TWO SIDES OF A COIN: PIERCING THE VEIL AND UNCONSCIONABILITY IN TRUST LAW

Abstract

While the concept of unconscionability serves as a protection against unjust terms in a contract, a piercing of the corporate veil acts as protective measure against the misuse of the juristic personality. Both doctrines, therefore, empower the courts to police particular unjust behaviour in the corporate environment. The question is whether there is any real interworking between the two concepts, and if so, how such relationship should be applied by the courts in general, and more particularly in matters dealing with trusts. The article explores the interface between these two common-law doctrines as well as recent attempts by the legislature to codify some elements thereof. It is submitted that while both concepts rely on objective standards of fairness, justice and reasonableness, it is necessary for the judiciary to develop the interworking between the two concepts, with particular emphasis on a balance between the interests of individual participants in the business environment with that of commercial and contractual certainty. Particular emphasis is placed on public policy as a deserving evaluative benchmark for contractual relationships, which will include the principles of fairness, equity, justice, good faith and reasonableness.