Undue influence Flashcards
Definition
Influcence which goes beyond what is regarded as acceptable. The approach by law is to identify relationships which are unequal and then to consider whether the transaction resulted from the dominant person abusing that relationship.
Actual undue influence
Claimant must prove that the defendant used undue influence. Difficult. Daniel v Drew - use of a witness
Presumed undue influence
Must be a relationship of trust and confidence and the transaction must be one that calls for an explanation.
Presumed undue influence - Relationship of trust and confidence
Certain categories of relationship e.g solicitor and client, doctor and patient, parents and children, religious advisors and followers. In case where this is not presumed the innocent party will have to prove this. .
Presumed undue influence - Relationship of trust and confidence - Husband and wife
It is not presumed with husband and wife. However, Lloyds Bank v Bundy - covers husband and wife - where one is induced to put up the family home as security for a loan made to the other. Also covers bank and client. Rebuttable presumption - it is rebuttable
Presumed undue influence - Transaction must call for explanation - Royal bank of Scotland
The transaction was to provide security for a large overdraft facility for a business in which she has no interest.
RBS v Etridge
Client is a surety because she is granting security for another’s debts. The relationship between surety and debtor (husband) is non-commercial. Client is not involved in husband’s business so it’s not a contract for a joint benefit. This would put the bank on inquiry so it has to take reasonable steps either by holding a private meeting with surety or obtaining a certificate from a solicitor that they’ve explained the risks
Consequences
Makes the contract voidable. Remedy = rescission.
Mortgage become voidable
If there’s been undue influence then the mortgage/security will become voidable not loan agreement
