## Facts

- Schebsman entered into a contract with a company that provided for payments to his wife and daughter after his death.
- During his lifetime, Schebsman held a contractual right to receive payments from the company.
- The agreement expressly stated that after Schebsman's death, his family would receive the payments.
- The court examined the nature of these payments to determine if they were held under a trust or constituted simple contractual rights.

## Issues

1. Whether the contract between Schebsman and the company created an implied trust in favour of his wife and daughter for future payments.
2. Whether the intent to create a trust was sufficiently established by the written terms of the agreement.
3. Whether the absence of consideration from the beneficiaries affected the existence of an implied trust.

## Decision

- The court held that while Schebsman had a contractual right during his life, the agreement set out a clear intention for his family to benefit after his death.
- It was found that the specific reference to the wife's and daughter's entitlement to the payments, coupled with the nature of the agreement, established an implied trust.
- The lack of consideration from the beneficiaries did not prevent the finding of a trust, as intent to create a trust was regarded as the decisive factor.
- The obligations of a contract debtor were distinguished from those of a trustee, with the latter entailing management of property for others.

## Legal Principles

- Implied trusts can arise from clear intent shown in contracts, even without express declaration.
- A mere contractual promise to pay does not create a trust; the parties' intention to benefit a third party as a trust beneficiary must be established.
- The existence of a trust does not require consideration from the beneficiary, whereas contracts do.
- The distinction between contractual obligations and trust duties is fundamental: a contract debtor is not a trustee unless the agreement indicates intent to create a trust.
- Later cases such as Vandepitte v Preferred Accident Insurance Corp of New York [1933] AC 70 and Don King Productions Inc v Warren [2000] Ch 291 have developed the test for identifying trust intent in contracts.

## Conclusion

Re Schebsman [1944] Ch 83 clarified that for an implied trust to arise out of a contract, there must be clear intent—demonstrated through words or conduct—to benefit third parties, and this does not depend on consideration from the beneficiaries; trust and contract obligations remain distinct.
