If the trustee fails to pay, the trustee may sometimes cancel the trust and consider the property he purchased for the trust as his own property.

A shareholder in the company had a right of first refusal to purchase shares in the company. Parties who sought to exercise this right entered into a trust agreement under which she would purchase shares in the company for them and they would pay her the price and bear the associated costs. However, the trust agreement did not specify the dates for payment by one of the beneficiaries, and when he did not pay his share, even though the trustee paid the sellers, the trustee announced the cancellation of the trust agreement with him and kept those shares in her hands.

The court ruled that the contract was legally terminated due to its breach by the beneficiary. A trust is created by law or by contract. When it comes to a trust created by an agreement, the parties to the agreement are entitled to shape the purpose of the trust and its terms in all its details, including when and how it will end. Sometimes a trust is similar to a fiduciary, in which the fiduciary must act according to the instructions of the fiduciary, and sometimes the fiduciary is seen as a party with independent discretion. Here, the institution of trust is used to simplify the purchase process and in an agreement that brings the parties’ relationship closer to a fiduciary relationship. Considering the nature of these relationships, the lack of explicit provisions that the purchase will be made with the fiduciary’s money and the reference in the fiduciary agreement to the purchase agreement indicate that the beneficiaries should have paid their share before the fiduciary paid the sellers, and if they did not do so, the beneficiary violated the provisions of the fiduciary agreement and the fiduciary has the right to cancel it.