Fraudulent Conveyances Act 1571


The Fraudulent Conveyances Act 1571, also known as the Statute of 13 Elizabeth, was an Act of Parliament in England, which laid the foundations for fraudulent transactions to be unwound when a person had gone insolvent or bankrupt. In the United Kingdom, the provisions contained in the 1571 Act were replaced by Part IX of the Law of Property Act 1925, which has since been replaced by Part XVI of the Insolvency Act 1986.

Text

It is clear from the text of the statute that it was framed in a purposive manner. So if someone had the intention of defrauding a creditor, unless a transaction was made bona fide and for good consideration, it would be void.

Historical background

In 1571, Parliament enacted this statute to prohibit transfers intended to defraud creditors or impede their collection efforts. This statute, known as the Statute of 13 Elizabeth, was passed in response to the widespread use of fraudulent transactions to defeat creditors. Until the 1600s, England had numerous sanctuaries not subject to the King's writ. These sanctuaries included churches but also certain areas defined by custom or royal grant. Debtors would often sell their property to friends or family at unreasonably low prices with the promise of buying it back later, move to a sanctuary, and then wait for creditors to exhaust their efforts or offer a favorable settlement.

Cases under the Act

United States

Many U.S. states enacted their own versions of the Statute of 13 Elizabeth after the American Revolution. The Act was later superseded by the Uniform Fraudulent Conveyances Act of 1918, which in turn was superseded by the Uniform Fraudulent Transfer Act of 1984. To date, UFTA has been enacted in 43 states and the District of Columbia.
Both the Bankruptcy Act of 1938 and the Bankruptcy Reform Act of 1978 also included their own versions of the UFCA, thus ensuring that bankruptcy trustees can "avoid" fraudulent transfers made by the bankrupt person within a certain time window before they filed for bankruptcy.

Commonwealth

The laws of England were incorporated into numerous of the colonies on specified dates. In Western Canada for example, the laws of England were incorporated as the laws of the Northwest Territories as at 1885. Although most former colonies have passed similar legislation, the 1571 Act may still be in effect in some jurisdictions.