A Study on Interest Conflict under Trust Relationship: Centered on Duty of Loyalty Normative

Based on English and American law, trust mechanism has always been the key position on the transmission of trans-generational wealth. The current trend of trust through adopting asset management for the purpose of financial investment, the significance of trust to the field of commercial law is as well increasing. Thus making “trust governance” an important assignment in law studies. For the above reason, this thesis paper is to discuss the main pillars of trust governance from the duty of royalty perspectives. The aims of this paper are to explore how the characteristics of duty of royalty normative are defined; and to further investigate how to reach balance among the following issues: contract flexibility, monitoring agency cost and regulation of external cost. Moreover, problems such like the core features of duty of royalty normative, and how it interact with the sole interest rule under the situation of absolute conflicting-interest prohibition are worth paying attention. In conclusion, trust law should code duty of royalty normative into legislature. As a spring board, further define the characteristics of duty of royalty normative’s default rule and set its boundary, one should also include the best interest rule and alternatives, to fulfill the sake of maximizing and protecting the beneficiaries’ welfare under the relationship of trust.