The following case highlights how important it is to seek the advice of a lawyer when setting up a trust fund as investors discovered when they sought to claim $18 million awarded to an inventor’s idea, which the court rejected.
The investor’s financial backing had allowed the inventor to complete his invention, which was a specific drilling device that was new to the market and filled a gap. An American company used the idea without the permission of the inventor who started court action and subsequently he received $17,774,135 from the company in respect of damages.
The financial support was part of a deal that ensured the return of the investment along with a share in the business, which was a mutually beneficial arrangement. The investors suggested that a trust had been established with the inventor before he died and that they were entitled to a share in the damages or in assets from his estate.
The High Court agreed whilst accepting from the paperwork provided, that the inventor had drawn up the agreement without the benefit of legal support, and that there was a trust in favour of the investors.
The Court of Appeal disagreed, on appeal by the inventor’s sons. The inventor made clear who his beneficiaries were, it was clear that no trust was ever created or meant to be.
The investors might have had redress against the inventor on the matter of breach of contract, however there was no statement to create a trust to be found in the paperwork. The inventor’s failure to deliver on his promises was not the making of a trust to the advantage of the investors.
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