Banking Law Assignment
“….if the creditor bank has notice, actual or constructive, of undue influence exercised by the husband (and consequently of the wife’s equity to set aside the transaction) the creditor will take subject to that equity and the wife can set aside the transaction against the creditor…as well as against the husband.” (per Lord Browne-Wilkinson in Barclays Bank plc v O Brien [1994] 1 AC 180 at 191)
Critically discuss the above statement.
Analysis of wife’s equity to set aside the husband’s transaction due to undue influence.
Establish the principles of the doctrine of undue influence first to establish the foundation stones of which third party undue influence occurs.
Equity was introduced to act as an enhancement of common law, commonly known as the second great subdivision of English law. Equity’s foundation is a judicial assessment of justice in contrast to the sometimes harsh and inflexible rule of common law. Historically, common law was known as the law, in contrast with equity. Equity sets aside contracts in the event of a party gaining a benefit through undue influence which is when an agreement is obtained by indecent pressure which is not duress at common law since no factor of violence to the individual was involved" (GH Treitel, The Law of Contract).
Equity is relevant to banks, as the courts prior to O’Brien analysed the problem of ‘indecent pressure’ by banks, in terms of agency. However O’Brien changed this and banks can now claim for the wrongdoing of banks who has exercised undue influence in order for them to induce them into an agreement, therefore contracts made between banks and customer can be set aside on the grounds of equity.
Types of undue influence
The COA adopted these classifications of undue influence in BCCI v Aboody and was implemented by Lord Brown-Wilkinson in Barclays Bank v O’Brien 1993. Class 1, is actual undue influence. In order to show this the claimant must prove favourably that the wrongdoer applied undue
Critically discuss the above statement.
Analysis of wife’s equity to set aside the husband’s transaction due to undue influence.
Establish the principles of the doctrine of undue influence first to establish the foundation stones of which third party undue influence occurs.
Equity was introduced to act as an enhancement of common law, commonly known as the second great subdivision of English law. Equity’s foundation is a judicial assessment of justice in contrast to the sometimes harsh and inflexible rule of common law. Historically, common law was known as the law, in contrast with equity. Equity sets aside contracts in the event of a party gaining a benefit through undue influence which is when an agreement is obtained by indecent pressure which is not duress at common law since no factor of violence to the individual was involved" (GH Treitel, The Law of Contract).
Equity is relevant to banks, as the courts prior to O’Brien analysed the problem of ‘indecent pressure’ by banks, in terms of agency. However O’Brien changed this and banks can now claim for the wrongdoing of banks who has exercised undue influence in order for them to induce them into an agreement, therefore contracts made between banks and customer can be set aside on the grounds of equity.
Types of undue influence
The COA adopted these classifications of undue influence in BCCI v Aboody and was implemented by Lord Brown-Wilkinson in Barclays Bank v O’Brien 1993. Class 1, is actual undue influence. In order to show this the claimant must prove favourably that the wrongdoer applied undue