victimisation

Question 1

how many elements of duress did Hammond J lay out in Pharmacy Care Systems

Answer 1

7

Question 2

what has the CA described Hammond J’s 7 elements of duress as

Answer 2

not as elements of duress, but as legal propositions of relevance to duress

Question 3

a threat to commit a crime, a tort or a breach of contract is likely to be regarded as ?

Answer 3

illegitimate

Question 4

a plea of economic duress will not succeed in cases where?

Answer 4

at the time the pressure is exerted there are no existing contractual relations between the parties and one does no more than strike a hard bargain

or where there is an existing contract and one induces a new agreement simply by threatening to enforce it

Question 5

the CA has spoken of the need for care in distinguishing between illegitimate ___ and legitimate ____

Answer 5

illegitimate threats and legitimate warnings

Question 6

what may be an alternative basis for a finding of illegitimate pressure

Answer 6

showing bad faith

Question 7

what are some examples of legitimate pressure?

Answer 7

• a party to a contract performing unsatisfactorily and then agreeing under some pressure to do further work
• a bank insisting on security to guarantee the continued provision of finance
• a contractor refusing to do further work while past work had not been paid for unless the defendant director guaranteed payment of the debt
• the Australian Rugby Football League, genuinely believing in its entitlement to exclude clubs from its competition, insisting that the clubc sign a loyalty agreement with it

Question 8

whether an illegitimate threat actually constitutes duress must be determined by reference to?

Answer 8

its coercive effect in the particular case

Question 9

the proper approach is to ask whether any _____ ____ induced the victim to enter into the contract and to ask whether that ____ ___ ____ what the law is prepared to countenance as ____

Answer 9

applied pressure

pressure went beyond

legitimate

Question 10

what is the effect of duress?

Answer 10

to render an agreement voidable, rather than void

Question 11

a right to avoid a contract for economic duress can be lost if?

Answer 11

the threatened party affirms the contract

Question 12

a contract induced by duress which has been affirmed cannot ?

Answer 12

be avoided against a person acquiring rights under it for value and without notice of duress

Question 13

a contract induced by duress which has been affirmed may be?

Answer 13

avoided against purchasers for value with notice and against volunteers

Question 14

what are the three types of victimisation?

Answer 14

duress, undue influence and unconscionability

Question 15

part of the philosophy of contract law is that contracts arise from ? and the courts should ?

Answer 15

the exercise of free will and therefore should be enforced and courts should not intervene

Question 16

to have a valid and binding contract there must be ?

Answer 16

true consent from both parties when entering into the contract

Question 17

a contract may be ___ or ___ ____ by the victim if he or she entered into the contract under duress, undue influence or if the contract results from an unconscionable bargain

Answer 17

vitiated or made voidable

Question 18

where does duress occur

Answer 18

where there is a pressure exerted by one party to coerce another party to act in a particular way.

Question 19

what are the three types of duress

Answer 19

• duress to the person
• duress to goods
• economic duress

Question 20

what does duress to the person consist of

Answer 20

• actual violent
• a present threat of violence or
• actual or threatened imprisonment

may also consist of:

• threats to prosecute
• extortion and black mail

Question 21

what happened in Barton v Armstrong

Answer 21

Managing director of a company was threatened with death if he didn’t agree to buy shares from the defendant at a substantial overvalue.

PC held the transaction could be set aside because it was obtained under duress.

Question 22

to constitute duress, threats must be/do what three things

Answer 22

• be of death, bodily harm or imprisonment
• be calculated to cause fear
• actually cause that fear

Question 23

what happened in Director of Public Prosecution of Northern Ireland v Lynch

Answer 23

“the will is defected not destroyed”

• people don’t need to have their will completely overridden, the will might be there but they just might not follow it

Question 24

when does duress to goods occur

Answer 24

when one party unlawfully seizes, detains, damages or destroys another’s goods - or threatens to do so - but the pressure exerted over the goods must be truly irresistible

Question 25

what is economic duress

Answer 25

threats affecting a party’s economic interests or well-being which are illegitimate and induce the contract

Question 26

there is a distinction between economic duress and ?

Answer 26

normal economic pressure

Question 27

what happened in Atlas Express Ltd v Kafco

Answer 27

Kafco had a contract with Woolworths to supply some baskets. They had a trading agreement with Atlas Express for 6 months to do the delivery to Woolworths.

Atlas realised they had underestimated the size of the baskets so it was going to cost them more to deliver those baskets to Woolworths. They said to Kafco they need to vary the price in the contract. Kafco said no - this is business, you made a mistake, too bad. Atlas sent an empty truck to Kafco with a piece of paper - you want your contract, you pay more or we’re not delivering. Under time pressure to retain their big contract with Woolworths, Kafco agreed to pay more to Atlas.

Later, Kafco refused to pay and argued they were under economic duress and that there was no new consideration.

Held: it is economic duress, the contract was voidable (or at least the term signed under duress).

When the head of Kafco signed, he did so unwillingly and under compulsion - no bargaining power, no commercial negotiation. Kafco would’ve gone bankrupt without their big contract to Woolworths.

Question 28

what are the two elements of duress as per Per Universe Tankships Inc of Monrovia v International Transport Workers Federation

Answer 28

• the pressure must be illegitimate

and

• it must coerce the other party to enter into the contract

Question 29

what happened in Per Universe Tankships Inc of Monrovia v International Transport Workers Federation

Answer 29

ITWF had blackened a ship (remove the ability for that boat to leave the harbour and do its business), unless a number of demands were agreed - money and employment conditions.

The ship owner paid to leave the harbour and later they tried to recoup the money, arguing the money was extracted under economic duress.

HOL held: money was paid under duress and identified two main elements of duress: compulsion of the will (lack of choice) and the illegitimate pressure, which has now evolved to the above.

Question 30

how does NZ law go further than Per Universe Tankships?

Answer 30

in Pharmacy Care Systems Ltd v Attorney-General, 7 elements of duress are outlined:

1. there must be a threat of pressure
2. that threat or pressure must be improper
3. the victim’s will must have been overborne by the improper pressure so that his/her free will and judgement have been displaced
4. the threat or pressure must actually induce the victim’s manifestation of assent
5. the threat or pressure must be sufficiently grave to justify the assent from the victim (it left the victim no reasonable alternative)
6. duress renders the resulting agreement voidable at the instance of the victim
7. the victim may be precluded from avoiding the agreement by affirmation

Question 31

what is the difference between legitimate and illegitimate pressure from A-G for England and Wales v R

Answer 31

the person does not have a reasonable alternative/practical choice in what they are going to be doing when there is illegitimate pressure.

it is easy to show it is illegitimate where it is an illegal act (e.g. blackmail)

Question 32

what are the 3 steps to deciding whether there is illegitimate pressure for a problem question

Answer 32

1. was there a threat against that person, or the exertion of illegitimate pressure on the party?
2. if so, did the threat result in the victim being coerced into entering into the agreement?
3. if we have duress, did the victim affirm the agreement?

Question 33

pressure is illegitimate if it ?

Answer 33

• consists of unlawful threats or

- it involves unconscionable conduct

Question 34

was the pressure illegitimate in Universe Tankships

Answer 34

yes - though not illegal, it was illegitimate because they could not leave the harbour

Question 35

what happened in the atlantic baron

Answer 35

the US dollar declined in value during the period the tanker was to be paid over and so they asked for a compensatory increase in the price.

this was economic duress (paying 10% more) but ultimately the claim failed because the plaintiff had affirmed the contract

Question 36

what happened in CTN Cash and Carry v Gallagher Ltd

Answer 36

cigarettes were delivered to the wrong warehouse and supplier insisted they should be paid for because they thought they had delivered to the right place - good faith for requesting payment.

therefore because it was good faith it wasn’t illegitimate pressure

Question 37

what was found in Atlas Express Ltd v Kafco Ltds

Answer 37

held unlawful and coercive threat amounting to duress = illegitimate pressure considered highly coercive

Question 38

what happened in Williams v Roffey Bros for duress

Answer 38

there was some practical benefit in paying more to have the contract be delivered but not economic duress or illegitimate pressure

Question 39

what happened in Haines v Carter

Answer 39

she said we’re separating and I’m keeping all these things and if you don’t agree to that I’m going to report you to Inland Revenue for your shady things. He agreed. Held: there is lawful and unlawful acts here - not illegal to report someone for tax but it is blackmail here which is unlawful. The act doesn’t have to be unlawful in order for illegitimate threat to be found.

Question 40

what cases are some examples of illegitimate pressure

Answer 40

Moyes & Groves Ltd v Radiation NZ Ltd

McIntyre v Nemesis DBK Ltd

Crown Commercial Construction Ltd v Lee

Question 41

what happened in Moyes & Groves Ltd v Radition

Answer 41

goods ordered from india took 2 years to come. the buyer genuinly believed the contract had been abandoned. seller wanted an increase in price because by the time they arrived they cost more. this was a genuine request and there was no duress here.

Cook J: economic duress should not be used lightly as a way to avoid contractual obligation

Question 42

what happened in McIntyre v Nemesis

Answer 42

a developer that was developing a piece of land for a trust wanted more money. court agreed the developer was a pain in the ass but his demand was not illegitimate. this is something more - putting them into a difficult/untenable situation.

Question 43

what happened in Crown Commercial Construction Ltd v Lee

Answer 43

reporting somebody who is not living in NZ under the appropriate visa is not unlawful but this threat could be considered blackmail and therefore constitute illegitimate pressure

Question 44

how does the concept of coercion play into illegitimate pressure

Answer 44

the pressure must be a factor in coercing the other party to contract. it must also be irresitible meaning that the person coreced chooses to submit to the demand rather than take an alternative course of action because a reasonable person would not be able to resist it.

Question 45

how does Pao On v Lau Yin Long say constitutes coercion

Answer 45

there should be “coercion of the will, which vitiates consent”

Question 46

what are the criteria to consider for coercion

Answer 46

• did the victim protest
• was an alternative course open to the victim
• did the victim get independent advice
• did the victim take steps to avoid the contract

Question 47

what happened in Pao On v Lau Yin Long

Answer 47

two parties owned a building and one agreed to sell the building to the other party by exchanging shares from each others’ companies. there was a clause that if the value of the shares dropped in 2 years the other party would give compensation.

the share fell more than the percentage agreed and it was argued there should be larger compensation.

this case, after looking at the criteria set out in it, was commercial pressure not coercion under duress and the court restated the two elements (illegitimate pressure and coercion needed)

Question 48

what cases are examples of coercion

Answer 48

Dimskal Shipping Co v ITWF

Haines v Carter
A-G for England and Wales v R

Question 49

what happened in Dimskal Shipping Co v ITWF

Answer 49

a boat was threatened to be blackened by the ITWF for exploiting its workers. The threat of strike actions would’ve come at an astronomical cost to Dimskal so they agreed to the demands.

The boat claimed economic duress and under the English law applied the threat of strike would’ve been an unlawful act and an illegitimate pressure because the cost was so astronomical it would’ve bankrupted the company so they had no other choice but to agree

Question 50

what happened in Haines v Carter

Answer 50

Young J considered there was a coercion element to a significant degree which left the victim with no practical choice but to submit to the demand. the blackmail led to no real choice

Question 51

is there coercion in AG for England and Wales v R

Answer 51

there was no illegitimate pressure or coercion - he had other choices even if they weren’t palatable or fun for him

Question 52

what are 3 effects of duress

Answer 52

• effect of duress is to render an agreement voidable rather than void - the agreement is valid until it is void
• the right to avoid can be lost by ratification or affirmation (Atlantic Baron)
• damages may be awarded in the tort of intimidation

Question 53

was there affirmation in Pharmacy Care Systems Ltd v Attorney-General

Answer 53

the party had taken too long to make their claim so they lost it

Question 54

is there affirmation in Haines v Carter

Answer 54

if you have taken steps to implement the contract then you have affirmed (effectively ratified)

Question 55

what happened in Dimskal Shipping Co v ITWF

Answer 55

a boat was threatened to be blackened by the ITWF for exploiting its workers. The threat of strike actions would’ve come at an astronomical cost to Dimskal so they agreed to the demands.

The boat claimed economic duress and under the English law applied the threat of strike would’ve been an unlawful act and an illegitimate pressure because the cost was so astronomical it would’ve bankrupted the company so they had no other choice but to agree

Question 56

what happened in Haines v Carter

Answer 56

Young J considered there was a coercion element to a significant degree which left the victim with no practical choice but to submit to the demand. the blackmail led to no real choice

Question 57

is there coercion in AG for England and Wales v R

Answer 57

there was no illegitimate pressure or coercion - he had other choices even if they weren’t palatable or fun for him

Question 58

what are 3 effects of duress

Answer 58

• effect of duress is to render an agreement voidable rather than void - the agreement is valid until it is void
• the right to avoid can be lost by ratification or affirmation (Atlantic Baron)
• damages may be awarded in the tort of intimidation

Question 59

was there affirmation in Pharmacy Care Systems Ltd v Attorney-General

Answer 59

the party had taken too long to make their claim so they lost it

Question 60

what does the complainant have to prove for undue influence under Barclay’s class 2

Answer 60

• there is a relationship of trust and confidence and
• the circumstances of the transaction call for an explanation

if the complainant can meet this requirement there is a rebuttable evidential presumption that the transaction was procured by undue influence and the dominant party then must produce evidence to rebut the presumption

Question 61

what is undue influence

Answer 61

the person in the dominant position uses their position in order to influence the will of the servient person

Question 62

Richardson J in Contractors Bonding Ltd v Snee said that “undue influence consists in the gaining of …. “

Answer 62

unfair advantage by an unconscientious use of power by a stronger party against a weaker in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by the stronger party”

Question 63

what are the classes of undue influence from Barclays Bank v O’Brien

Answer 63

Class 1 - influence shown to actually have happened - no necessity for a relationship as such

Class 2 - influence is presumed to have happened due to a relationship of trust and confidence between the parties

2A - certain relationships as a matter of law raise the presumption that undue influence have been exercised e.g. lawyer to client, doctor to patient, trustee and the beneficiary, employers and employees

2B - there may be no particular relationship but if the complainant proves de facto existence of a trust and confidence relationship, such relationship will raise the presumption of undue influence - have to show the trust and confidence relationship

Question 64

what are some relationships of presumed trust and confidence - the complainant must show that there is a special relationship in which the law presumes trust and confidence

Answer 64

• parent and child
• guardian and ward
• doctor and patient
• solicitor and client
• trustee and beneficiary or
• religious adviser and disciple

Question 65

if there is no relationship of trust or confidence (class 1), the complainant must prove there was undue influence on the facts as per Contractors Bonding v Snee, as per which 5 things

Answer 65

1. that the other party to the transaction had the capacity to influence the complainant
2. that the influence was exercised
3. its exercise was undue
4. its exercise brought about the transaction
5. that the transaction was to the manifest disadvantage of the complainant

Question 66

what does the complainant have to prove for undue influence under Barclay’s class 2

Answer 66

• there is a relationship of trust and confidence and

- the circumstances of the transaction call for an explanation

Question 67

what happened in Etridge

Answer 67

husband needed a guarantee for business loan and guaranteed it against the family home on which the husband and wife had a mortgage. therefore, the wife had to give her agreement. she has no direct benefit from the business.

wife claimed she signed under undue influence and wanted the agreement voided.

this lump of cases went before the HOL and they held banks have obligations to make them obtain independent legal advice especially for a couple and to watch out for undue influence or misrepresentation. But the wives also had their own obligation to get independent legal advice aside from the husband

Question 68

rebuttal of clause 2 presumptions of undue influence is a question of?

Answer 68

evidence

Question 69

to discharge the burden of proof, two basic facts must be established by the complainant as per Royal Bank of Scotland v Etridge, what are they?

Answer 69

1. the complainant placed trust and confidence in the dominant party
2. the transaction calls for an explanation or one which is ‘not readily explicable by the relationship of the parties’

the proof of these two facts is prima facie evidence that the dominant party abused the influence that s/he acquired in the parties’ relationship.

it is then for him/her to counter the interference. shifts the burden of proof.

Question 70

what happened in Re Brocklehurst

Answer 70

an old man with an estate granted shooting rights to his mechanic friend and the executor claimed he had taken advantage. the man did not get legal advice.

it was not a case of undue influence and there was no relationship of trust and confidence where the plaintiff had put their affairs into the hands of the other man. this was a genuine friendship and if anything Brocklehurst was the dominant personality

Question 71

automatic presumption of influence excludes those between?

Answer 71

• husband and wife
• engaged persons
• a child over a parent

Question 72

what happened in Roche v Sherrington

Answer 72

Roche was bound by a vow of poverty, chastity and obedience as a member of a catholic sect.

he left and wanted the repayment of his substantial donation. the court held it was between an incorporated body and not a person alongside Roche so the case failed (relationship of trust and confidence must be between person and person)

Question 73

what happened in LEAD Training Trust Ltd v Evans

Answer 73

students had set up a business venture and the teacher set up a contract and was getting all the money.

there was a relationship of undue influence

Question 74

what happened in Re Craig

Answer 74

Craig, after his wife died, employed Mrs Middleton as his secretary, helper and companion. He gave her approximately £28,000 in gifts over the next 6 years. When he dies, the beneficiaries sue for recovery of the gift due to undue influence.

The relationship was not in the special category of 2A but there was a high order relationship of trust and confidence by her being with him all the time.

a relationship of trust and confidence was established and the transaction called for an explanation

Question 75

what happened in Re Brocklehurst

Answer 75

an old man with an estate granted shooting rights to his mechanic friend and the executor claimed he had taken advantage. the man did not get legal advice.

it was not a case of undue influence and there was no relationship of trust and confidence where the plaintiff had put their affairs into the hands of the other man. this was a genuine friendship and if anything Brocklehurst was the dominant personality

Question 76

what happened in ASB Bank v Harlick

Answer 76

daughter and son in low asked the daughters father to guarantee a loan of a business venture for those two which failed.

a relationship must involve a certain degree of reliance in order to be one of trust and confidence for undue influence. This was a normal loan issue and the father did not give up his rights to manage his own affairs so this was not a matter of trust and confidence

Question 77

what happened in UDC Finance Ltd v Down

Answer 77

Down (director and shareholder) guaranteed loan to the company on husband and accountants advice.

company failed and she claimed undue influence.

the transaction was in need of an explanation because she wasn’t getting anything in return for her guarantee (no consideration obvious)

Question 78

what happened in Public Trust v Ottow

Answer 78

PT advanced money to a family trust and husband and wife beneficiaries personally guaranteed this.

money was to better their joint property so this was not a transaction called into question

Question 79

does a transaction need to constitute a manifest disadvantage for there to be the change of undue influence in nz

Answer 79

no - you only need a transaction that is not quite readily explainable (Etridge)

Question 80

the presumption of undue influence may be rebutted by showing ?

Answer 80

that the servient party:
1. had taken fully informed independent advice before entering into the transaction or

2. would have ignored that advice anyway or
3. had the ability to exercise, and did freely exercise, an independent will in entering into the transaction

Question 81

what happened in Inche Noriah v Shaik Allie Bin Omar

Answer 81

you have to show that the advice is independent (doesn’t necessarily have to be from a lawyer) and that the advisor knows all the circumstances of that person in that transaction.

here, the legal advisor was not aware of some material facts so the presumption could not be rebutted

Question 82

what happened in Hammond v Osborn

Answer 82

a disabled man gave a £300,000 gift to his helpful neighbour. there was a trust and confidence relationship between them and it raised question because this was 90% of his estate.

Osborn hadn’t abused the relationship and he had given the money after free and full informed consent but the court voided the gift even though there was no proof of undue influence.

by applying etridge, the defendant should be able to rebut the evidential presumption by stating evidence there was no abuse of the person in the dominant position, they have not influenced their will or exploited the weaker party

here the court went outside Etridge and found it was too much of a gift

Question 83

what is the effect of undue influence

Answer 83

the victim is entitled to rescind the transaction - the contract or the gift - they were induced to enter into by the exercise of the undue influence

Question 84

what are the restrictions to relief for undue influence

Answer 84

right to relief may be lost through affirmation or acquiescence, inordinate delay in taking action after the influence ceases or where a third party has acquired an interest in good faith and for good consideration

Question 85

undue influence might be imputed in 2 situations (Barclays Bank v O’Brien)

Answer 85

(a) the third party, who exerts undue influence is acting as an agent (actual or ostensible) of the bank; or
(b) the bank has actual or constructive knowledge of the undue influence (or misrepresentation) - the bank is put on notice

Question 86

what happened in Kings North Trust v Bell

Answer 86

husband fraudulently misrepresented the business to the wife and she did not get legal advice.

held: bank entrusted husband with getting the wife to sign the document = agent of the bank = principal is bound by the wrongdoing = bank cannot implement guarantee against the wife

Question 87

what happened in Contractors Bonding Ltd v Snee

Answer 87

son pressures alcoholic elderly mother to guarantee a loan to run a travel agency

it fails - he had unduly influenced his mother but bank not affected because he was only given the documents to give to her (no instruction to get signature)

Question 88

what happened in ANZ National Bank Ltd v Smith

Answer 88

low income earner and solo mother was the co-borrower of a loan with her friend to buy a property.

had the friend unduly influenced her and was she an agent of the bank?

only gave document to friend, no tasks set up for the friend and bank had even organised an independent solicitor for Smith which showed they were not trying to have the friend as agent

Question 89

what are the 4 doctrines for victimisation

Answer 89

• duress
• undue influence
• unconscionability
• incapacity

Question 90

what do you have to prove for duress

Answer 90

pressure (illegitimate in economic situations but in domestic just pressure is enough) (CTM Cash and Carry v Gallagher)

coercion (4 requirements): did he protest, did he have independent advice, did he take steps to avoid the contract, did he have an alternative course open to him

cannot affirm the contract and go to court later to claim duress (Atlantic Baron)

Question 91

what do you have to prove for undue influences

Answer 91

Etridge:

must be a relationship of trust and confidence and a transaction that requires an explanation (is one party being disadvantaged/it is a large transaction/have they had independent advice)

once you prove these two things, it gives rise to a rebuttable presumption of undue influence and the party can rebut it by showing they’ve acted independently

Question 92

what must be proven for unconscionability

Answer 92

Gustav:

• a position of disadvantage (give the list of factors that makes them disadvantaged)
• knowledge or ought to have known about that disadvantage
• victimisation - either active extortion or passive acceptance of an unconscionable bargain

Question 93

what must be proven for incapacity

Answer 93

Scott v Wise:
- you must be able to understand the general nature of the transaction as opposed to the details

O’Connor v Hart:
- knowledge of that incapacity

Question 94

what are some circumstances in which the bank would be put on notice (or not)

Answer 94

Barclays Bank v O’Brien - any emotional relationships covered. as soon as there is a serious disadvantage, the bank should be looking into the relationship

Credit Lyonnais Bank Nederland v Burch - bank had constructive notice the employee whose employer acted as a father figure might have been in issues of undue influence guaranteeing the business loan - there was no benefit or independent advice for her and this should’ve raised the banks suspicions.

CIBC Mortgages v Pitt - husband used remortgaged second house money to play on the stock market instead. the bank was not put on notice because they believed the money was going to be used for both the husband and the wife.

Etridge - if they have an interest in the commercial business its fine but if they go for a commercial loan the bank is not put on notice.

Question 95

how does Royal Bank of Scotland v Etridge outline the steps a bank should take when put on inquiry

Answer 95

reasonable steps to satisfy itself the wife has understood, in a meaningful way, the practical implications of the proposed transaction:

1. communicate with the wife directly
2. disclosure of financial information
3. inform the wife’s solicitor of belief or suspicion
4. the bank should insist on advice being given to the wife by a solicitor independent of her husband

—- in this case, the bank will not be put on notice —

Question 96

what cases adopt Etridge in NZ/

Answer 96

Horgan v Commercial Factors Ltd - all kinds of lenders are covered - banking system and products being sold in NZ are very similar to England so it can be transferred.

Rawleigh - solicitors have to take information from the bank seriously and have duties towards the wife. If they don’t they might be put on notice or be in breach of their duty.

UDC Finance Ltd v Down - also makes reference to Etridge

Question 97

what is the difference between a harsh term and an unconscionable bargain

Answer 97

• mere harshness of a contract does not affect its enforceability at common law (applying the will theory of contract)

at most the courts would merely require that the proferens expressly put the other party on notice of the term

equity was however prepared to intervene where the stronger party had acted unconscionably

Question 98

what do you have to show to plead unconscionability

Answer 98

• show that a stronger party took some undue advantage of the weaker’s position

the weaker party must be able to show:

1. that an unfair bargain was struck and
2. it was reached by the stronger party taking unfair and improper advantage of some disability by which the weaker was affected

Question 99

what happened in Hart

Answer 99

trustee of a trust owned a family farm and his brothers and him worked and lived on the farm.

solicitor recommended they step aside from farming as they are getting old.

they lease to neighbour with an option to buy the farm.

neighbour wants to buy within a few months so they enter into a sale of land under unfair conditions (sold for $180,000 but valuation $197,000).

Jack dies and two surviving brothers take action against the neighbour claiming Jack was old and had become senile due to a condition = unconscionable bargain.

dismissed because needs to be an action of unconscionability - party should’ve been active in obtaining an unfair contract. the terms also came from Jack and his solicitor and the solicitor did not know Jack was unwell. There was no action against the neighbour as the terms did not come from him

Question 100

what did Attorney-general for England and Wales v R claim about unconsciionability

Answer 100

claimed an unconscionable bargain but unconscionability was linked to a serious disadvantage on the part of the weaker party known by the stronger party and the exploitation of a disadvantage

Question 101

what is the difference between unconcsionability and undue influence

Answer 101

undue influence = pleaded where the stronger party has played some part in influencing the will of the weaker party so the weaker party does not reach a fully independent decision

unconscionability merely requires that the stronger party took undue advantage of a ‘special disability’ suffered by the weaker

Question 102

what are the elements of unconcionsbility from Gustav

Answer 102

1. weaker party is under a significant disability
2. stronger party knows or ought to know of that disability
3. stronger party has victimised the weaker in the sense of taking advantage of the weaker’s disability, either by:
   - active extortion of the bargain
   - passive acceptance of it in the circumstances where it is contrary to conscience that the bargain should be accepted
4. there is a marked inadequacy of consideration and the stronger party either knows or ought to know that to be so and

5, there is some procedural impropriety either demonstrated or presumed from the circumstances

Question 103

what happened in Bowkett v Action Finance Ltd

Answer 103

• elderly couple under pressure from son Michael to use house as loan security
• did not seek legal advice though Action Finance advised them to. Action explained the general nature of the transaction to them.
• son defaulted on loan and Action sought to foreclose. Bowkett’s got an injunction to stop the sale and pleaded an unconscionable bargain but Action wanted the injunction lifted
• the court held the Bowkett’s were under special disability when they entered the transaction because they were elderly, unversed in business matters and under pressure from their son. Action knew or ought o have known of their disability and they passively accepted the situation.
• it was against good conscience for Action to go through with the contract so the court refused to lift the injunction

Question 104

what happened in Gustav

Answer 104

a seller of land had cancer and the purchaser knew about it. court decided it couldn’t be set aside because the seller was capable of conducting their affairs at the time of the transaction

Question 105

what are the 3 critical elements of an unconscionable bargain as per Tipping J in Bowkett v Action Finance

Answer 105

1. the weaker party is under a significant disability
2. the stronger party knows, or ought to know, of that disability
3. the stronger part has victimised the weaker in the sense of taking advantage of the weaker’s disability

Question 106

how is a special disability or disadvantage met for there to be an unconscionable bargain

Answer 106

• not satisfied by proof of a mere disadvantage or inequality of bargaining power
• has to be some disabling condition or circumstance which significantly diminishes the affected party’s ability to make rational decisions in his or her own best interests
• can take the form of ignorance, lack of education, illness, age, mental or physical infirmity, stress or anxiety and other disabilities depending on the circumstances

Question 107

what happened in Blomley v Ryan

Answer 107

possibilities of disabilities were listed: poverty, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy, lack of education, lack of assistance

Question 108

what happened in Commercial Bank of Australia v Amadio

Answer 108

• elderly migrant italian couple didn’t speak must English but were pressured by their son to guarantee his loan against their house, which he doesn’t pay so the bank wants to sell there house
• court found: little English understanding, did not get professional independent advice, bank manager had knowledge of their lack of knowledge in this area and did not suggest they should get advice, bank knew son was in unstable business and knew the parents did not know of the situation, bank did not inform they were liable for the full amount of the loan (£50,000)
• so bank knew about the special disability and did nothing to help, instead taking advantage

Question 109

what happened in Moffat v Moffat

Answer 109

in a separation case, husband got everything including full custody of the children. the wife signed but didn’t seek the independent advice the solicitor told her to get. she was pregnant with her lover and felt bad so was vulnerable. she also didn’t know the true value of the marital home.

the husband was aware of all of these circumstances and took advantage of the situation so the transaction should be set aside

Question 110

what happened in Nichols

Answer 110

back neighbour wanted to do a property development to make 12 flats in the back and convinced front neighbour to agree to pay for a part of the new driveway.

he was a real estate agent manager so knew about these things while she was a nurse so didn’t.

she signed the first contract but it had her wrong maiden name and she refused to sign the new contract. he said she’s bound because she signed the wrong name first one.

court held she doesn’t have to sign - its an unconscionable bargain

Question 111

in Hart v O’Conner, the Privy Council held that victimisation consists of either ?

Answer 111

• active extortion

- passive acceptance of a benefit in unconscionable circumstances

Question 112

what is the effect of unconscionability

Answer 112

• the contract is voidable at the instance of the weaker party
• in appropriate cases the court may simply reduce that party’s liability instead of extinguishing it completely
• the right to relief can be lost through ratification, affirmation, delay, intervention by a third party or even unconscionable conduct by the weaker party

Question 113

what is a disadvantage for unconscionable bargain

Answer 113

a condition or characteristic which significantly diminishes a party’s ability to assess his or her best interests

Question 114

what are some factors that show an unconscionable bargain

Answer 114

inadequacy of consideration, procedural impropriety, such as unfair pressure being applied to obtain the other’s consent, and the absence of independence advice