How Do Trust Disputes Occur in Commercial Litigation?

When you own or co-own a business, there are many different disputes that can arise between other parties that are involved or have a stake in your company. Business trust disputes occur when an investor (trustor) sues its trust company. When creating a trust, the trustor and trustee sign a written contract under which the trust property is controlled by the trustee. Business trust disputes often occur within these trust contracts, but these kind of contract disputes are pretty different than normal contract disputes.

What is a Business Trust?

A business trust is created by a contract between the trustor and trustee. However, it would be unwise to view a trust only as a contract because it includes additional elements that a contract does not. The legal basis for a trust is to maintain dual property ownership under common law. This means that a trust’s duty is to protect the property that it’s maintaining, rather than protect the individual rights of the beneficiary. A trust has multiple functions: to preserve the contract under which it was created, to protect the beneficiary’s property, and to act as an independent legal entity or business organization.

How Can a Trust Dispute Occur?

Since there are multiple aspects involved in a business trust, and since a business trust is essentially a business organization, a business trust dispute will involve both a contract dispute and a commercial dispute. One of the main ways a contract dispute can arise is through a breach of contract. Other issues that can occur, besides the business trust contract are:

  • Illegitimacy and noncompliance of a trust plan
  • Altering in status or nature of trust plan (termination, moving of trust property)
  • Trustee’s inability to perform duties of trust plan
  • Actual loss of trust property

Our Middlesex county commercial litigation lawyers have experience in handling business disputes, and business trusts are no exception. Contact us today for a consultation.



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