Undue Influence in Contracts

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  • UNDUE INFLUENCE
    • Actual Undue Influence
      • 1. C must show actual influence exists
      • 2. C must show C AI was exercised
      • 3. C must show the contract exists due to the influence
    • Presumed Undue Influence
      • RBS plc v Etridge (No. 2) [2001]
      • 3 Elements required to proove
        • 1. Relationship of trust and confidence
          • Class 2A; (guardian/ward, doctor/patient, solicitor/client, trustee/beneficiary and religious advisor/disciple) holds presumption that one party influences another. The C only has to prove existence of the relationship.
          • Clas 2B: C have to prove the existence of a relationship of trust and confidence. Husband and Wife fall here.
        • 2. Something which calls for an explanation
          • The gift must have been “so large as not to be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives on which ordinary men act.” [Allcard v Skinner [1887] LR 36 ChD 145]
        • 3. Can the presumption (of UI) be rebutted?
          • Normal manner is through showing independent advice has been taken (Hammond v Osborn [2002]
            • but this is neither always sufficient for rebutting (Etridge)
    • Third Parties
      • Banks, which suspect UI, must take reasonable steps to satisfy themselves that there is none. they have to do this in every case where the relationship is between a surety and a non-commercial debot
        • Etridge stated however the bank does not need to meet the spouse, and must satisfy themselves that the party has seen a solicitor.
    • Remedies
      • Rescission
        • 1. Affirmation of contract
        • 2. Bona fide TP with no knowlegde of UI acquires goods, the victim cannot reclaim goods just compensation

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