Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter focuses on the principles applicable where a contract is entered into after there have been threats or improper influence brought to bear on one party or where the one-sided nature of the contract suggests that one party has been taken advantage of. The discussions cover duress (duress and pressure, threats against the person, threats against goods and economic duress); undue influence (actual undue influence, presumed undue influence and third-party cases); and unfairness and unconscionable bargains.
Chapter
9. Duress, undue influence and unconscionable bargains
Chapter
9. Duress, undue influence and unconscionable bargains
Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter focuses on the principles applicable where a contract is entered into after there have been threats or improper influence brought to bear on one party or where the one-sided nature of the contract suggests that one party has been taken advantage of. The discussions cover duress (duress and pressure, threats against the person, threats against goods and economic duress); undue influence (actual undue influence, presumed undue influence and third-party cases); and unfairness and unconscionable bargains.
Chapter
22. Additional chapter: Capacity
This chapter considers the scope of contractual capacity, noting the tension in the law between the need to protect someone who is incapacitated and the desire to not treat too harshly the person dealing fairly with the incapacitated person. The general rule is that a minor will not be bound by a contract, although the person contracting with them will be. There are exceptions which will bind both parties unless the minor repudiates, and on becoming 18 a minor may ratify a contract made before that date. The law recognizes the general incapacity to contract of minors, the mentally incapacitated, and in certain circumstances where an individual is intoxicated. An adult of sound mind has full contractual capacity, although they may be able to claim that the contract is not enforceable on some other basis, for example undue influence.
Chapter
7. Factors Affecting The Validity of a Contract
This chapter discusses how the manner in which a contract is concluded can potentially affect its validity. Before discussing the terms and details of a contract, it is important to note that a contract may fail due to one or both parties not possessing the capacity to establish a contract. Some of the common reasons includes a mistake by one or both parties, a provision that has been misrepresented in the negotiations, or the use of undue influence or placing the other party under duress in the process of concluding the contract. Some of the reasons listed in this chapter may be common, but the emphasis here is to identify where problems may occur that could prevent the successful operation of the contract despite fulfilling the essential features discussed in the previous chapters.
Chapter
12. Mortgages
The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, bullet-pointed answer plans and suggested answers, author commentary, and illustrative diagrams and flowcharts. This chapter presents sample exam questions about the law of mortgages. The questions deal with issues such as their creation; clogs on the equity of redemption; the remedies of a mortgagee and protection of the mortgagor; and undue influence. Remedies of a mortgagee where the mortgagor defaults is an area of the law where, over recent years, the courts have had to consider entirely new social circumstances in relation to ‘negative equity’ and mortgage debt.
Chapter
14. Mortgages
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses mortgages. A mortgage is a proprietary interest that can be legal or equitable in status. The equity of redemption encapsulates the rights of a mortgagor and includes the equitable right to redeem and the ability to have certain clauses struck out from a mortgage agreement. The mortgagor of a dwelling house has special legislative protection. Where a mortgage is obtained under undue influence, be it actual or presumed, it may be set aside. The mortgagee has various remedies available to it should the mortgagor fail to meet the mortgage payments, dependent upon the status of the mortgage. A property may be subject to more than one mortgage and where this is the case and the property is sold, proceeds from the sale will be applied in order of priority.
Chapter
14. Mortgages
This chapter discusses mortgages, specifically mortgage creation, legal mortgages, equitable mortgages, and priority of mortgages. A mortgage is a debt secured on land. A legal mortgage in registered land can now be created only by means of a legal charge under the Land Registration Act 2002, s. 23(1)(a). The mortgagor has a bundle of rights known as the ‘equity of redemption’. If the mortgagee attempts to gain any unconscionable advantage by means of the mortgage, the courts will strike it down. The mortgagee has five potential remedies to recover the debt: an action on the mortgagor’s personal covenant; repossession; sale; appointment of a receiver; and foreclosure. The doctrine of undue influence is important in the law of mortgages. Provided the mortgagee bank follows the steps outlined by the House of Lords in Royal Bank of Scotland v. Etridge (No. 2), it will be protected against a claim for undue influence.
Chapter
10. Duress and undue influence
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. The doctrines of duress and undue influence may result in a contract being set aside (the remedy of rescission) where illegitimate pressure has been used in the contracting process. This chapter focuses on instances where the agreement cannot stand in light of duress or undue influence, including instances where the duress or undue influence was exercised by a third party and the contracting party had notice of that duress or undue influence.
Chapter
15. Undue Influence, Unconscionability, and Equality of Bargaining Power
This chapter examines undue influence, which is largely about pressure and influence arising from a relationship. It begins with the basic role of the law on undue influence before moving to the substantive case law. The case law is divided into three categories, which are based on the different ways of proving undue influence. The first relates to what is known as ‘actual undue influence’, which is where a complainant proves undue influence. The second is where undue influence between two parties can be presumed from the circumstances. The third category has been a major problem in modern cases and it involves undue influence coming from a third party. The chapter then turns to the wider issues that complete the ‘bigger picture’. The first of these is the area often referred to as ‘unconscionability’, which is about the exploitation of weakness. The second is the attempt to create a wider ‘inequality of bargaining power’ principle. Finally, the chapter looks at the Consumer Protection from Unfair Trading Practices Regulations 2008, which can cover conduct otherwise classed as duress, undue influence, and harassment.
Chapter
10. Duress, Undue Influence, and Unconscionable Bargains
Jack Beatson, Andrew Burrows, and John Cartwright
This chapter discusses the nature and operation of duress, undue influence, and unconscionable bargains. Duress and undue influence occur where one party to a contract has coerced the other or exercised such domination that the other’s independence of decision was substantially undermined. In the limited category of cases in which the doctrine of unconscionable bargains operates, it is necessary to show not only that the process by which the contract was made was unfair but that there is contractual imbalance, i.e., the doctrine extends to the actual substance of the contract and the fairness of its terms. Conduct which constitutes duress or undue influence by a trader against a consumer may also constitute a ‘prohibited practice’ under the Consumer Protection from Unfair Trading Regulations 2008, which will give the consumer ‘rights to redress’ under the Regulations.
Chapter
13. Mortgages
This chapter examines mortgages—a form of proprietary security for the advancement of a loan. A bank or lender advances a loan and in return they are granted a mortgage: an interest in the borrower’s land. Mortgages are distinct from other loans because they are ‘secured’ on the property itself meaning that if the borrower fails to make repayments, the bank can take steps to recover its money including seeking possession of the property and selling it. This chapter explores the nature and creation of mortgages, the rights and powers enjoyed by mortgagors, the rights of mortgagees, the effect of undue influence on mortgages, and the priority of mortgages.
Chapter
3. Contract II: mistake, misrepresentation, duress, and undue influence
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for and how to achieve extra marks. This chapter considers contract law and the factors that may affect the contract or its validity: mistake, misrepresentation, duress, and undue influence. A contract may be held void due to a fundamental mistake, as the parties did not have a true agreement. An action under misrepresentation is available if an untrue representation is considered ‘actionable’. If a contract is established on the basis of violence (or a threat), or unlawful economic pressure, this may be considered to be a case of duress. Where undue influence has been used to form the contract, it will be voidable.
Chapter
7. Vitiating Factors
A contract may meet the necessary formation requirements of offer and acceptance, consideration, and intention to create legal relations, but still not be binding because it lacks other necessary factors. These invalidating factors are sometimes referred to as ‘vitiating factors’. This chapter discusses statements that constitute actionable misrepresentations; the difference between fraudulent, negligent, and innocent misrepresentation; the remedies available for each type of misrepresentation; and the effect a misrepresentation will have on the validity of a contract. The chapter considers types of mistake and when a court will regard a mistake as an operative mistake rendering the contract void. It also considers how duress and undue influence may arise, the presumptions relating to undue influence, and whether the presence of duress and undue influence will make a contract voidable. Finally, the chapter considers types of contract that are illegal under statute and under common law.
Chapter
2. The banker–customer relationship
Iris Chiu and Joanna Wilson
This chapter discusses the relationship between a bank and its customer. The Bills of Exchange Act 1882 defines a banker to include ‘a body of persons whether incorporated or not who carry on the business of banking’. Meanwhile, upon the opening of an account, a person will be deemed to have become a customer of the bank and there is no requirement for a habitual course of dealings. Although the relationship between a bank and its customer is primarily governed by contract law, there may be circumstances in which the bank undertakes additional obligations, thereby taking the relationship beyond the remit of contract law such that the bank becomes subject to fiduciary duties of trust and loyalty. The chapter then considers the fiduciary nature of the banker–customer relationship as well as undue influence.
Chapter
11. Undue influence
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines undue influence in a contract, which is a vitiating factor and also a ground of restitution. It explains that undue influence is hard to define and can more easily be recognised when found than exhaustively analysed in the abstract. This chapter investigates how undue influence is proved by means of a rebuttable presumption based on a relationship of trust and confidence coupled with a transaction that calls for an explanation, and how the resulting presumption is rebutted. It then covers the remedy of rescission for undue influence. Finally, it explores undue influence in three-party cases, where relief depends on whether the contracting party had notice, actual or constructive, of the undue influence and whether it had taken reasonable steps.
Chapter
27. Protection of the Borrower
All books in this flagship series contain carefully selected substantial extracts from key cases, legislation, and academic debate, providing able students with a stand-alone resource. This chapter reviews the loan contract and the controls that the law has imposed to protect the borrower. The level of protection differs according to the nature of the borrower and the type of security transaction. Market regulation of the residential mortgage market has increased protection for domestic borrowers. Vitiating factors, particularly undue influence, have impacted upon the creation of collateral mortgages of the family home to secure commercial borrowing. Equitable protection has been provided by controls against penalties and oppressive and unconscionable terms, as well as by protection of the borrower’s equity of redemption. Statutory consumer protection now offers more effective protection to domestic borrowers. The common law, equitable, and statutory control mechanisms are then described and applied to demonstrate the protection they afford against particular mortgage terms, for instance to control rates of interest and other costs associated with borrowing.
Chapter
27. Protection of the Borrower
All books in this flagship series contain carefully selected substantial extracts from key cases, legislation, and academic debate, providing able students with a stand-alone resource. This chapter reviews the loan contract and the controls that the law has imposed to protect the borrower. The level of protection differs according to the nature of the borrower and the type of security transaction. Market regulation of the residential mortgage market has increased protection for domestic borrowers. Vitiating factors, particularly undue influence, have impacted upon the creation of collateral mortgages of the family home to secure commercial borrowing. Equitable protection has been provided by controls against penalties and oppressive and unconscionable terms, as well as by protection of the borrower’s equity of redemption. Statutory consumer protection now offers more effective protection to domestic borrowers. The common law, equitable, and statutory control mechanisms are then described and applied to demonstrate the protection they afford against particular mortgage terms, for instance to control rates of interest and other costs associated with borrowing.
Chapter
13. Mortgages
This chapter examines mortgages—a form of proprietary security for the advancement of a loan. A bank or lender advances a loan and in return they are granted a mortgage: an interest in the borrower’s land. This chapter explores the nature and creation of mortgages; the rights and powers enjoyed by mortgagors and the rights of mortgagees. Beyond this, the chapter discusses the effect of undue influence on mortgages and the priority of mortgages.
Chapter
10. Duress and undue influence
James Devenney and Adam Shaw-Mellors
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. The doctrines of duress and undue influence may result in a contract being set aside (the remedy of rescission) where illegitimate pressure has been used in the contracting process. This chapter focuses on instances where the agreement cannot stand in light of duress or undue influence, including instances where the duress or undue influence was exercised by a third party and the contracting party had notice of that duress or undue influence.
Chapter
14. Duress and undue influence
This chapter looks at the effect of duress or undue influence on the making of a contract. The difficulty is identified of distinguishing hard bargaining from economic duress, when the ‘threat’ is to the economic interest of the party ‘threatened’. This raises the question of what amounts to an illegitimate threat; whether a threat which is not otherwise legally labelled as wrongful will suffice (lawful act economic duress), and whether all threatened breaches of contract do so. The question also arises as to a test of a ‘reasonable’, or ‘practical’, alternative to agreeing. Undue influence is concerned with the surrender of decision making because of the relationship of the parties whether through domination or trust. The presumptions that arise in relation to undue influence, and when they arise, are examined. Consideration is given to the treatment of aggressive and misleading trade practices under the Consumer Protection from Unfair Trading Regulations (as amended by the Consumer Protection (Amendment) Regulations 2014).
