Undue Influence, unconscionability ad equality of bargaining

Question 1

what is undue influence

Answer 1

where one party,C, places trust and confidence in another party, D, and D exerts their influence upon C in a way which is ‘undue’, then C may have a claim for undue influence

Question 2

what is the effect of undue influence

Answer 2

render the contract voidable such that it can be rescinded

Question 3

what is the difference between presumed undue influence and actual undue influence

Answer 3

actual - requires proof that contract was entered into as a result of actual influence. deliberate steps to persuade a donor to act. - Libya Investment Authority v Goldman Sachs International.
presumed - based around a lack of independent advice or support. - ETRIDGE

Question 4

what are the 2 types of presumed categories

Answer 4

• protected/ special relationships influence exists ad a matter of law because sue relationships matter based on trust and confidence- ALLCARS V SKINNER.
• case established on the facts- no automatic assumption of influence

Question 5

what is manifest disadvantages

Answer 5

Originally it was a requirement that the claimant seeking to find relief through actual undue influence must also establish that they had suffered a manifest disadvantage (See BCCI v Aboody above).

However, it was held in CIBC Mortgages v Pitt that manifest disadvantage was not required in cases of actual undue influence.

Question 6

how do you establish cases of presumed undue influence of class b (all the other relationships)

Answer 6

1. There was a relationship which as a matter of law gives rise to a presumption of undue influence
2. The transaction is one which can not readily be explained by the relationship of the parties.

Question 7

what kind of relationships give rise to automatic presumption of undue influence

Answer 7

Parent: child

Solicitor: Client

Religious advisor: disciple

Doctor: Patient

Trustee: beneficiary

Question 8

how can presumed undue influence be rebutted?

Answer 8

demonstrating that the vulnerable exercised free will in entering the transaction.
- demonstrating that they were fully aware of the risks before agreeing.

Question 9

what is a constructive notice

Answer 9

they arise where the bank is
1. put on enquiry and
2. fails to take reasonable steps to ensure that the transaction was entered freely without the exercise of undue influence.

Question 10

what are the categories of class b (all the other relationships) within presumed undue influence

Answer 10

1. vulnerability and reliance on advice
2. physical dependance and reliance
3. institutional hierarchy
4. love and affection and reliance on money.

Question 11

can special relationships of presumed influences be rebutted

Answer 11

no the are classified by the law

Question 12

after a presumed influence is established what is the next step

Answer 12

to prove the transaction was one calling for an explanation.
the transaction must be one that suggests use of influence where it is not explained by ordinary motives expected in that relationship

Question 13

what are Relevant factors suggesting the use of influence are usually combined in some way

Answer 13

■
a very large gift or one that risks the complainant’s only asset;
■
a transaction that was disadvantageous to the complainant;
■
wrongful conduct like misleading statements, pressure, or emotional blackmail;
■
unavailability of independent legal advice.

Question 14

how does undue influence operate in three-party cases

Answer 14

• must ensure the other party has seemed legal advise so that they are fully aware of all the risks associated.
• if it is a bank, a wife and a husband
  1. burden is on wife to show that the bank had constructive notice.
  2. burden is then on the bank to prove reasonable steps were taken, once they are put on enquiry.- Barclays Bank v Boutledge

Question 15

Syndicate bank v Dansingani

Answer 15

Lord Nicholls clarified the use of a solicitor to ensure the client is fully aware of risks

Question 16

Massey v Midland Bank

Answer 16

not just wife and husband, anyone living together

Question 17

what are the remedies available for undue influence

Answer 17

no tort available so can’t rely on undue influence to cliam damages
RESCISSION
- LOOK AT BARS TO RESCISSION
ETRIDGE - confirmed^^^

Question 18

when would a bank not be put on inquiry for undue influence

Answer 18

when the loan advanced to them both jointly as the other partner would not benefit from the money
- non commercial relationahip

Question 19

what is an unconscionable bargain

Answer 19

where it shocks the sense of the court
- transaction can be set aside

Question 20

what does unconscionability require

Answer 20

A transaction that is so disadvantageous that it is unfair to the complainant;
■
The complaint has some vulnerability or weakness that has been exploited;
■
The resulting transaction was overreaching and oppressive

Question 21

Fry v Lane

Answer 21

example of weakness in the sense of being ‘poor and ignorant’

Question 22

Alec Lobb v Total Oil

Answer 22

unconscionability requires exploitation beyond he bad bargain, mist be morally improper

Question 23

cresswell v potter

Answer 23

applied 3 requirements from fry v lane but emphasised its not exhaustive.
test for unconscionabiltiy

Question 24

when may a contract be unconscionable

Answer 24

A contract may be unconscionable if the claimant is ‘poor and ignorant’, the terms of the contract are substantially disadvantageous to the claimant, and the claimant had no independent advice. Moreover, the defendant must have exploited the claimant’s weakness in a morally culpable manner. This is a narrow doctrine.

Question 24

when may a contract be unconscionable

Answer 24

A contract may be unconscionable if the claimant is ‘poor and ignorant’, the terms of the contract are substantially disadvantageous to the claimant, and the claimant had no independent advice. Moreover, the defendant must have exploited the claimant’s weakness in a morally culpable manner. This is a narrow doctrine.

Question 25

when will the courts step in

Answer 25

when there is an substantive inequality of bargaining power

Question 26

what is the purpose of the consumer protection from unfair tradings practices regulations 2008

Answer 26

apply between consumers and traders and the regulations provide remedies for conduct that includes duress and undue influence