Fraudulent Conveyance Legislation - a precursor of Preferences and Transactions at an Undervalue

18 AUG 2010

Early fraudulent conveyance legislation is an interesting area for examination. [1] Bankruptcy and usury were legislative bedfellows throughout the history of our subject. We also find statutes dealing with the fraudulent conveyance of property featuring in the development of our earliest insolvency laws. The first statute introduced in English law to tackle this problem was in 1351 and this perhaps well illustrates Glenn’s contention that, “never yet, so far as human experience goes, has it been proper to legislate in bankruptcy matters without providing for his [fraudulent debtor] case.”[2] Whilst the introduction of bankruptcy as a jurisdiction had to wait for another 192 years, this attendant area’s importance weighed heavy on the minds of those policy makers seeking to foster and improve trade and commerce in England. It must therefore be considered one of the founding areas of insolvency regulation.


During the reign of Edward III, the Black Prince, [3] the first statute designed to preclude fraudulent conveyances received royal assent.[4] This act was entitled, "Fraudulent assurances of lands or goods, to deceive creditors, shall be void. cap VI (1376)." A second debt related statute was passed during the reign of Richard II. In 1379 a statute entitled, Fraudulent deeds made by debtors to avoid their creditors, shall be void was enacted. This statute regulated fraudulent conveyances made by debtors within sanctuaries.[6] Any conveyances that were made by debtors who were in a sanctuary were declared void by this statute. Their property could then be executed against by the creditors.

The subject of fraudulent conveyances was revisited during the seventeenth century in a number of readings in the Inns of Courts.[8] It could be argued that fraudulent conveyances are the genesis of regulation that governs transactions at an undervalue and preferences in the modern context,[9] in that they are both later statutory attempts to ensure that dispositions of property in an attempt to spirit value away from the bankruptcy estate do not occur.[10] However, fraudulent conveyances and preferences are different,[11] but the former could be construed as the seed of the later. An early modern case on fraudulent transfers is The Case of the Bankrupts.[12] The judge held in the case that once an act of bankruptcy had been committed all dispositions by the debtor were invalid against he Commissioners in Bankruptcy.[13]


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[1] On fraudulent conveyances see: Roberts, WM. A Treatise on the Construction of the Statutes 13 Eliz.c.5 and 27.Eliz. c.4, relating to Voluntary or Fraudulent Conveyances, and on the Nature and Force of different Considerations to support Deeds and other Legal instruments in the Courts of Law and Equity. 8vo. London, 1800. 2nd American Ed, with references to American and English decisions, by a member of the Bar. 8vo. Hartford, 1825. See further: Coull, DC. The Prevention of Fraud prior to bankruptcy – a comparative study. Unpublished Ph.D. thesis. University of Aberdeen, 1974.
[2] Glenn Essentials at page 373.
[3] 13 November 1312 – 21 June 1377.
[4] (1351) 25 Edw III, Chp 17.
[6] 2 Rich II. stat.2, c.3, 1379.
[7] Radin, M. Fraudulent Conveyances at Roman Law (1931) 18 Virginia Law Review 109; Radin, M. The Nature of Bankruptcy [1940] University of Pennsylvania Law Review, vol.89, no. I, pages 1 to 38.
[8] See further: Manuscript - Thomas Harris. Reading at Middle Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1588; Manuscript - John Amherst. Reading at Gray’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1670; Manuscript – Thomas Wade. Reading at Gray’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1590; Manuscript – Roger Wilbraham. Reading at Gray’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1598; Manuscript - John Amherst. Reading at Gray’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1670; Manuscript – Francis Bacon. Reading at Gray’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1634; Manuscript – William Brock. Reading at Inner Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1608; Manuscript – Anthony Dyott. Reading at Inner Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1602; Manuscript – William Brock. Reading at Inner Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1608; Manuscript - Henry Hobart. Reading at Lincoln’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1603; Manuscript – George Watt. Reading  on 37. Hen V.III, c.9, usury at Lincoln’s Inn; Manuscript – John Tindal. Reading at Lincoln’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1585; Manuscript – Henry Hobart. Reading at Lincoln’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1603; Manuscript – John More. Reading at Lincoln’s Inn on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1608. Manuscript – Thomas Harris. Reading at Middle Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1588; Manuscript – George Shurley. Reading at Middle Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1616; Manuscript – John Bramston. Reading at Middle Temple on fraudulent conveyances, 27 Eliz I, c.4 fraudulent conveyances. 1623; Manuscript – William Whitaker. Reading at Middle Temple on fraudulent conveyances, 13 Eliz. I, c.5. 1627. Identified in Professor Sir John Baker QC's Seldon Society volume on the Readings in the Inns of Court.
[9] See IA86, s.238 (transactions at an undervalue) and IA86, s.239 (preferences). On these provisions see: Goode at Chapter 11.
[10] On this historical development of preferences see: Weisberg, R. Commercial Morality, the Merchant Character, and the History of the Voidable Preference (1986) Stanford Law Review 39;1-137. See also: Glenn, G. The Diversities of the Preferential Transfer: A Study in Bankruptcy History (1930) 15 Corn LQ. 521. See also: McCoid , J. Bankruptcy, preferences and efficiency: an expression of debt [1981] 67 Virginia LR 249, at pages 250-253 on the early history of preference regulation.
[11] McCoid, ibid, at page 250.
[12] 76. Eng Rep. 441 (KB. 1584).
[13] For an analysis of this case see: McCoid, ibid, at page 251.

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