Trust agreement

A trust agreement contains the obligation of the trustee to enter into a legal transaction in his own name but in the interest and at the risk of the trustor in exchange for compensation. As a rule, the legal transactions involved are assets which the trustee invests and manages according to the instructions of the trustor. In practice, trust relationships are common, for example in the banking and real estate sectors.

The term “trust agreement” is often used in connection with so-called fiduciary legal transactions. In such cases, the trust agreement regularly contains a core agreement according to which the trustor transfers an object (trust property) such as plots of land, movable property, securities (e.g. share certificates), rights and outstanding claims against third parties, e.g. account balances at a bank, or shares in a company, to the trustee in full and the latter – in exchange for a fee – acts in accordance with the trustor’s instructions and returns the object upon termination of the agreement.

The trust agreement is not expressly governed by law. However, the legal relationship is subject to the rules of the law of agency pursuant to Art. 394 et seq. of the Swiss Code of Obligations (OR) and of bailment pursuant to Art. 472 et seq. OR.