Royal Bank of Scotland v Etridge 
- 8 conjoined appeals concerning undue influence and, more specifically, suretyship transactions
- How could undue influence claims concerning mortgages succeed?
- See reasoning; in Etridge itself there was no undue influence
- Actual undue influence and presumed influence amount to the same thing, differing only in how they are proven
- Actual undue influence is proved by the conduct of the ‘stronger’ party
- Presumed undue influence is proved by showing firstly that there is a relationship of trust and confidence between debtor and surety (usually husband and wife) and that the transaction which took place calls for an explanation. This creates a rebuttable evidential burden of proof on the defendant (the legal burden remains on the claimant to prove undue influence)
- Manifest disadvantage is not relevant to undue influence
- In a suretyship transaction, a bank is put on notice in any non-commercial surety-debtor transaction
- Once on notice, a bank must take reasonable steps to satisfy itself that the risks associated with the transaction have been bought home to the surety
- Reasonable steps include a private (without husband) meeting with a solicitor, who must certify that the nature of the documents, risks, and other options have been discusses, as well as the surety having been given a choice whether or not to proceed. The bank is not liable for deficient advice unless it has reason to believe that advice was so.
Posted in Contract Law Revision Notes.
This page was last updated on 28th April 2015