Presumed undue influence Flashcards
(10 cards)
Allcard v Skinner [1887]
gift to religious sisterhood
- This case laid down the the categories of actual and presumed undue influence
- class 1 -> actual undue influence
- Class 2 -> presumed undue influence
- 2A -> the relationship provides a presumption of undue influence (e.g. solicitor & client)
- 2B -> the relationship could suffer from undue influence (e.g. couple)
Bank of Montreal v Stuart [1911]
wife guarantees husband’s business debts
- wife & husband are not automatically presumed to have undue influence
- wife was so far under husband’s influence
Zamet v Hyman [1961]
engaged couple
- A fiduciary relationship which can give rise to undue influence must be proven and is not presumed to exist between engaged couples
- A transaction that overly favours one party over the other, could be evidence of such a fiduciary relationship
- The presumption of undue influence may be rebutted by the person who benefitted proving that the other party gave their “full, free and informed” consent to the agreement
Re Brocklehurst’s Estate [1978]
elderly man not dominated by his friend
- The presumption of undue influence requires a relationship of trust and confidence via which the donee could have influenced the donor to make the gift.
- The presumption can be rebutted by showing that the gift was a free and independent exercise of judgment.
- This can be proved by showing that the donor had independent legal advice, but this is not the only way.
National Westminster Bank plc v Morgan [1985]
guarantor wife claimed influence by bank manager; ‘manifest disdavantage’ test
- The doctrine of inequality of bargaining power was rejected by the House of Lords; the doctrine of undue influence is not subsumed by it
- requirement that transaction be of manifest disadvantage for influenced person
Avon Finance v Bridger [1985]
couple influenced by son to grant charge
- lacking bargaining power & not receiving independent legal advice = undue influence
Cheese v Thomas [1994]
great uncle and great nephew bought house that lost value
- In ordering restitution, the court has discretion to apportion the loss of a contract for joint venture between the parties such that loss is not sustained only be the defendant
- ensures practical justice
Barclays Bank v O’Brien [1994]
guarantor wife; Lord Browne-Wilkinson’s guidance for lenders
- Established Classes 2(A) and 2(B) under presumed undue influence, see judgment below
- A transaction with a third party can be avoided if the third party has actual or constructive of undue influence
Credit Lyonnais v Burch [1997]
employee guaranteed employer’s debt; bank merely suggested legal advice; in any case no competent solicitor could advise this guarantee
- Where a transaction is excessively onerous, the third party has to take steps beyond what was laid out in Barclays v O’Brien to avoid being fixed with constructive notice of undue influence
- The relationship of employer and a junior employee (especially in a small company) is likely to give rise to a relationship of trust and confidence, which can be inferred where there is a particularly onerous transaction
Royal Bank of Scotland v Etridge (No 2) [2001]
landmark spousal guarantee case: presumption is evidential; ‘calls for explanation’; guidance for lenders
- removed manifest disadvantage
- disagreed with classes from Allcard
- set out guidelines for lenders -> to protect them
1. bank’s duty ot inform about possibility of undue influence
2. independent legal advice must be provided
3. solicitor’s confirmation that they have given individual legal advice
