Contract Versus Trust

Distinguishing between contract and trust is useful, particularly when considering their functions in e-commerce. Contracts are social tools as well as legal instruments, and so expectations and relationships are as important in contracting as legal obligations. Trust is an expectation in society of honest reliable behaviour according to accepted norms. The inherent risks usually associated with new ways of manufacturing or communicating are less obstructive when the actors trust each other. The interaction between trust and contract in relationship development is complex, and thereby trust and contract can go ‘hand in hand’. Trust law provides for the creation of an entity known as a Trust that is separate from the settlor, the Trustee and the beneficiary. An important feature of Trust law is the overlap between the non-custodial duties of Trustees and the duties of loyalty of fiduciaries. Sometimes fiduciaries owe duties to their principal with respect to the property of their principal.