WORDS:2745
Q2:
This question is concerned with undue influence (UI), as there is no indication that
Eric was subjected to duress or that there was a misrepresentation.
The law on UI applies to gifts, in the same way as it is for the contract(RBS v.Etridge
(No.2)). Thus, if Eric can prove UI, the contract will get voidable. Thus, Eric would
able to avoid it and get £18,000 back as it will be like a contract never happened.
There are two evidential routes to proof UI, actual undue influence (AUI), and
presumed undue influence (PUI). This division comes from the case of Allcard v.
Skinner. Although there are two routes, they both lead to the same results(Etridge).
The difference is that in presumed undue influence, the Complainant must prove that
a close personal relationship and a transaction required an explanation. This will
arise presumption, but the defendant can rebut it.
In this case, Eric could use both routes, but PUI would be challenging to prove. As,
according to RBS v. Etridge for PUI, Eric needs to prove that he had a close personal
relationship. Their relation is not one of relationship which automatically establishes
the necessary relationship of influence (Etridge). Therefore, according to Lord
Nicholls, in Etridge, we should look into a relationship in which Eric is generally
disposed to agree to a course of action proposed by the Daniel, concerning the
matter with which the transaction dealt. Looking into facts, there many be special
relationship as they have been dating for several years, although do not leave with
each other and they keep their finances separate. However, Eric maybe predisposed
to do as he believes Daniel wishes but it seems that there is not sufficient evidence
to prove that. Thus, if Eric will be able to prove the first element than he will require to
proof that the transaction is not readily explicable by the nature of the relationship
between the parties.
In Allcard v skinner, the complaint had joined a religious order and made all her
possession gift, without taking any complete advice. When she left the order, she
sought to recover the gift by saying damages had induced her. The court found that
she was entitled to have her possessions returned. Although Lady Superior had not
done anything to induce this, this case also established that the bigger the gift, the
more likely it is that there was UI. Therefore, Eric requires to prove that the
transaction was not readily explicable by the nature of the relationship between Eric
and Daniel(Etridge, Morgan). It seems that the transaction was explicable by
"ordinary," "proper" motives with the context of that relationship. As although the gift
does seem large, but partner often helps each other’s in the time of need. Thus, it
seems that Eric will not able to second element, thus will unable to get presumption.
Therefore, Eric should adopt the route of actual undue influence (AUI) and get his
money back.
For AUI, BCCI v. Aboody set out four elements. The first element is that the weather
Daniel's capacity to influence Eric. Eric and Daniel are in a relationship for many
years. Thus, Daniel had the capacity to influence over Eric.
The second element is the exercise of influence over the Complainant. According to
Aboody, it does not require no more than that F did something to cause the influence
, to be operative. In Aboody, the exercise was proved by merely showing that the
husband had asked her to sign the documents. Daniel tells Eric that he will lose his
job and tells him he needs money as he wants to start a business. Thus, he is trying
to emotional exploit, Eric. Thus, as seen in Aboody, it is enough for the exercise of
influence.
The third element is more challenging to prove; it says the exercise of influence was
undue or wrongful. It seems as if Daniel merely hinted for the need of money without
doing anything undue. However, Hammond v. Osborn provides that if conduct is
"unimpeachable and that there [is] nothing sinister in it' will not rebut the Presumption
of PUI. Therefore, the same can be said for AUI that the conduct does not need to be
impeachable or sinister to be undue. If the conduct is not sinister, it not a wrongful
outside relationship; however, in the context of the relationship when the complaint
has influence over the defendant, it can be undue or wrong as the defendant owns
"duty of protection" to the complaint. As explained in Aboody, 'where conduct, which
is if undertaken concerning a stranger, would be unimpeachable and not sinister.
However, it nonetheless amounts to a wrongful if it is in the context of relationship as
due to unconscionable exercise of influence, as C is vulnerable' unconscionable
exercise of influence, as C is vulnerable.'
On the fact that Eric wanted an independent opinion but Daniel cancels meeting with
an adviser. Similarly, Daniel tries to exploit Eric by saying that he is ' not trusting his
business acumen emotionally.' Moreover, the fact that Daniel knows that Eric's is
giving his life savings, it becomes unconscionable for Daniel to accept. Also, the fact
that Daniel breakup with Eric. Thus, Daniel does not fulfil the duty of protection own
to Eric, and his conduct itself seems as wrong. Eric can thereby show that the
conduct was wrongful.
The final element of proving actual undue influence is causation; it must be proved
that the exercise of influence caused the complaints actions and influenced them to
enter the contract. In Aboody, CA seemed to apply a "but for" test. However, in UCB
v. Williams, CA said that in Aboody, "but for" causation was treated, not as the
causation element and held there was no requirement for "but for" in undue
influence. Therefore, saying that "a factor" was the right test for undue influence.
Although, it makes law unclear, however, it seems that due "protective" nature of UI,
"a factor" is better suited. Also, according to Zamet v Hyman, the Eric decision must
freely choose to enter into the transaction, after full, free, and informed thought.
Therefore, Eric must have all the information about the business plan and understood
the consequence of the gift given. The scenario clearly shows that Daniel's undue
exercise of influence was a factor in Eric's decision. Eric would not have given money
if he knew Daniel was going to leave him. Similarly, the fact that Eric did not take
independent advice shows that exercise of influence caused the complaints action.
In conclusion, Eric will get money back using AUI as the transaction will be voidable.
Thereby, he can avoid the contract.
a)
No, the outcome would be the same. However, it will be a lot easy for Eric to prove
UI. As there would be just a more persuasive argument toward the practice of undue
influence, as it will be a lot easier to prove that exercise was undue. As Daniel is
emotionally exploiting Eric about not trusting him and ending of a relationship.
Therefore, Eric can get his money back as the above case.
