- the transaction must be actually disadvantageous to the weaker party
(this was a new requirement).
Here the Morgans had asked for help and had received it. This was not seen
as a disadvantage to them. Had their business been successful, presumably
they would have been grateful for the help.
The case of Midland Bank v Shephard (1988) followed in the courts, and
confirmed the approach taken in National Westminster Bank v Morgan.
There then followed a series of cases, refining the doctrine and raising
particular issues. Consider the particular facts of the following cases.
CIBC v Pitt (1993) then confirmed that in cases of proved undue influence
(undue influence which arises on this particular occasion) manifest
disadvantage need not be shown. However, the following case is now seen as a
key authority, giving the courts the opportunity to restate the law in this area.
Duress and undue influence 159BCCI v Aboody (1990)
Mrs Aboody was a young Saudi Arabian wife who was totally
dominated by her older husband in financial matters. There was no
manifest disadvantage, but there could have been undue influence
between husband and wife, even if unintentional. This case was a
landmark in the light of the reluctance of the courts to find such a
relationship between husband and wife.Barclays v O’Brien (1993)
This case went to court as a claim by Mrs O’Brien of undue influence.
Mr O’Brien had told her that he needed to borrow £60,000 from the
bank for a short period to support his business, and on that basis Mrs
O’Brien signed papers presented to her by Mr O’Brien after he had
visited the bank. In fact the loan grew to reach £135,000 and was
repayable over a much longer period. When it was not repaid the bank
sought possession of the family house which had been used as security.
Mrs O’Brien claimed undue influence, and at the Court of Appeal it
was held that the loan was only repayable up to the amount that Mrs
O’Brien originally expected to borrow. On appeal, however, to the
House of Lords it was held that the whole loan could be set aside.
However, the findings were somewhat unexpected. The court found
that Mrs O’Brien was an intelligent and independent-minded woman,
so there was no undue influence. But, it was held that there was a
misrepresentation between husband and wife, and banks in these cases
should be ‘put on enquiry’ (alerted, or informed) that if a spouse or
cohabitee was involved in a loan, they may be at some disadvantage.
The doctrine of notice applies, so that the bank should be aware of the