Royal Bank of Scotland plc v Etridge (No 2)
Encyclopedia
Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44 is a leading case relevant for English property law
and English contract law
on the circumstances under which actual and presumed undue influence
can be argued to vitiate consent to a contract.
) with a transaction that ‘calls for explanation’, or one which ‘is not readily explicable by the relationship between the parties.’ In the ordinary case it is not ‘to be regarded as a transaction which, failing proof to the contrary, is explicable only on the basis that it has been procured by the exercise of undue influence.’ That is because it is nothing out of the ordinary. You are put on inquiry whenever a wife offers to stand as surety for her husband’s, or a company’s debts, where the loan is only going to be for the husband’s purposes. Once on inquiry, the bank must ensure that the spouse has independent advice and a certification that they have formed a truly independent judgment.
Lord Scott and Lord Hobhouse cast doubt on the utility of class 2B.
English property law
English property law refers to the law of acquisition, sharing and protection of wealth in England and Wales. Property law can refer to many things, and covers many areas. Property in land is the domain of the law of real property. The law of personal property is particularly important for...
and English contract law
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
on the circumstances under which actual and presumed undue influence
Undue influence
Undue influence is an equitable doctrine that involves one person taking advantage of a position of power over another person. It is where free will to bargain is not possible.-Undue influence in contract law:...
can be argued to vitiate consent to a contract.
Facts
In eight joined appeals the common thread was that a wife had not fully understood legal advice that she had received, that the spouse’s business had gone broke and the house was being repossessed. So it is cases where the wife is standing as surety to a husband’s possible future business debts.Judgment
Lord Nicholls held that if the banks ensured that the wife had had independent advice, it could not be responsible for that advice being defective. The presumption is rebutted if there is ‘expression of… free will’. The idea of manifest disadvantage for presumed undue influence was rejected but replaced (like the milder tone in Allcard v SkinnerAllcard v Skinner
Allcard v Skinner 36 Ch D 145 is an English contract law case dealing with undue influence. It is one of the leading cases in the area and in English unjust enrichment law.-Facts:...
) with a transaction that ‘calls for explanation’, or one which ‘is not readily explicable by the relationship between the parties.’ In the ordinary case it is not ‘to be regarded as a transaction which, failing proof to the contrary, is explicable only on the basis that it has been procured by the exercise of undue influence.’ That is because it is nothing out of the ordinary. You are put on inquiry whenever a wife offers to stand as surety for her husband’s, or a company’s debts, where the loan is only going to be for the husband’s purposes. Once on inquiry, the bank must ensure that the spouse has independent advice and a certification that they have formed a truly independent judgment.
Lord Scott and Lord Hobhouse cast doubt on the utility of class 2B.
See also
- English contract lawEnglish contract lawEnglish contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
- Iniquitous pressure in English lawIniquitous pressure in English lawUnconscionability in English law is a field of contract law and the law of trusts, which precludes the enforcement of consent based obligations. "Inequality of bargaining power" is another term used to express essentially the same idea for the same area of law, which can in turn be further broken...
- Lloyds Bank Ltd v BundyLloyds Bank Ltd v BundyLloyds Bank Ltd v Bundy [1974] is a landmark case in English contract law, on undue influence. It is remarkable for the judgment of Lord Denning MR who advanced that English law should adopt the approach developing in some American jurisdictions that all impairments of autonomy could be collected...
[1975] QB 326 - Williams v. Walker-Thomas Furniture Co.Williams v. Walker-Thomas Furniture Co.Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 , was a court opinion, written by Judge J. Skelly Wright, that had a definitive discussion of unconscionability as a defense to enforcement of contracts in American contract law. As a staple of first-year law school contract law courses, it has...
350 F.2d 445 (C.A. D.C. 1965)