undue influence essay

Undue Influence In Contract Law

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Undue Influence Pq Notes Notes

Updated undue influence pq notes notes.

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Undue influence

In the past, actual and presumed undue influence used to be treated separately.

However, as was recently clarified, they are one and the same. The difference is simply evidential – if there is no actual evidence of undue influence, it can be presumed on the facts.

Royal Bank of Scotland v Etridge (No 2) a t 93: “ English law has identified certain relationships where the conclusion can prima facie be drawn so easily as to establish a presumption of undue influence. But this is simply a matter of evidence and proof. ”

Actual undue influence

In this rare category of cases, there is actual evidence of influence (usually in the form of bullying or pressurising), invariably in the context of a relationship, but there is no need to show that the transaction was suspicious.

The tactical advantage of showing actual undue influence is that the victim is entitled to rescission ‘as of right’ because there is no further need to show that the gift or transaction ‘calls for explanation’.

CIBC Mortgages v Pitt (1993): where there is evidence of actual undue influence, there is no need to show that the transaction was suspicious.

Drew v Daniel : “[I]n the case of actual undue influence something has to be done to twist the mind of a [contracting party] whereas in cases of presumed undue influence [where a relationship has been abused] is more a case of what has not been done , namely ensuring that independent advice is available to the donor.” Facts: D bullied his elderly aunt, C, into retiring as a trustee of the family trust and letting him take over, by taking advantage of her fragile and naïve personality . Later, C sued to get the contract rescinded. Verdict: Successful. There was actual evidence of D’s impropriety.

Presumed undue influence

In the absence of actual undue influence, the complainant must overcome three hurdles.

Existence of a relationship of trust and confidence

That the transaction calls for explanation

However, this presumption can be rebutted.

Relationship of trust and confidence

Certain stereotypical relationships automatically give rise to presumption of influence

Royal Bank of Scotland v Etridge (No 2) : “Examples of relationships within this special class are parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and medical adviser and patient. In these cases the law presumes, irrebuttably, that one party had influence over the other. The complainant need not prove he actually reposed trust and confidence in the other party. It is sufficient for him to prove the existence of the type of relationship.”

Solicitor and client: Wright v Carter. In Markham v Karsten , the presumption of influence arose even between a solicitor and client who had entered into a relationship. There was no reason to confine the presumption of influence to their legal relationship, it extended to their domestic relationship as well.

Doctor and patient: Mitchell v Homfray

Spiritual adviser and novice? Allcard v Skinner: mother superior and novice nun, who bound herself to obey the rules of the order. Presumption of influence arose. Roche v Sherrington : P was a member of the ‘Opus Dei’, a Roman Catholic Institution. He transferred money to fellow members, C and D. Presumption between C and D, and P, arose.

NB. Marital relationships and ‘banker and customer’ relationships not in class of automatic presumptions

Even if not stereotypical relationship, can show that their particular relationship was one of trust and confidence, on the facts

Barclays Bank plc v O’Brien : “Even if there is no relationship falling within Class 2(A), if the complainant proves the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence.”

Apply the cases below analogously:

Re Craig [1970] 2 All ER 390 (elderly widower and housekeeper)

Facts : 84-year-old widower, who was gentle and kind and sheltered, employed M, a housekeeper, as a companion. She made gifts to M representing 75% of her husband’s estate. The husband’s family challenged these gifts. Verdict : undue influence presumed, given the evidence.

O’Sullivan v Management Agency & Music [1985] QB 428 (young pop singer/songwriter and manager)

Facts : O, a young and unknown composer and performer of popular music wholly inexperienced in business matters, became closely acquainted and entered into an exclusive management agreement with a company. He did not have any legal advice before doing so. Verdict : undue influence presumed.

Leeder v Stevens [2005] EWCA Civ 50 (divorced lady and her new gentleman-friend)

Facts : In the context of a long-term relationship with the respondent (S), L had agreed to put the property into their joint names in return for S discharging the mortgage outstanding on the property. S paid off the remaining mortgage to the value of GBP 5,000 (a small proportion of the value of the property) and had a deed of consent drawn up by his legal advisers. The deed of consent was sent to L with a letter advising her to obtain independent legal advice before signing the deed. The deed was in fact prejudicial to L's interests, in that inter alia it empowered S to force a sale, and she signed it without obtaining advice. S then sought to enforce the deed by selling the property and taking half of the profits thus depriving L of her property rights and home. Verdict : L was in a position where she was putting her trust and confidence in S, Royal Bank of Scotland Plc v Etridge (No.2) [2001] UKHL 44, [2002] 2 A.C. 773, [2001] 10 WLUK 346 applied. The transaction was manifestly to the disadvantage of L and to the advantage of S. Theirs was a long-term relationship and L had allowed S to provide legal advice. There was no doubt that this was the sort of case where on the facts a situation of possible undue influence arose. The test was not whether L knew what she was doing but rather why she was doing it and, on that basis, a presumption of undue influence arose that could not be rebutted. The

Abbey National Bank plc v Stringer [2006] EWCA Civ 338 (non-English speaking widow and her son)

Verdict, per Lloyd LJ: undue influence presumed. “Mrs Stringer was unable to read at all and her understanding of English was limite d. She depended and relied on her son to assist her with any kind of correspondence or documentation or financial matter and placed trust and confidence in him . The property was her home and her principal asset. She was herself still responsible for the payments under the mortgage to the Halifax Building Society and for the outgoings towards which the first defendant made in effect no contribution. The transaction involved putting her home at risk … in relation to a new business of which she knew nothing and from which she would obtain no benefit … She believed that it had something to do with his business but she had no idea that by signing it she was putting her property up as security. If she had known that that was the document did she would not have agreed to sign it ”.

An expansion in the case law?

Malik v Shiekh [2018] EWHC 973 (Ch)

Verdict : undue influence presumed, based on vulnerability and dependence of victim on her sons. “The facts of Mrs Malik's advancing age, physical infirmity and immobility, impending mental degeneration, and...

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11 Undue Influence: Beyond Impaired Consent and Wrongdoing towards a Relational Analysis

• Published: August 2006
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This chapter represents the first stage in the development of a new theory of undue influence. It argues that any one-dimensional view of undue influence fails and that any credible theory of undue influence must accommodate a multidimensional approach. It addresses the poverty and lack of fit of both the claimant and the defendant-sided accounts of undue influence.

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Undue Influence

As James Munby firmly stated, “it is impossible to define, and difficult even to describe, at what point at which the influence becomes, in the eye of law, undue. ” The doctrine of undue influence has been agreed upon as “the ground of relief developed by the courts of equity as a court of conscience. ” It is an ordinary behaviour to influence individuals and persuade them to enter into transactions. However, the aim is to ensure that the influence exercised is not abused.

On the grounds of these concepts, it is impossible to set a flawless higher definitive criterion to be directly applied in every case to recognize whether undue influence had been exercised or not. Attempting to do that has been problematic. Firstly, courts have not been able to always distinguish between undue influence and unconscionability dealing. Secondly, titles categorizing undue influence as either “claimant-sided” or “defendant-sided” have not been successful in presenting undue influence as an independent doctrine.

Thirdly, subdividing undue influence into categories and setting rules under them increased the possibility of misconceptions arising. Since undue influence is an equitable doctrine, the criteria set to define it ought to only provide a framework for judges to exercise their jurisdiction. Hence, it allows them to assess cases flexibly based on the particulate facts provided rather than looking at undue influence as a common law doctrine and applying the rules set strictly.

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A main difficulty in attempting to set a comprehensive definitive description of undue influence is its numerous resemblances with the unconscionability notion. The usage of the word “unconscionable” in describing undue influence has established an opinion that it is based on the Unconscionability Bargains doctrine. Furthermore, misconception can be recognized in the case Lloyds Bank Plc v Lucken, where Mr. Lucken had pressured Mrs. Lucken to obtain a loan using her house’s security. Mrs. Lucken ultimately agreed to Mr. Lucken’s request, and the money was lent to one of Mr.

Lucken's eventually failing businesses. She later claimed that the charge was impeachable because Mr. Lucken had exercised undue influence upon her. The Court of Appeal refused relief disputing that the pressure placed was not “unconscionable. ” Tending to define undue influence in an excessive precise manner using the word “unconscionable” has rather caused confusion and difficulty in terms of separating it from unconscionability dealing. Therefore, even if the two doctrines share similarities, they should still be distinguished.

Undue Influence is concerned with “the quality of the consent or assent of the weaker party,” while unconscionable dealing is concerned with “the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity. ” Legal certainty requires that they be distinct; hence there should not be an attempt to limit undue influence under a precise definition unless it would be used to represent and clarify that it is an independent doctrine.

There has been an ongoing debate on whether undue influence is categorized as a “claimant-oriented” or “defendant-oriented” doctrine. The defendant approach suggests that it is “illegitimate” or “unconscionable. ” As Lord Hoffman stated in R v Attorney-General for England and Wales, “undue influence has concentrated in particular upon the unfair exploitation by one party of a relationship which gives him ascendancy or intense over the other. ” Including “unacceptable means” and “unfair exploitation” within the definition makes it powerfully appear as defendant focused.

Furthermore, claimant-sided orientation defines the influence as being “overbearing” and “too high. ” It originally aimed to differentiate unconscionability from undue influence, but rather obliquely connected it to another doctrine. It was pointed by Birks and Chin when they said, “Some jurists will still be attracted by the simplicity of the defendant-sided analysis, and they will point out, correctly, that the number of cases in which there is no unconscionable behaviour is very small…If there are two doctrines, there are two doctrines...

The correct approach will be to treat both undue influence and duress as plaintiff-sided factors which ground relief based on a degree of impairment of the plaintiff's capacity to make decisions. ” Even though they tend to separate the two doctrines, they still tend to relate it to duress. A new approach can be taken -that presents undue influence as a flexible doctrine- including the presence of flaws within the claimant and defendant oriented definitions.

It can be said that undue influence can be both “excessive” (claimant-focused) and used in an “improper” or “unconscionable” manner (defendant-focused) depending on the facts of the case. Some of cases set under presumed undue influence had been miscategorised after directly applying the rules rather than interpreting the facts valuably. To prove that presumed undue influence has been exercised, the claimant has to establish “a relationship of trust and confidence” and consequently prove a “transaction that calls for an explanation. Scepticism is apparent, as shown by Lord Browne Wilkinson when he describes those certain relationships as “a matter of law [that] raise the presumption that undue influence has been exercised. ” In other words, the relationship itself might give rise to a presumption of undue influence as applied under the two requirements. It should be observed each relationship should be interpreted individually rather than being grouped into a certain type. If jurists apply the rules rigorously, they will only be; as Lord Nicholls refers to in Etridge, presuming that influence exists.

Presumed undue influence taxonomy appears to have characteristics that divert undue influence from its essence meaning. It had been subdivided into firstly, “certain relationships as a matter of law raise the presumption that undue influence had been exercised,” and secondly, that “the complainant proves the existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer. ” Even if certain relationships do fall under the categories, they should not override the evidence set in the case facts that show whether undue influence has been exercised.

It is supported by Lord Nicholls of Birkenhead when he says, “The types of relationship, such as parent and child, in which this principle falls to be applied, cannot be listed exhaustively. Relationships are infinitely various…It would be absurd for the law to preserve that every gift by a child to a parent, or every transaction between a client and his solicitor or between a patient and his doctor, was brought about by undue influence. ” Due to the flaws within their definitions, the subdivisions set under presumed undue influence would only aid in describing the various parameters of previous cases.

However, once jurists intend to view them as firm rules that should be applied to any case that seems to relate to a certain criteria, they will be contradicting the overall idea that the doctrine is equitable. Flaws within the definition of actual undue influence caused it to overlap with other doctrines, hence emerging to misinform its overall implication. In Royal Bank of Scotland plc v Etridge , Lord Hobhouse defined it as “an equitable wrong committed by the dominant party against the other which makes it unconscionable for the dominant party to enforce his legal rights against he other. ” Also, Lord Nicholls emphasized that uncertainty builds up after subdividing the doctrine to actual undue influence, as it “compromises overt acts of improper pressure over or in such as unlawful threats. ” Thus, it has “much overlap with the principle of duress as this principle has subsequently developed. ” Flaws within the definition are evident, since it doesn’t seem to directly reflect a complete definition of undue influence that doesn’t overlap with other doctrines.

Furthermore, in Bank of Credit and Commerce International SA v Aboody, the Court of Appeal dismissed the appeal because it had not been shown that the transactions were manifestly disadvantageous to Mrs. Aboody, because even though Mr. Aboody had unduly influenced her, he had not acted with any improper motive. It appears that the Court of Appeal; after recognising that the case is similar with others which had previously been classified as actual undue influence cases, had directly applied the rules set strictly under it without recognising that equity cases are variant and can be each judged valuably by their unique facts.

The nature of the requirement “manifestly disadvantageous” was not used as its originator Lord Scarman had intended. This had been shown in the earlier case Bank of Credit and Commerce International SA v Aboody. “In a narrow sense, such a transaction plainly 'manifestly' is disadvantageous to the wife. She undertakes a serious financial obligation, and in return she personally receives nothing. But that would be to a relationship of solicitor and client or medical advisor and patient, in the case of husband and wife there are intent reasons why such a transaction may well be for her benefit. The latter extract added the factor of “intention. ” Intention appears to be a subjective matter that would be proven under the facts of a certain case, rather than applying the rules set under the categories of undue influence. Such cases therefore, “cannot be approached solely on a mathematical basis: it involves a value judgment. ” This directly relates to the original nature of undue influence, where its flexibility should be granted rather than it being applied under regulations.

The label “manifestly disadvantageous” should not be rejected, but only be set to clarify possibilities of what Lords may adopt in certain undue influence cases as Lord Scarman has proposed in National Westminster Bank Plc v Morgan. Overall, since it is a well vitiated concept known to be an equitable jurisdiction, courts should apply the doctrine of undue influence flexibly based on the facts of the case. There have been many subdivisions and titles that were set under undue influence. Firstly, arguments on whether undue influence is claimant-oriented or defendant-oriented.

Secondly, divisions that are known as actual and presumed undue influence (as well as subdivisions and requirements under them). Such criteria can be useful in describing the different parameters on what undue influence is generally all about. However, if the intention is to use it strictly to decide whether undue influence has been exercised or not, the flaws within their definitions might lead to misconceptions. Accordingly, returning to the basic definition that has been agreed upon would reduce the bewilderment and increase the possibilities that courts make correct jurisdictions. ------------------------------------------- [ 2 ]. Bank of Scotland v Bennett [1997] 1 F. L. R. 801. [ 3 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 749 [ 4 ]. Devenny and Chandler , Unconscionability and the Taxonomy of Undue Influence [2007] JBL 541 [ 5 ]. [1998] 4 All E. R. 738 [ 6 ]. Devenny and Chandler , Unconscionability and the Taxonomy of Undue Influence [2007] JBL 541 [ 7 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 753 [ 8 ]. ibid 752 [ 9 ]. [2003] UK PC 22 [ 10 ]. McKendrick, E.

Contract Law (6th edn Palgrave MacMillan, New York 2005) [ 11 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 752 [ 12 ]. Birks, P and Chin, NY, “ On the nature of undue influence” , in Beatson, J and Friedmann, D (eds), Good Faith and Fault in Contract Law ( Clarendon, Oxford 1995) 95 [ 13 ]. ibid 758 [ 14 ]. Barclays Bank v O'Brien [1994] A. C. 180 at 189 [ 15 ]. Enonchong, N. “Presumed undue influence: continuing misconceptions? ” (2005) LQR (accessed 12 December 2008) [ 16 ]. Royal Bank of Scotland plc v Etridge [2002] 2 AC 773 [ 17 ]. Stone R. and Cunnington, R. Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 758-759 [ 18 ]. Royal Bank of Scotland plc v Etridge [2002] 2 AC 773 [ 19 ]. [2002] 2 AC 773 [ 20 ]. McKendrick, E. Contract Law  (6th edn Palgrave Macmillan, New York 2005) 365 [ 21 ]. ibid [ 22 ]. [1990] 1 Q. B. 923 at 953 [ 23 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 756-757 [ 24 ]. Collins , H. The Law of Contract (4th edn LexisNexis, London 2003) 144-145 [ 25 ]. Devenny and Chandler , Unconscionability and the Taxonomy of Undue Influence [2007] JBL 541 [ 26 ]. [1985] 1 AC 686 at 709

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