In English law, undue influence occurs when a party enters into a contract or transaction due to pressure or manipulation, undermining their free will and genuine consent.
Undue influence involves exploiting a position of trust, authority, or power to unfairly persuade another party into contractual arrangements. The resulting agreements can be voidable by the influenced party.
Contracts formed under undue influence can be rescinded, restoring parties to their pre-contractual positions.
Recognising undue influence protects individuals from exploitation, ensuring contractual agreements reflect genuine, voluntary consent.
Miss Allcard transferred substantial property while under the influence of a religious sisterhood. The Court of Appeal held the gifts were voidable for presumed undue influence, but her six-year delay after leaving the order barred recovery through laches and acquiescence.
Mrs O’Brien mortgaged the matrimonial home to secure her husband’s company debts after he misrepresented the transaction. The Court of Appeal set the charge aside, holding that Barclays was put on inquiry and had failed to take reasonable steps to ensure her consent was properly obtained.
Mrs Pitt was induced by her husband's actual undue influence to charge their jointly-owned home to secure a loan ostensibly for a holiday home, but actually used by Mr Pitt for share speculation. The House of Lords held that manifest disadvantage need not be proved in cases of actual undue influence, but dismissed the appeal as the lender had no notice of the husband's wrongdoing.
A junior employee was persuaded by her employer to mortgage her flat as unlimited security for the company's overdraft of up to £270,000. The Court of Appeal set aside the mortgage, finding the bank had constructive notice of the employer's undue influence over the employee and the transaction was manifestly disadvantageous.
An elderly farmer charged his only asset, Yew Tree Farm, to secure his son's company debts after the bank manager visited without suggesting independent advice. The Court of Appeal set aside the guarantee and charge on grounds of undue influence, establishing that banks owe fiduciary duties when crossing from routine transactions into advisory relationships with vulnerable customers.
Mrs Morgan signed a legal charge over the family home to secure a bridging loan from the bank to pay off a building society mortgage. She claimed the charge was procured by undue influence. The House of Lords held that no undue influence existed as the transaction was not manifestly disadvantageous to her and the bank manager had not crossed the line into a relationship of dominating influence.
Eight appeals concerning wives who charged their homes as security for husbands' debts and later claimed undue influence. The House of Lords clarified when banks are 'put on inquiry' and what steps they must take to avoid constructive notice of undue influence, establishing comprehensive guidance on solicitors' duties and disclosure obligations in suretyship transactions.
Mrs Waller-Edwards remortgaged her home jointly with her partner, partly to discharge his personal debts. She later claimed undue influence. The Supreme Court held that banks are put on inquiry whenever any non-trivial portion of a non-commercial loan serves to discharge one party's debts, requiring independent legal advice.
September 3, 2026
National Case Law Archive
September 3, 2026
National Case Law Archive
September 3, 2026
National Case Law Archive