the other two institutions. It is worth noting that exculpation clauses do not only concern trustees but also all those subjects who exercise duties and/or powers under a trust and, therefore, who are potentially exposed to the relevant responsibilities, e.g. protectors.

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