Conceptually, entrustment and trust have many things in common, that is, they are both based on mutual trust, and both are acts in which one party is entrusted to handle affairs for the other party, and the other party bears the legal consequences of the entrusted affairs. But there is a difference between a trust and an entrustment. It can be said that a trust is a unique and special entrustment. To sum up, the differences between the trustees are as follows:.
1. Laws have different requirements for contract subjects and subject qualifications. The parties to the entrustment contract are the client and the trustee. The subjects of the entrustment contract are very wide, and the law has no special requirements for the trustee; the parties to the trust contract are the client, the trustee and the beneficiary. The trustee of a business trust is legally required It is a legal person specializing in trust business approved by the relevant departments.
2. The nature and scope of entrusted affairs are different. Entrustment is a general contractual relationship, and the affairs involved are not particularly limited. In addition to property entrustment affairs, other affairs can also be entrusted as agents; while the essence of trust is a property management relationship, and trust affairs are limited to specific affairs related to property management.
3. Whether the contract is paid or not is different. A trust contract is a paid operation for engaging in trust affairs; an entrustment contract can be either paid or free.
4. The names of the entrusted affairs are different. Entrustment can be done in both the name of the trustee and the trustor. In the latter case, the trustor directly has a relationship of rights and obligations with the third party (ie, the agency in civil law); while the trust is the trustee. When handling trust affairs in the name of the trustee, the client does not directly have legal rights and obligations with the third party.
5. The requirements for the establishment of the contract are different. The entrustment contract is an unnecessary contract, that is, it is established and takes effect when both parties reach an agreement on the entrustment matter; while a trust contract is a practical contract and an essential contract, that is, it must be in the form of a written document, and the actual delivery of the property to the trustee is the prerequisite for establishment. .
6. The provisions on contract termination are different. As far as entrustment is concerned, my country’s “Contract Law” stipulates that both parties to an entrustment contract have the right to rescind the contract at will, and may request to rescind the contract at any time; while the “Trust Law” has restrictions on the rescission of a trust contract, first of all, the trustee cannot rescind the trust at will. . When the trust is a self-benefiting right, the settlor can write off the trust in the middle. However, when the trust is a self-benefiting right, the settlor cannot revoke it at any time and cannot violate the purpose of the trust. And the trust does not terminate due to the death, incapacity, dissolution, bankruptcy of the settlor or the trustee (except where the settlor is the only beneficiary), nor does it terminate due to the resignation of the trustee.
Trust has legal features such as property independence, organization of trustee institutions, and securitization of trust beneficiary rights. The independence and transcendence of trust property enables the trustor or beneficiary to enjoy the benefits of the trust property within a limited risk, and is exempt from the recourse of the creditor of the beneficiary, establishing an effective bankruptcy isolation mechanism. This is an important institutional advantage for trusts to compete with other institutions in the asset management market, and it is also the charm of trusts.