
Trusts can be used to create mutual collateral between the parties in connection with company acquisitions or a pending legal situation.
There are several transactions in which performance of the contract is not prompt and depositing a surety would be justified in order to ensure future performance by the parties, but the object of the transaction cannot be deposited due to physical or legal reasons.
In such a case, the party which has made more progress in performance is at a disadvantage with respect to the other party. Company acquisition is a typical example, where there is a lag, typically of several months, between the time of concluding the contract and the date of closing the transaction. A similar problem arises in the case of complex real estate purchase and sale transactions (e.g. an office building is sold together with the tenants) where property items (such as rail wagons, cargo vessels) are sold which are geographically spread and constantly on the move and it consequently takes a long time to verify them. A trust can be an acceptable solution for both parties for the duration of the pending legal situation in the course of which the trustee not controlled by either party takes possession of the object of the transaction and, manages it with due care until the pending legal situation is settled. When this situation no longer exists, the trustee releases the object of the transaction in accordance with the trust deed.