New York Law (NYLE) Practice Exam

Which statement about constructive trust is NOT true?

1. It is an equitable remedy to prevent unjust enrichment

2. It requires a promise to hold property for another

3. It requires a wrongful act

4. It does not require any relationship between parties

The correct answer is: It requires a wrongful act

The assertion that a constructive trust requires a wrongful act is not true. A constructive trust is indeed an equitable remedy established primarily to prevent unjust enrichment. It is typically imposed by a court to address situations where one party has wrongfully obtained or holds property that in fairness should belong to another. However, the imposition of a constructive trust does not hinge solely on the presence of a wrongful act in every instance; rather, it can also arise in situations that do not necessarily involve wrongdoing but are aimed at achieving fairness and justice between parties. For instance, a constructive trust can arise in cases involving an implied promise or understanding, where one party would benefit unjustly at the expense of another, even absent overt wrongdoing. This flexibility allows constructive trusts to serve as an effective tool in equitable law, focusing on fairness rather than just legal technicalities. In contrast, the other statements accurately reflect elements of constructive trusts. They highlight that this remedy is indeed designed to address unjust enrichment, can involve an understanding to hold property for another, and does not necessitate a specific relationship between the parties involved.