A advances a sum of money to B for a specified purpose. Before that purpose can be accomplished, B becomes insolvent or divests himself of the money in favour of a transferee taking with notice of the circumstances in which it was obtained by B. If the purpose had been duly accomplished, B would have been indebted to A in the amount of the loan. May A in these circumstances recover the money and upon what basis? The House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd' ruled in favour of A, on a more elaborate version of the above facts, on the ground that the money had come into B's hands impressed with a trust for the specified purpose. The failure of this purpose had the consequence that B held the money on a secondary, or resulting, trust in favour of A. This article, in dealing with the Quistclose trust, seeks to treat it as a form of secured lending and to place it in the world of secured transactions alongside other forms of secured lending. The first half of the article will therefore explore the theme of security, making incidental references to the Quistclose trust, while the second half will be given over to a detailed treatment from the security point of view of the development of the trust. The equitable provenance of the trust is no impediment to the argument that it has a rightful place alongside other examples of security. Judicial statements have been made from time to time that equity has merely an unsettling effect when transplanted into the field of commercial law,2 but equitable intervention is far from being an unwelcome irruption in the field of security. Indeed, a compelling claim may be made that the modem subject of security is the invention of equity, which created the possibility of future assets secured financing and so permitted the encumbering of shifting and productive assets.3 The common law offered only the fixed mortgage over present assets and the possessory pledge.
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