Cap. 16 Art. 1124BDealings with third parties aware of fiduciary obligations.

(1) Where a third party is aware that a fiduciary is vested with ownership, has registered in his name, holds, exercises control or powers of disposition over property subject to fiduciary obligations, third parties may, in good faith, act in relation to the fiduciary as though he were the absolute owner thereof.

(2) A third party who acquires property under an onerous title as provided for in sub-article (1) shall not be affected by the fiduciary obligations to which the said property is subject, unless otherwise agreed upon.

(2A) Where a third party acquires property under gratuitous title as provided for in sub-article (1) from a fiduciary who acts in breach of the fiduciary obligation or where the third party has acquired property under gratuitous title to the detriment of a beneficiary, the third party shall be subject to the same fiduciary obligations which the fiduciary was subject to, which shall take effect when the third party becomes aware or where he reasonable ought to have become aware from the circumstances of the breach of the fiduciary obligations: Provided that the fiduciary obligations which the third party is subject to shall be limited to the extent of the breach or unauthorised gain, unless the Court provides otherwise pursuant to any of the remedies in article 1124A:

Provided further that the performance of the fiduciary obligations in accordance with the terms and conditions that the fiduciary is subject to shall not be considered to be gratuitous for the purpose of this article.

(3) A person dealing with a fiduciary in relation to property subject to fiduciary obligations need not -

(a) enquire into the terms and conditions of his authority, except in the case of a gratuitous transaction; or

(b) obtain the consent of the person to whom the fiduciary duties are owed or any other person, and shall, subject to being in good faith, be entitled to rely on declarations made by the fiduciary with regard to his authority.

(3A) Any third party dealing with a fiduciary in a transaction shall be entitled to enquire about the purposes of the fiduciary obligation, including the obligation of not exceeding the value raised by the transaction, or otherwise relating to the propriety subject to the transaction or the applicability of the funds in question.

(4) The fiduciary may furnish to any person dealing with him a certificate containing the following information without being in breach of any confidentiality obligations:

(a) that the authority exists, the date the relevant instrument was executed and that the authority has not been revoked;

(b) a declaration that he is authorised to carry out the transactions being entered into; and

(c) the identity and address of the fiduciary.

(5) Any fiduciary who issues any certificate containing any statement which he knows or ought to know is false shall be guilty of an offence and shall on conviction be liable to the punishment of imprisonment for a term not exceeding two years or to a fine (multa).

(6) Where a fiduciary is vested with ownership, has registered in his name, holds, exercises control or powers of disposition over property informs a third party with whom he is dealing that he is acting as a fiduciary, the third party is otherwise aware or should reasonably be aware, the fiduciary shall not be personally liable for the obligations entered into with such third party, other than those entered into in the exercise of his obligations. Where the third party is unaware of the fiduciary obligations, the fiduciary shall, subject to any terms which may have been stipulated or which otherwise apply under the applicable law, be personally liable to such third party in respect of any obligation entered into.

(7) The fiduciary shall have a right of recourse against the beneficiary where contemplated in the provisions of this Code or in any special law, by way of indemnity against such liability unless he has acted in breach of his duties, in which case he shall not be entitled to be indemnified.

(8) A fiduciary shall be presumed to have all the powers at law which are required for him to perform his fiduciary obligations towards beneficiaries or purposes.