Chapter 6: Undue influence Flashcards
What is undue influence and what are the two types?
Where a person’s consent ought not to be treated as the expression of their free will. There could be instances of acts of improper pressure or coercion or where one party has influence or ascendancy over the other and they take advantage of their position
How can taking advantage of influence or ascendancy in a relationship be proved?
Victim must show that there is a relationship of trust and confidence and there is also a transaction which requires explanation either due to its type or value
What is the remedy following undue influence?
The contract or gift by deed may be set aside however this is an equitable remedy
How does this effect contracts where there are third parties involved?
If the contracting party has actual notice of the undue influence the contract will be affected
When is the creditor deemed to be put on notice?
Where the transaction is on its face not to the financial advantage to the surety concerned in the transaction and there is a substantial risk in transactions of that kind that the debtor has committed a legal or equitable wrong
What are the reasonable steps that the creditor must take to satisfy himself that the surety is fully aware of the risks being taken and been advised to take independent advice?
- Creditor does not need to see the surety, rather they can rely on solicitor confirmation that the surety has been advised
- Creditor must provide the solicitor with sufficient information about the transaction
- If the creditor is aware (actually or constructively) that the surety may have been misled, must tell solicitor
What is the duty of the advising solicitor?
- Must warn surety that their involvement may be relied upon by the creditor to counter allegations of undue influence
- Explain documents and their practical consequences
- Seriousness of any risks including the duration and terms of the security and the surety’s assets and means
- Fact that the surety has a choice
