Abstract

The stipulatio alteri, which is regarded as the mode through which an inter vivos trust is created, is still being scrutinised and continues to be shrouded in uncertainty. Some of these uncertainties have been created by courts, which have held that acceptance enables the third party to step in as a contracting party to the trust. This article shows how case law has developed based on this faulty premise, and explains the impact the premise has had on the involvement that is needed from beneficiaries to effect amendments to a trust deed. It is argued that the true interpretation of the stipulatio alteri, in line with common law, focuses on the question of the rights that were intended for beneficiaries. The various intended rights may enjoy different forms of protection against amendment of the trust deed. When the issue of amendment comes up, consideration must be given to the position of the beneficiary, not by deeming him or her to be a contracting party, but by evaluating the rights the founder intended to confer on him or her, the value or protection of these rights, the effect of the amendment clause on these rights, and any rights that the beneficiary may possess ex lege trust law.