Recission - Undue Influence

What is the legal definition of Rescission?

Recission is a process by which a contract can be nullified and obligations under the contract are terminated.

What was established in Allcard v Skinner [1887]?

The case confirmed that equity will intervene where one party’s dominance has resulted in a disadvantageous transaction for the other.

How is actual undue influence defined?

As per Carroll v Carroll [1990], it arises where it is proven that a person did not enter into a transaction of their own free will.

What characterises Class 2A presumed undue influence?

It is confined to relationships which, by their nature, give rise to a presumption of undue influence.

Which relationships are explicitly excluded from Class 2A?

The husband–wife relationship (noted by Delaney) and banker–client relationships (National Westminster Bank).

What must a claimant establish for Class 2B Presumed Undue Influence?

1. They placed trust and confidence in the defendant.
2. The transaction conferred a substantial benefit on the defendant or was manifestly disadvantageous to the claimant.

How do spousal relationships fit into Class 2B?

Cases like Royal Bank of Scotland v Etridge [2002] and Barclays Bank v O’Brien [1994] suggest that marital relationships often fall here because wives may place trust and confidence in husbands regarding financial affairs, and emotional ties can facilitate influence.

How does a defendant rebut a presumption of undue influence?

The defendant must prove the claimant exercised free and informed consent.

What was held in Provincial Bank v McKeever [1941]).

While not a strict requirement, showing the claimant received independent legal advice is central to this rebuttal

What are the requirements for legal advice to be effective per Prendergast v Joyce [2009]?

• Given by a competent adviser acting solely in the interests of the donor.

• Tailored to ensure real understanding.

• Resulting in a decision based on 'full, free and informed thought'

When is a bank put on constructive notice (inquiry) of undue influence?

Per Etridge [2002], a bank is on inquiry when:

• The transaction calls for explanation.

• One party in a personal relationship (married or unmarried) stands surety for the other's debts.

• The lender is aware of that relationship.

What was the rule established in Ulster Bank v Roche [2012]?

A bank is on inquiry if it is aware of facts suggesting a non-commercial element to the guarantee, such as when the guarantor has no active involvement in the business.

What happened in ACC Bank plc v Walsh [2017] regarding bank duties?

The court found the bank had constructive notice and failed to take reasonable steps (like ensuring independent advice), rendering the guarantee unenforceable.

What was held in BOI v Curran [2016]?

the Court held there was no evidence of undue influence as she signed a statement saying she did not wish to take independent advice and she had in the past been a director and secretary of the company.

What was held in ACC Loan Management v Sheehan [2015]?

the High Court rejected a claim of undue influence arising from a sibling relationship, holding that a mere desire to assist a sibling does not constitute undue influence.

What was held in  Barry v Ennis Property Finance [2018]?

the court held that it is generally sufficient for a bank to insist that the influencing party obtain independent advice before execution.