ABSTRACT
This chapter focuses on the nature of Quistclose trusts. The most significant overlap between commercial activity and the law of trusts relates to taking title in goods and to the acquisition of security as part of a transaction. Quistclose trust is a means by which a lender of money can retain a 'security interest' in loan moneys by inserting a clause into the loan contract which provides that borrower may use those loan moneys only for specified purposes. The trust transfers only equitable title to the beneficiaries of the trust arrangement subject to the limitations and provisions of the trust itself. A Romalpa clause is a contractual provision which enables the titleholder to property to retain common law rights in that property. Securities in this sense are financial instruments which can be traded on open market which evidence a debt. Typically the trust will make the rights of the parties contingent on their performance under terms of any commercial contract.
