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Barclays Bank v O’Brien [1994]

Facts

  • After signing an increased (re-mortgage) mortgage deal securing both her and her husband’s house against the debts of her husband’s business, the claimant claimed undue influence when the bank tried to repossess her house: she had not obtained legal advice despite having been asked to and was not aware of the effects of the contract

Issue

  • Could undue influence be claimed, could recovery be allowed?

Decision

  • No undue buy xanax now influence, but repossession not allowed due to misrepresentarion

Reasoning

  • There are 2 categories of undue influence:
  1. Actual undue influence, where the claimant must prove the the wrongdoer exerted undue influence directly
  2. Presumed undue influence, where there must be shown to have been a relationship of trust and confidence. The defendant must then rebut such a presumption that undue influence was exerted. For presumed undue influence, the relationship may be a given type, such as between a solicitor and a client, but not a husband and wife, or it may be proved on the facts.
  • In a suretyship transaction, a bank is put on notice whenever a wife is a surety for her husband and when the bank believes undue influence could exist
  • Once on notice, a bank should bring home the risks to the surety
  • In this case, there was no undue influence, but the bank had misrepresented the contract such that it could be set aside and repossession not allowed
  • The misrepresentation made the liability for the re-mortgage loan amount of £43,000 voidable, such that the claimant was only bound by the original mortgage loan amount of £30,000
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