Undue influence

Question	Answer
What is undue influence?	Undue influence is an equitable remedy and is available at the court's discretion. It covers situations where one party has gained an unfair advantage over the other by applying improper pressure that does not amount to duress.
BCCI V ABOODY	The courts defined two classes of undue influence. Class 1 - actual undue influence Class 2 - presumed undue influence
BARCLAYS BANK PLC V O'BRIEN	Class 2 was redefined into two subdivisions; Class 2a - presumed undue influence (arising from a special relationship) Class 2b - presumed undue influence (no special relationship in the same sense of 2a but a relationship of trust and confidence)
Actual undue influence	This is where there is undue influence applied to the innocent party. This influence does not amount to duress but still influences the decision of the party. This may include threats of divorce etc
ETRIDGE	“An equitable wrong committed by the dominant party against the other which makes it unconscionable for the dominant party to exercise his legal rights against the other”.
WILLIAMS V BAYLEY	The defendant did not enter voluntarily into the contract, therefore, it was set aside on grounds of actual undue influence.
CIBC MORGAGES V PITT	It is no longer necessary for that party that has been affected to show they suffered a manifest disadvantage.
Presumed undue influence - Class 2A (special relationship)	There is a presumption of undue influence which arises when there is a special relationship between parties.
Burden of proof	The burden then falls to the other party to prove that there was no undue influence. They must show that the other party had full knowledge of the character and effect of the contract AND they had independent and impartial advice before entering into the contract.
Special relationships	There are certain relationships under this class that give rise to a presumption under class 2a.
LANCASHIRE LOANS COMPANY V BLACK	Relationship of parent to child
ALLCARD V SKINNER	Relationship between a religious leader and disciple.
BENNINGFIELD V BAKER	Relationship between a trustee to beneficiary.
DENT V BENNETT	Relationship between a doctor and a patient.
WRIGHT V CARTER	Relationship between a solicitor and a client.
MIDLAND BANK V SHEPHERD	The relationship between husband and wife was excluded from this class.
Presumed undue influence - Class 2B	It is still possible for a party alleging undue influence to give rise to a presumption of undue influence is one of trust and confidence. The party alleging undue influence must prove the existence of a relationship that was of such a kind that the party placed their trust and confidence in the other to safeguard their interest.
LLOYDS BANK PLC V BUNDY	Class 2b was extended to the relationship between a bank and its client.
ROYAL BANK OF SCOTLAND PLC V O'BRIEN	This class may apply where the transaction calls for explanation - the transaction must constitute a disadvantage sufficiently serious so that evidence is required to rebut the presumption that it was procedured by undue influence.
SMITH V COOPER	By reason of Cooper's mental condition and Smith's subsequent taking control of her finances, a presumption of undue influence arose.
Undue influence and third parties	Generally, this class applies to husband and wife. Where a wife establishes undue influence it will entitle her to have the transaction set aside as against her husband, however, the transaction is generally with a bank who was not a party to the influence.
NATWEST V MORGAN	Banks were not acting in a fiduciary capacity as to give rise to a presumption of undue influence. There had to exist another factor in order to have the contract set aside as against a bank.
BARCLAYS BANK V O'BRIEN	Introduced constructive notice. Constructive notice. This is knowledge which, according to law, a person is presumed to acquire by making normal and reasonable enquiries. Therefore, a bank will put on an enquiry as to whether they failed to take reasonable steps to ensure that the transaction was entered into freely without the exercise of undue influence.
BANK OF SCOTLAND V BENNETT AND ANOR	The bank were not found having constructive notice as it was clear that they were not aware of the fact that the wife was the sole beneficial owner of the property.
BARCLAYS BANK V THOMPSON	Where a bank instructs solicitors to advise the wife, the solicitor acts solely for the wife and not as an agent for the bank.
NATIONAL WESTMINISTER BANK V BEATON AND ANORE	This applies where the bank paid for the advice to the wife.

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	Created by Chantal Briancon about 8 years ago