Lecture notes
Undue Influence
- Module
- Contract
- Institution
- The University Of Liverpool (UoL)
Lecture notes of 7 pages for the course contract at UoL
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Textbook Stone: 350 – 380Under Influence
Introduction
Renders contract voidable if contract was executed in result of persons under
influence
Influence perfectly acceptable – on when undue that law will influence
Uncertain limits
Mummery LJ Niersmans v Pesticcio quotes – “…fundamental misconceptions
persist even though the doctrine is over 200 years old and its basis and scope
were examined …. less than 3 years ago in the well-known case of RBS v
Etridge …” and “…need for a wider understanding, both in and outside the legal
profession, of the circumstances in which the court will intervene to protect the
dependant and the vulnerable in dealings with their property”
Definitions
“abuse of a position of influence” – Royal Bank of Scotland v Etridge
“consent obtained by unacceptable means” - R v AG for England and Wales
“abuse”, “victimisation” and “exploitation” - National Commercial Bank (Jamaica) v
Hew
“improper means of persuasion” – UCB Corporate Services v Williams
Key points
Relationships where there is trust, confidence, dependency
Imbalance of power between parties is important element of under influence
Law won’t permit transaction to stand if contract created by unacceptable means
Courts focus on process of contract not agreement itself
Prevent victimisation – concerned with relationship unfairness
How to distinguish normal and under influence
EXAMPLE: ascertaining the limits of acceptable persuasion. It may be legitimate
for a shopkeeper to convince a child to buy a Mars bar but not for a 30 year old to
convince his granny to sign over her house to him
Bank of Scotland v Etridge – permissible limits of the transaction. Cases where
someone has agreed to something but can’t be seen as their freewill.
2 views of UI
Undue influence is bad because it is illegitimate or unconscionable – focusses on
conduct of the influencer, defendant-focussed
Influence undue because its over-bearing – looks at lack of advice , claimant
focused
CASES DECISIONS EXTRAS
, Textbook Stone: 350 – 380
Division of topic
Simple 2 party cases
Complex 3 party cases
Actual UI
Presumed UI
Actual under influence
No relationship needed
More subtle than duress
Proved that one party exercised influence over another
Williams v Bayley – son forged father name on promissory notes and gave to
bank. Bank found out and were going to tell police but dad mortgaged house to
pay them. Court sided with father and said that there was no free will and that dad
mortgaging house was under influence of bank
BCCI v Aboody – young woman spoke with solicitor about mortgaging house to
secure husband business. Husband came in and shouted at solicitor which made
wife cry. Witnesses in room provided truth about undue influence. Court of Appeal
held that husband had undue influence of wife but couldn’t show that mortgaging
house was at a disadvantage to her.
CIBC Mortgages v Pitt – the defendant pressured wife to sign mortgage of
£150,000 to buy shares. They said mortgage was to buy holiday house. Shares
did well in the beginning but then the stock markets crashed in 1987 and bank
tried to get house. The wife raised actual influence in her defence. The House of
Lords overruled BCCI v Aboody because it wasn’t necessary for the claimant to
demonstrate manifest disadvantage where a defence is based on actual undue
influence.
Notes
Actual undue influence can be applied in cases where the doctrine of duress
narrowly fails to apply.
This will particularly be the case where the type of threat made is legitimate.
All that is necessary is that the undue influence caused the party to enter the
contract
Presumed Under Influence
Usually no concrete evidence because happens in subtler manner
Courts begin to give relief in the basis that evidence of UI could be presumed on
facts
Where a contract between parties in a relationship of presumed influence clearly
operates to the disadvantage of the weaker party, then UI will be presumed.
Presumed influence can be found by:
CASES DECISIONS EXTRAS
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