Unconscionable bargains Flashcards
Ayres v Hazelgrove
A very old person suffering from dementia sold her valuable paintings to a door to door dealer for a derisory sum. Other facts are not so obviously covered and some judges have gone to tortuous lengths to bring claimants precisely within a modern version of the Fry v Lane ‘poor and ignorant’ test.
Blomley v Ryan
A good example was in the Australian case where relief was granted to the defendant, an alcoholic. The defendant sold his property at an undervalue to purchasers who knew about and exploited his intoxication by bringing a bottle of rum with them to negotiations.
Hart v O’Connor
The vendor, held farm land on trust for the benefit of himself and his siblings. When they were too old to farm longer, the vendor without consulting his brothers sold the land to the defendant. One of the brothers sought to set the transaction aside on the basis that it was an unconscionable bargain (he argued that the vendor was of unsound mind). He then conceded to say that the transaction was objectively unfair without the need for proof of unconscionable conduct by the stronger party.
The PC disagreed and said “there was no equitable freud, no victimisation, no taking advantage”
Boustany v Pigott
Miss P was an elderly lady who leased one of her properties to Mrs B. Miss P had dementia and so her cousin took over the management of the properties. Then while the cousin was away on business, Mrs B invited Miss P to tea and lavished attention on her. Mrs B then took Miss P to the office of Mrs B’s solicitor, where she produced a new 10 year lease. The terms of the lease were extremely favourable to Mrs B and the solicitor pointed this out, while Mrs B said nothing. Miss P signed it and later the cousn sought to have the lease set aside. The PC agreed.
Fry v Lane
Emphasised that one of the features which justified relief was that the brothers received neither independent nor adequate advice.
Crédit Lyonnais v Burch
Miss Burch started working for her employer at the age of 18. She became close to the director. She often visited his home to do babysitting and went on holiday with the family to Italy. Her boss asked her to put her flat up as security for a loan taken out by the company. She agreed believing it was no risk to her. The bank had written to her and informed her that the charge was unlimited in amount and time and advised her to seek independent advice. She at no time was told of the extent of the company’s borrowings which stood at £270,000 neither did the bank satisfy themselves that she had in fact received independent advice.
Held:
The agreement of Miss Burch had been obtained by undue influence and the bank had notice of this as the transaction was so obviously to her disadvantage. The bank had taken insufficient steps to avoid constructive notice. Therefore the transaction could be set aside.
