Undue Influence Flashcards
What is the primary remedy for undue influence in a contract?
The primary remedy is rescission, but it is subject to bars such as delay, affirmation, or third-party rights
How does undue influence differ from duress?
Duress involves threats or force, while undue influence arises from relationships of trust where one party takes unfair advantage
What are the two categories of undue influence?
The two categories are:
- Actual Undue Influence – Direct evidence of coercion or pressure
- Presumed Undue Influence – A relationship of trust where influence is inferred from circumstances
What was the key ruling in Royal Bank of Scotland plc v Etridge (No. 2) [2002]?
The House of Lords ruled that banks are “on inquiry” whenever a wife acts as a surety for her husband’s debts. The bank must ensure the surety receives independent legal advice before the agreement is binding
In the case of BCCI v Aboody [1990], why did the court find actual undue influence?
The court found actual undue influence because the wife was pressured by her husband’s dominant personality, but her claim failed due to no manifest disadvantage at the time of the transaction
What is the difference between Class 2A and Class 2B in presumed undue influence?
- Class 2A – Automatically presumed relationships (e.g., parent-child, solicitor-client)
- Class 2B – The claimant must prove trust and confidence existed
In Allcard v Skinner [1887], why was the claim of undue influence unsuccessful?
The claim was unsuccessful because Miss Allcard delayed too long in challenging the transaction, barring rescission due to delay
What 3 things must a defendant show to rebut the presumption of undue influence?
The defendant can rebut the presumption by showing that:
- The claimant received independent legal advice
- The transaction was reasonable
- The claimant acted freely
What did the court decide in Re Brocklehurst [1978] regarding alleged undue influence on an elderly person?
The court found no undue influence as the elderly man made the decision out of genuine friendship despite his age, and mere old age or generosity does not establish undue influence
In Barclays Bank v O’Brien [1994], what was the House of Lords’ ruling regarding banks and undue influence?
The House of Lords ruled that banks are “on inquiry” whenever a wife acts as a surety for her husband’s debts and must ensure she receives independent legal advice before enforcing the contract
What are the 3 common bars to rescission in undue influence cases?
The common bars to rescission are:
- Delay (Laches) – The claimant waited too long to challenge the contract
- Affirmation – The influenced party later confirmed or benefited from the contract
- Third-party rights – If an innocent third party acquires an interest in the contract, rescission may be prevented
In CIBC Mortgages v Pitt [1994], why was the transaction not voided for undue influence?
The House of Lords ruled that the transaction was not manifestly disadvantageous, even though undue influence occurred, because the loan seemed to benefit both spouses
