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  • 3 Ch. Cas. 1, 22 Eng. Rep. 931 (Ch. 1682)

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    The rule against perpetuities prevents tying up property for too long after the death of those alive when the legal instrument was written. Specifically, it forbids creating future property interests that would vest beyond 21 years after the lifetimes of those living at the time. The rule serves to prevent excessive control of property by the dead, promote marketability of land, and prevent very large estates from remaining in one family for too many generations. It originated in the 1682 Duke of Norfolk's Case and was later codified in the Transfer of Property Act of 1882 in India.

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    The rule against perpetuities prevents tying up property for too long after the death of those alive when the legal instrument was written. Specifically, it forbids creating future property interests that would vest beyond 21 years after the lifetimes of those living at the time. The rule serves to prevent excessive control of property by the dead, promote marketability of land, and prevent very large estates from remaining in one family for too many generations. It originated in the 1682 Duke of Norfolk's Case and was later codified in the Transfer of Property Act of 1882 in India.

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    80 views6 pages

    3 Ch. Cas. 1, 22 Eng. Rep. 931 (Ch. 1682)

    Uploaded by

    Abhishek Raj
    The rule against perpetuities prevents tying up property for too long after the death of those alive when the legal instrument was written. Specifically, it forbids creating future property interests that would vest beyond 21 years after the lifetimes of those living at the time. The rule serves to prevent excessive control of property by the dead, promote marketability of land, and prevent very large estates from remaining in one family for too many generations. It originated in the 1682 Duke of Norfolk's Case and was later codified in the Transfer of Property Act of 1882 in India.

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    of 6

    Introduction

    The rule against perpetuities is a rule in the common law that forbids legal instruments
    (usually a will) from tying up property for too long a time beyond the lives of people living at
    the time the instrument was written. Specifically, the rule forbids a person from creating future
    interests (traditionally contingent remainders and executory interests) in property that would
    vest at a date beyond that of the lifetimes of those then living plus 21 years. In essence, the rule
    prevents a person from putting qualifications and criteria in his or her will that will continue to
    control or affect the distribution of assets long after he or she has died, a concept often referred
    to as control by the "dead hand" or "mortmain".
    Rule against perpetuity has been dealt under section 14 of Transfer of Property Act, 1882.
    Perpetuity simply means indefinite Period, so this rule is against a transfer which makes a
    property inalienable for an indefinite period.
    The rule against perpetuities serves a number of purposes. First, English courts have long
    recognized that allowing owners to attach long-lasting contingencies to their properties can
    negatively impact the ability of future generations to freely buy and sell the properties, since
    few people would be willing to buy a property that had unresolved issues regarding its
    ownership hanging over it. Second, judges often had concerns about the dead being able to
    impose excessive limitations on the ownership and use of property by those still living. For this
    reason, the rule only allows testators (will-makers) to put contingencies on ownership upon the
    following generation plus 21 years. Lastly, the rule against perpetuities was sometimes used to
    prevent very large, possibly aristocratic estates from being kept in one family for more than
    one or two generations at a time.
    Historical background
    The rule has its origin in the Duke of Norfolk's Case of 1682.1 That case concerned Henry,
    22nd Earl of Arundel, who had tried to create a shifting executory limitation so that some of
    his property would pass to his eldest son (who was mentally deficient) and then to his second
    son, and other property would pass to his second son, but then to his fourth son. The estate plan
    also included provisions for shifting property many generations later if certain conditions
    should occur.
    When his second son, Henry, succeeded to his elder brother's property, he did not want to pass
    the other property to his younger brother, Charles. Charles sued to enforce his interest, and the

    1 3 Ch. Cas. 1, 22 Eng. Rep. 931 (Ch. 1682)


    court (in this instance, the House of Lords) held that such a shifting condition could not exist
    indefinitely. The judges believed that tying up property too long beyond the lives of people
    living at the time was wrong, although the exact period was not determined until another
    case, Cadell v. Palmer, 150 years later.2
    The rule against perpetuities is closely related to another doctrine in the common law of
    property, the rule against unreasonable restraints on alienation. Both stem from an underlying
    principle or reference in the common law disapproving of restraints on property
    rights. However, while a violation of the rule against perpetuities is also a violation of the rule
    against unreasonable restraints on alienation, the reciprocal is not true. As one has stated, "The
    rule against perpetuities is an ancient, but still vital, rule of property law intended to enhance
    marketability of property interests by limiting remoteness of vesting." For this reason, another
    court has declared that the provisions of the rule are predicated upon "public policy" and thus
    "constitute non-waivable, legal prohibitions.

    How Perpetuity May Arise?


    Perpetuity may arise in two ways
    I) by taking away from transferee his power of alienation (such a condition has been made void
    under S.10 of the Act)
    II) by creating future remote interest (which has been prohibited under S.14 of the TP Act)

    Rule against perpetuity is the rule against such creation of future remote interest or we can say
    is arule against remoteness of vesting(interest). Remoteness here means The state of being
    unlikely to occur.

    Object of the Section


    It is important to ensure free and active circulation of property both for trade and commerce as
    well as for the betterment of the property. There are people who want to retain their property
    in their own families from generations to generations. This will be a loss to the society because
    it will be deprived of any benefit arising out of that property. Free and frequent circulation is
    important and the policy of the law is to prevent the creation of such perpetuity.

    2 1 Cl. & Fin. 372, 6 Eng. Rep. 936 (H.L. 1832, 1833)
    Thus, the object of section 14 is to see that the property is not tied- up and to prevent creation
    of perpetuity.

    What Does The Law Says?


    The rule against perpetuity as dealt under section 14 makes such a transfer (of property)
    inoperable where condition is laid down for vesting of interest after the life of the last preceding
    interest holder/s and beyond the minority of the ultimate beneficiary.

    Breakdown of the Section


    The language of this section can simply be broken down into the following manner
    No transfer of Property can operate to create an interest which is to take effectAFTER
    The lifetime of one or more persons living at the date of such transfer( i.e. lifetime of the last
    prior interest holder/s) and
    The minority of some person who shall be in existence at the expiration of that period and to
    whom, if he attains full age, the interest created is to belong.( i.e. minority of the ultimate
    beneficiary who must have been in existence at the death of the last prior interest holder/s)

    So clearly S.14 provides that in a transfer of property, vesting of interest cannot be postponed
    beyond the life of the last prior interest holder and the minority of the ultimate beneficiary.

    Essential Ingredients of the Section


    The following ingredients must be present to attract the provisions of Section. 14
    There must be a transfer of property.
    The transfer should be to create an interest in favour of an unborn person (i.e. ultimate
    beneficiary).
    The vesting of interest in favour of the unborn must be preceded by life or limited interest of
    living person/s (i.e. prior interest holder).
    The unborn person must be in existence (either in the mothers womb or born) at the expiration
    of the interest of the living person/s

    If all the above ingredients are present then the vesting of the interest in favour of the ultimate
    beneficiary may be postponed only up to the life or lives of living persons plus the minority of
    the ultimate beneficiary but not beyond that.
    Minority
    Minority in India terminates at the age of 18 years or when the minor is under supervision of
    Court at the age of 21 years. But inSaundara Rajan v. Natarajan,A.I.R 1925 P.C. 244, the Privy
    Council held that since at the date of the transfer it is not known whether or not a guardian
    would be appointed by Court for the minor in future, for purposes of S.14 the normal period of
    minority would be 18 years. So, the vesting can be postponed only up to the life of the prior
    interest holder and the minority i.e. 18 years of the ultimate beneficiary.

    Period of Gestation

    The maximum limit fixed for postponing the vesting of interest is the life or lives of the prior
    interest holder/s plus the minority of the ultimate beneficiary. But when a child is in his
    mothers womb at the time of the expiration of the interest of the prior interest holder and since
    for the purposes of being a transferee a child in the mothers womb is a competent person, the
    latest period up to which the vesting may be postponed would be the life of the prior interest
    holder/s plus the period of gestation ( I.e. the period during which a child remains in womb
    after being conceived which is normally about 9 months or 280 days) plus minority of the
    ultimate beneficiary. The period of gestation shall not be counted in addition to minority if the
    ultimate beneficiary is already a born person.
    Example. If A (prior interest holder) dies then the ultimate beneficiary i.e. X must already be
    in existence at that time either in the mothers womb or as a born child. If X is in mothers
    womb, say of 6 months then the maximum period up to which vesting of period may be
    postponed would be life of A plus six months ( period of gestation) plus 18 years ( minority of
    X)

    Maximum Possible Remoteness of Vesting

    In India, the maximum permissible possible remoteness of vesting is


    Life of the preceding interest Period of gestation of ultimate beneficiary (only when the child
    is not born) minority of the ultimate beneficiary

    How It Differs From English Law?


    Under English Law, vesting of interest may be postponed up to life or lives of last person plus
    a period of 21 years irrespective of the age of minority of ultimate beneficiary and a transfer
    shall not be void even if vesting has been postponed beyond 21 years but it shall take effect as
    if the age of 21 had been substituted for the specified in the instrument, which may be any fixed
    period longer than 21 years.
    In India, Section1 4 provides that vesting can be postponed up to life or lives of the last person
    plus the minority of the ultimate beneficiary. Minority in India terminates at the age of 18 years.
    After the existing life or lives, vesting cannot be postponed in India beyond 18 years in any
    circumstance.

    Exceptions
    The provisions of Section 14 shall not apply in the following cases
    Transfer for public benefit - Where property is transferred for the benefit of the people in
    general, then it is not void under this rule. E.g. for the advancement of knowledge, religion,
    health, commerce or anything beneficial to mankind.

    Covenants of Redemption - This rule does not offend the covenants of redemption in
    mortgage.

    Personal Agreements - Agreements that do not create any interest in the property are not
    affected by this rule. This rule applies only to transfers where there is a transfer of interest.

    Pre-emption - In this there is an option of purchasing a land and theres no question of any
    kind of interest in the property, so this rule does not apply.
    Perpetual Lease - It is not applicable to the contracts of perpetual renewal of leases.

    Mortgages - because there is no creation of future interest.

    Conclusion
    Therefore S.14 provides a rule against perpetuity i.e. a rule against remoteness of vesting, in
    absence of which the society shall definitely suffer a loss because of the stagnation of the
    properties. It would cause great hardship in the easy enforcement of law which shall be
    detrimental to trade, commerce, intercourse and may also result into the destruction of the
    property itself. So this rule against perpetuity ensures free and active circulation of property
    both for the betterment of the property as well as for the betterment of the society at large.

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