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Undue Influence (Week 14) - Coggle Diagram
Undue Influence (Week 14)
General
It is a vitiating factor
Remedies: If UI is proven = The contract is voidable (rescind or affirm); no right to damages
Bars to rescission: (I) Affirmation, (II) Delay, (III) Impossibility (inc. "equity's darling)
Definition: The improper influence (”an abuse of influence”, or excessive/unacceptable influence) that one party in a contract (or a third party) exerts over another.
Burden of proof: On the claimant
Categories
Actual undue Influence
—This is when it is proved that undue influence was exercise before/at the time the transaction was entered into
Burden of Proof: On the balance of probabilities
Cases: Williams v Bayley [1866]; Aboody [1992], CIBC [1993]
Other
There is no requirement of manifest disadvantage (CIBC)
Third parties (e.g. Husband-Wife-and Bank)
Reasonable steps (Bank must take R.S. to uncover whether UI has taken place
(I) 'Wife' must have a meeting with an independent legal advisor
(II) Solicitor should: Explain why he has become involved
(III) Also: Explain the docs. + the consequences of signing them, the seriousness of the risk(s), and emphasise to the Wife that she has a choice
If the Wife still wants to contract, the solicitor provides a written confirmation to the Bank (= No UI, generally)
Notice
Constructive notice: When relationship between C and the debtor is non-commercial, and D has failed to take 'reasonable steps' (Cases - Barclays [1993] and Etridge (No. 2))
Etridge
(No 2): Reasonable steps must be taken by the creditor to ensure that the surely entered into the obligation freely, and in the knowledge of the true facts
con. notice - -When a contracting party did not notice of a particular event, but the courts deem such notice, usually because the party turned a blind eye or was negligent and ought to have had actual notice
Per Etridge, 'the wife' can waive independent legal advice, but they must make this clear.
Presumed undue influence
Definition: This is when the Courts can infer from the facts that one party has preferred their own interests and failed in some duty they owed to safeguard the other party's interest
Requirements
(I) There must be a relationship of trust and confidence
Presumed relationships of trust (e.g. doctor-patient)
Cases: Allcard [1887]; Westminster v Morgan [1985], Bundy [1975); Burch [1997]
(II) The transaction must 'call for an explanation', or not be readily explicable by the parties' relationship
Test = Whether the (whole) transaction cannot be reasonably explained on the grounds of friendship, relationship, charity, or other ordinary motives on which ordinary people act
Rebutting the presumption: If D can show that C entered the transaction voluntarily and aware of what they were doing = Rebutted.
Since
Etridge
, AUI and PUI are one claim of Undue influence: They are two ways to prove it
Add somewhere:
If there is a financial benefit to a party (i.e. symmetrical benefits) = Difficult to claim UI.
And, simply because a financial opportunity goes on to fail does not mean that UI necessarily exists
Other cases
Pitt (read this)
Wolla (?)