Contract Law - Week 16 Lectures Undue influence Undue influence · Equitable doctrine. · Involves "undue" pressure or influence on a contracting party. · Current approach is based on o Evidence of "actual" pressure o "Presumptions" from relationships Definition Improper pressure, falling short of duress (as duress requires a specific threat), which makes a person enter a contract that they would not otherwise have entered. Example · Andy owns his own business. · The business gets into financial difficulty. . Andy needs to raise money. . He persuades his wife, Belle, to let him use their matrimonial home (joint ownership) as security for a loan. · The business fails. · The bank (lender) seeks possession of the home. · Did Andy "unduly influence" Belle? Classes of Undue influence Only one claim but make out the claim in 2 different ways . Actual undue influence- RBS v Etridge (2001)- Lord Nicholls described that it comprises overt acts of improper pressure or coercion " 8 conjoined appeals relating to situations where wives allowed husbands to use their homes for bank loans · Presumed undue influence- where undue influence is presumed from relationships, and the transaction is one that requires explanation - nature of relationship and nature of transaction Actual undue influence . Here, the claimant must prove, on a balance of probabilities, that in relation to a particular transaction, undue influence occurred - no need to prove a history . There does not have to be any previous history of such influence. BCCI v Aboody [1992] 4 All ER 955 o Williams v Bayley [1866] LR 1 HL Libya Investment v Goldman Sachs [2016] . Party in stronger position should do their best to make sure the party in the weaker position fully understands what they are entering into
Presumed undue influence · Relationships of presumed influence i.e where one party is presumed to repose trust and confidence in the other party - how much the law believes a party has trust in another party · The law automatically presumes trust and confidence in certain relationships - Irrebuttable presumption : o Parent/minor child, doctor/patient, solicitor/client, religious leader/follower o Note: does not include husband/wife o The presumption of influence here is irrebuttable. o Allcard v Skinner(1887) 36 Ch D 145 " Miss Allcard decided to join a convent, pledged herself to vows . Whilst in the convent, assigned her property to mother superior " Left convent and wanted to get property back " Court agreed she'd been influence, but couldn't get remedy because she had waited too long · Influence can also be presumed from the relationship itself ie the relationship has developed in a way that has created "trust and confidence"- evidence is needed to prove this relationship - · Examples- Bank/customer, Husband/wife, Employer/employee · The presumption here is rebuttable . Credit Lyonnais Bank v Burch [1997] 1 All ER 144 Need for explanation · If there is a transaction that needs explanation- then undue influence will be presumed · Example-Solicitor buys