ABSTRACT
A Quistclose trust comes into existence in relation to a loan contract when the intention of the parties is that the borrower is required to use the loan moneys for a specified purpose. This chapter explains the legal basis of loan contracts as a background to Quistclose trusts. Quistclose trusts are usually intended to be used if the borrower goes into insolvency but there is no reason why these trust rights cannot operate more generally than that. The first explanation of the nature of a Quistclose trust, which has been attributed to Lord Wilberforce in Barclays Bank v Quistclose. A Quistclose trust considered to be a constructive trust on the general basis that it would be unconscionable for the lender to assert title to that money if it was not used for the purpose for which it was lent.
