When operating in the market, it is also relevant to bear in mind that donors and donees maintain trading relationships with third parties. Due to the gratuitous character of donation, third parties are potentially affected by the gratuitous dissipation of the donor’s patrimony, with potential risk to their rights of credit. From the perspective of third parties associated with the donee, any patrimonial gains by the donee may be regarded as desirable, and securing their rights in credit towards the donee-debtor. Recognising the relevance of the third parties’ expectations, the Scots law of donation will be reviewed, in order to understand if it may permit the fulfilment of rights held by third parties connected with the donating parties, which may be endangered by the donation.
Under Scots law of donation, the donee takes the subject matter of the donation cum onere. This means that the benefit granted to the donee is subject to any rights or obligations
affecting it, such as heritable securities600. Therefore, all third party rights or claims secured
by heritable securities601, mostly connected with donations whose subject matter is the
597 Forbes v Eden (1865) 4 M 143. 598 Anderson v Manson 1909 SC 838. 599 Bell v Trustees 1975 SLT (Sh Ct) 60.
600 Exclusive of personal debts, see Ballantyne’s Trustees v Ballantyne’s Trustees 1941 SC 35. 601 As defined by the Heritable Securities (Scotland) Act 1894.
transfer of real rights, will be valid. Furthermore, other third party rights based on succession
law, such as provisions relating to the legitim602 or insolvency rules603, will also apply.
The legitim, collation, and insolvency rules are applicable to donations in a market context. However, this thesis is concerned with the answers provided by national laws of donation to issues concerning third parties being affected by market donations which are potentially detrimental to their rights in credit. This protection exists in Scotland, being embodied by
the presumption against donation604. As mentioned above, the presumption against donation
is one of the most distinctive particularities of Scots law of donation. It must be overcome by the donee, in order for the juridical act to be classified in court as a donation. This means that the donee has the burden to prove (i) the animus donandi of the donor, and (ii) that the
benefit was delivered605. The presumption against donation is traditionally described as
based in the Roman maxim debitor non presumitur donare606, and is one of Scots law’s
particularities607. Scots law therefore distrusts benefits gratuitously created in the market
context608, because “no person is presumed to do what, in place of bringing him profit, must
certainly be attended with some pecuniary loss”609. This presumption is particularly strong
in the market context, where at least one of the parties in the donating relationship is acting with a view to profit.
A donation establishes a personal relationship in Scots law and it is presumed to be closely
connected with the family life610. This means that, in Scots law, a donation is regarded as a
normal occurrence between parties who are close and who know each other. The existence
602 As defined by Part II of the Succession (Scotland) Act 1964, in particular s 11-13.
603 As regulated by the Companies Act 2006; Insolvency Act 1986 (as amended); Insolvency Rules (Scotland)
1986; Bankruptcy (Scotland) Act 1985; Enterprise and Regulatory Reform Act 2013; Insolvency (Scotland) Amendment Rules 2002; Insolvency (Scotland) Amendment Rules 2003; Insolvency (Scotland) Amendment Rules 2010; Insolvency (Scotland) Regulations 2003; and Insolvency (Scotland) 2016, coming into force in the 30th of November 2016.
604 Stair, Institutions, I.8.2 and IV.35.17.
605 If the benefit is not delivered, the law of promise applies, and the promisee only holds a personal right to
enforce delivery of the subject matter of the donation. That is also why the donee may never receive, for example, a real right as promised, if the donor has validly disposed of the relevant right in a previous moment. See Gauld v Middleton 1959 SLT (Sh Ct) 61.
606 Stair, Institutions, I.8.2 and IV.35.17.
607 In direct opposition to what happens in Portugal of France, where there is no presumption in favor or against
donation.
608 Exceptions exist in what concern to donations that are not given in a market context, such as donations
given between family members or where an exchange of gifts is socially expected, such is the case of father and child, uncle and nephew, among others. See Nisbet’s Trs. V. Nisbet (1868) 6 M 567; Fairgrieves v.
Hendersons (1885) 13 R 98; Wilson v. Paterson (1826) 4 S 817; Macalister’s Trs. V. Macalister (1827) 5 S
219; and Forbes v. Forbes (1869), 8 M 85.
609 Erskine, Institute, III.9.32.
of the assumption that donations are entered into by two parties who are close has the effect of tempering the burden of proof placed on the donee’s shoulders when the donation is made in a market context. For example, Watson, while writing about Scots law of donation, states that “in certain circumstances, the presumption against donation is overcome, or rather inverted. For example, advances made by a parent or one in loco parentis, are presumed to
have been made ex pietate, in the absence of evidence to the contrary”611. It is therefore
possible to conclude that Scots law of donation is fit to protect the expectations of third parties associated with the donor because of the presumption that, if a donor is acting in a market context, he is acting in the pursuit of profit. Therefore, a gratuitous juridical act which is potentially able to impoverish him is unlikely to occur. If such gratuitous act is to occur, then the burden of proof is on the donee, who has to prove that the donation was made with animus donandi and that the benefit was delivered.
Furthermore, the expectations of third parties associated with the donee are that he will be allowed to keep the subject matter of the donation. This expectation is particularly strong when the third parties hold rights in credit, to be paid by the donee, which may be enforced against the benefit gratuitously received. In order to provide security to this class of third parties, the donee cannot be arbitrarily deprived from the benefit received under the donation. In other words, donations need to be irrevocable, and may not be revocable at the discretion of the donor. If a donation is allowed to be discretionarily revoked by the donor, the third party-creditor is deprived of access to the benefit received by the donee-debtor, now called back by the donor.