Unconscionability is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract.
In trust law, a constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess due to unjust enrichment or interference, or due to a breach of fiduciary duty, which is intercausative with unjust enrichment and/or property interference. It is a type of implied trust.
Barclays Bank Ltd v Quistclose Investments Ltd[1968] UKHL 4 is a leading property, unjust enrichment and trusts case, which invented a new species of proprietary interest in English law. A "Quistclose trust" arises when an asset is given to somebody for a specific purpose and if, for whatever reason, the purpose for the transfer fails, the transferor may take back the asset.
English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the Commonwealth and the United States. Trusts developed when claimants in property disputes were dissatisfied with the common law courts and petitioned the King for a just and equitable result. On the King's behalf, the Lord Chancellor developed a parallel justice system in the Court of Chancery, commonly referred as equity. Historically, trusts have mostly been used where people have left money in a will, or created family settlements, charities, or some types of business venture. After the Judicature Act 1873, England's courts of equity and common law were merged, and equitable principles took precedence. Today, trusts play an important role in financial investment, especially in unit trusts and in pension trusts. Although people are generally free to set the terms of trusts in any way they like, there is a growing body of legislation to protect beneficiaries or regulate the trust relationship, including the Trustee Act 1925, Trustee Investments Act 1961, Recognition of Trusts Act 1987, Financial Services and Markets Act 2000, Trustee Act 2000, Pensions Act 1995, Pensions Act 2004 and Charities Act 2011.
English contract law is the body of law that regulates legally binding agreements 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, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.
Garcia v National Australia Bank Ltd, was an important case decided in the High Court of Australia on 6 August 1998. The case determined the circumstances under which it is unconscionable for a lender to enforce a transaction against a wife. It is considered a very important case in Australian equity, as it continues to be the leading case in spouse-surety cases.
Lloyds Bank Ltd v Bundy is a decision of the English Court of Appeal in English contract law, on undue influence. One of the three judges hearing the case, Lord Denning MR advanced the argument that under English law, all impairments of autonomy could be collected under a single principle of "inequality of bargaining power."
Unconscionability in English law is a field of contract law and the law of trusts, which precludes the enforcement of voluntary obligations unfairly exploiting the unequal power of the consenting parties. "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 down into cases on duress, undue influence and exploitation of weakness. In these cases, where someone's consent to a bargain was only procured through duress, out of undue influence or under severe external pressure that another person exploited, courts have felt it was unconscionable to enforce agreements. Any transfers of goods or money may be claimed back in restitution on the basis of unjust enrichment subject to certain defences.
Resulting trusts in English law are trusts created where property is not properly disposed of. It comes from the Latin resultare, meaning to spring back, and was defined by Megarry VC as "essentially a property concept; any property that a man does not effectually dispose of remains his own". These trusts come in two forms: automatic resulting trusts, and presumed resulting trusts. Automatic resulting trusts arise from a "gap" in the equitable title of property. The equitable maxim "equity abhors a vacuum" is followed: it is against principle for a piece of property to have no owner. As such, the courts assign the property to somebody in a resulting trust to avoid this becoming an issue. They occur in one of four situations: where there is no declaration of trust, where an express trust fails, where there is surplus property, or upon the dissolution of an unincorporated association. Rules differ depending on the situation and the type of original trust under dispute; failed charitable trusts, for example, have the property reapplied in a different way from other forms of trust.
Royal Bank of Scotland plc v Etridge [2001] UKHL 44 is a leading case relevant for English land law and English contract law on the circumstances under which actual and presumed undue influence can be argued to vitiate consent to a contract.
Bank of Credit and Commerce International S.A. v. Aboody [1992] 4 All ER 955 is an English contract law case relating to undue influence.
Westdeutsche Landesbank Girozentrale v Islington LBC[1996] UKHL 12, [1996] AC 669 is a leading English trusts law case concerning the circumstances under which a resulting trust arises. It held that such a trust must be intended, or must be able to be presumed to have been intended. In the view of the majority of the House of Lords, presumed intention to reflect what is conscionable underlies all resulting and constructive trusts.
Tinsley v Milligan[1993] UKHL 3 is an English trusts law case, concerning resulting trusts, the presumption of advancement and illegality.
Midland Bank plc v Cooke [1995] is an English land law case, concerning constructive trusts; and at first instance proven undue influence in law as to a secured business loan and later refinance.
Thompson v Foy[2009] EWHC 1076 (Ch) is an English land law case concerning the right of a person with an overriding interest in a home and deals with a family arrangement for a house to be a gift transferring from a mother to a daughter and the trust between the two parties that the daughter would pay the mother her sum to buy out her share of the property.
National Westminster Bank plc v Morgan[1985] UKHL 2 is a judicial decision of the House of Lords relating to English contract law and the doctrine of undue influence. The case is most well known for the comments of Lord Scarman about the supposed requirement of "manifest disadvantage" to set aside a contract for undue influence.
AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58 is an English trust law case, concerning the applicable principles of causation for a breach of trust. It held that a "but for" test of causation applies for equitable compensation.
Undue influence in English law is a field of contract law and property law whereby a transaction may be set aside if it was procured by the influence exerted by one person on another, such that the transaction cannot "fairly be treated the expression of [that person's] free will".
CIBC Mortgages plc v Pitt[1993] UKHL 7 is a decision of the House of Lords relating to undue influence. The decision confirmed that a person did not need to suffer "manifest disadvantage" under a transaction in order to challenge it for actual undue influence.
Bank of Montreal v Stuart is a decision of the Judicial Committee of the Privy Council on appeal from the Supreme Court of Canada. It deals with the principle of undue influence in relation to contracts, in the particular context of dealings between spouses. Decided in 1910, the case continues to be cited in the courts in Canada and in England and Wales.
