Category Archives: Contract Law

Offer and acceptance

Posted on by
Reply

Two types of contract

One of the systemic problems afflicting contract textbooks is their failure to acknowledge that English law recognise two different types of contract: bilateral contracts (which arise when two people reach an agreement under which they promise to do things for each other) and unilateral contracts (which arise when someone makes a promise to another with the object and result of inducing that other to act in a particular way). Of course, the textbooks acknowledge the existence of these different types of contract, but when it comes to describing how contracts are made, they fail to follow through. Instead of first setting out the rules governing the formation of bilateral contracts, and then setting out the rules governing the formation of unilateral contracts, they attempt to come up with one set of rules that – they claim – govern the formation of all contracts, whether they are bilateral or unilateral in nature. These rules are known as the rules on ‘offer and acceptance’.

Offer and acceptance: bilateral contracts

The language of ‘offer and acceptance’ – and the idea underlying those rules, that contracts are based on agreement – is perfectly suited for the formation of bilateral contracts. After all, bilateral contracts are agreements (under which the parties to the agreement promise to do things for each other). The ‘offer and acceptance’ rules that govern the formation of bilateral contracts are as follows:

(I) If A approaches B with an ‘offer’ (a proposal that they enter into an agreement under which A promises to do something for B and B promises to do something for A), A is free to withdraw that offer (by notifying B that he is withdrawing the offer) at any point up until it is accepted by B.

(II) If B rejects A’s offer (either outright, or by making a counter-proposal of his own), then that kills off A’s offer and it cannot be subsequently accepted by B unless the offer is renewed by A.

(III) B will only be held to have accepted A’s offer if he informs A that he is accepting A’s offer (unless the postal rule applies, in which case posting a letter of acceptance will count as a valid acceptance).

These rules are perfectly designed: (1) to let A and B know what they have to do to enter into a legally binding agreement; and (2) to allow us (and them) to determine with relative certainty when they have entered into a legally binding agreement.

Offer and acceptance: unilateral contracts

Problems arise, however, when we turn to the rules governing the formation of unilateral contracts. Contract textbook writers are committed to the idea that we can use the language of ‘offer and acceptance’ to describe what goes on when two people enter into a unilateral contract. Now – making a unilateral contract has two stages:

(1) A makes a promise to B, with the object of inducing B to do x.

(2) B is induced by A’s promise to do x.

If (1) and (2) occur, then A will be (normally) bound by his promise to B. We say that there exists a ‘unilateral’ contract between A and B in this situation because A is bound by his promise to B, but B does not have any obligations to A.

Now – in order to adapt the language of ‘offer and acceptance’ to the formation of unilateral contracts, the textbook writers are forced to say that (1) is an ‘offer’ and (2) is an ‘acceptance’ of the offer made in (1). So – when A promises B ‘I promise to pay you £1,000 if you mend my car’, A is making an ‘offer’ to B. And when B is induced by A’s promise to mend A’s car, B ‘accepts’ A’s ‘offer’. At that point a contract arises, where A is bound by his promise to pay B £1,000.

But see what complications arise if we apply rules (I), (II) and (III) above – which apply perfectly in bilateral contract situations – to the formation of unilateral contracts.

(1) The rule (I) that A is free to withdraw his offer (by notifying B) up until the point when it is validly accepted by B creates the potential for injustice where A has promised to pay B £1,000 if B mends his car, and B has started work on A’s car but has not yet got to the point where she can claim to have mended A’s car. If B has spent three days working on A’s car but has not yet mended it, and A can then go to her and say ‘Forget it – I’ll have someone else look at it’, that three days work will be wasted. In order to avoid this problem, the courts qualify the rules on ‘offer and acceptance’ as they apply to unilateral contracts to say that if A makes a promise to B with the object of inducing B to do x, and B has begun to do x, then A cannot withdraw his ‘offer’ and must wait to see whether B actually does do x (in which case, A will be bound by his promise): Errington v Errington (1952). A qualification to this qualification then has to be made to accommodate the case where B has consciously taken the risk that A will withdraw his promise at any point up until the point where B has finished doing whatever it is that A wanted to induce B to do by making his promise. For example, if A promises B, an estate agent, ‘I will pay you 2% commission if you find someone to buy my house’, and then B goes about trying to find a buyer, he consciously takes the risk that A will be able at any moment to say ‘Forget it – I’ll get someone else to sell my house’ and so B’s busying himself trying to find a buyer will not mean that A is not allowed to withdraw his ‘offer’ to B: Luxor (Eastbourne) v Cooper (1941).

(2) The rule (II) that a rejection of an offer will kill off the offer seems not to apply straightforwardly in a unilateral contract situation. (There is no authority on this, but what follows seems to be correct.) Suppose that A posts up advertisements in the local paper that say, ‘Fruit pickers needed for this weekend. Turn up to my farm, work for 5 hours picking fruit, and you will be paid £75.’ B sees A after seeing the advertisement and says to A, ‘You can stuff your fruit picking! I wouldn’t be seen dead working on your farm.’ But later on B thinks better of it, and turns up to work on A’s farm (entering the farm unnoticed among a group of other fruitpickers) and does 5 hours’ fruit-picking. When he goes to collect his £75, could A say, ‘Sorry – you rejected my offer, so you couldn’t accept it later on by working for five hours on my farm’? I don’t think so. A crucial feature of this situation is that it is not important to A to know whether or not B is going to pick fruit on his farm. A wouldn’t mind if B told him ‘No’ initially but then later on turns up to work. But in some situations, it will be quite important that A knows where he stands, and a ‘No’ may have the effect of ensuring that A is not bound by a promise that he has made with the object of inducing B to do x, even if B later changes his mind and does x. For example, if A says to B, ‘If you mend my car, I will pay you £1,000’, and B says ‘No – I’m too busy’, I don’t think B could sue for the £1,000 if he later on secretly goes round to A’s house and mends the car. The reason is that A may have responded to B’s ‘No’ by entering into a bilateral contract with someone else (under which C promises to do his best to mend A’s car, and A promises to pay him £1,000 if he does so) on which he could now be sued. So B’s ‘No’ in this case will terminate A’s ‘offer’ to B. But this will not always be the case with unilateral contracts.

(3) The rule (III) that an offer will only be validly accepted if the offeree has told the offeror that he has accepted the offer (Felthouse v Bindley (1863)) does not usually apply to unilateral contracts. The classic case is Carlill v Carbolic Smoke Ball Co (1893). In that case the promise was – ‘If you catch influenza using our smoke ball, we will pay you £100.’ The promise was (obviously) not made with the object of inducing people to catch the flu, but to induce people to buy the defendants’ smoke ball. (So this was a unilateral contract situation where the promise was conditional (‘If you do x, then I will do y for you’) but the condition on the promise was (unusually) not the thing the promisee was trying to induce the promisee to do. What the promisor was trying to get the promisee to do did not appear on the face of the promise.) Mrs Carlill bought the smoke ball in reliance on this promise, and that was enough to make the defendants’ promise binding on them. So if Mrs Carlill did catch influenza using the smoke ball – as she did – they would have to pay her £100. What is important, for our purposes right now, is that the mere act of buying the smoke ball brought a unilateral contract into existence between Mrs Carlill and the defendants. Mrs Carlill did not have to tell the defendants that she had bought the smoke ball – thereby ‘accepting’ their ‘offer’ – in order to bring the unilateral contract into existence. Things would be different, of course, if A’s promise was made with the object of inducing B to tell him something, or to contact A in some way. In such a case, a unilateral contract could not come into existence if B did not get in touch with A in the way A wanted. For example, suppose A said to B, ‘I will pay you £10,000 if you supply me with evidence that my wife is having an affair’. If B then gets some photos of A’s wife in a compromising position and posts them to A but then the photos get lost in the post, A will not have to pay B £10,000 – the promise to pay that sum was made with the object of getting B to supply him with evidence of his wife’s infidelity, and B has not done that.

Life would be much simpler if the textbook writers abandoned the idea that the formation of unilateral contracts can be described through the language of ‘offer and acceptance’. But the idea is now too deeply entrenched for it now to be abandoned – and you will be expected to use such language in the contract exam, whether you are dealing with a bilateral or unilateral contract situation. However, if you are dealing with a unilateral contract situation, bear in mind that the rules on ‘offer and acceptance’ are radically modified in that sort of context, and don’t apply rules (I), (II) and (III) – in their unqualified form, as they apply to the formation of bilateral contracts – unthinkingly.

Auctions

Let’s apply all this to a situation that often comes up in problem questions in the exam, but is often done very badly by students: the situation of a blind auction at a distance. Here is a typical version of the situation I am talking about:

A puts an advertisement in the newspaper: ‘I have a rare first edition of JK Rowling’s Harry Potter and the Philosopher’s Stone. I will sell it to the person who bids the highest price for it by midnight on December 1st.’

The problem question goes on to have various people making various types of bids for the book and has various things happening to those bids. And the question is whether A is bound to sell the book to anyone, and if so who.

The key to doing this problem question properly is to realise that we are dealing with a unilateral contract situation here. A is basically promising ‘If you are the highest bidder at midnight on December 1st, I will sell the book to you for the price you bid.’ And because we are dealing with a unilateral contract situation, we must be careful about what rules on ‘offer and acceptance’ we apply to this situation – we cannot unthinkingly apply the normal rules that would apply to the formation of bilateral contracts. Here are some points that you should bear in mind in analysing this problem question:

(1) The deadline makes it clear that a bid has to be received for it to count as a ‘winning’ bid. A wants to know at midnight on December 1st where he stands – he needs to know who he is supposed to sell the book to. He can only do this if it is only the bids he has received that can count as winning bids. So any bids that are lost in the post or otherwise not communicated (and not through A’s fault in failing to receive them) will not count as valid bids.

(2) Multiple bids, and bids made after rejecting A’s initial ‘offer’, are perfectly acceptable. The only thing that matters is whether you are the highest bidder by the deadline. If you put in a bid, and then thought better of it and put in a higher bid, then that that is fine. If you told A to stuff his offer, and then thought better of it and put in a bid, then that is fine.

(3) It is also acceptable to withdraw a bid that has already been made. As in (2), the only thing that matters is whether you are the highest bidder by the deadline. If you have made a bid before the deadline and then take it back, you are not the highest bidder by the deadline. The bid you made has been nullified by your subsequent act of withdrawing it.

(4) It is a difficult issue, what the position is if A withdraws his ‘offer’ (by placing another advertisement in the paper and notifying all current bidders at the time of withdrawal) before the deadline of midnight on December 1st. In order to deal with this issue, we need to ask – what was A trying to induce people to do by placing his initial advert in the paper?    If the answer is ‘bid for the book’ then A cannot withdraw his offer if anyone has already made a bid for the book. There already exists a unilateral contract between A and anyone who has already bid for the book. A’s promise – ‘I will sell you the book if you are the highest bidder by midnight on December 1st’ – was made with the object of inducing people to bid for the book, and so if anyone is induced by A’s promise to bid for the book, a unilateral contract will then have come into existence under which A is bound to sell the book to that bidder if his bid turns out to be the highest bid by the midnight December 1st deadline. A cannot now get out of that contract by withdrawing his ‘offer’. The ‘offer’ has already been ‘accepted’. If, however, what A was trying to do by making his promise was to induce someone into becoming the highest bidder for the book by midnight December 1st, then his ‘offer’ has not yet been ‘accepted’. The deadline has not yet come, so we don’t know yet who the highest bidder is. But would Errington v Errington kick in to say that A cannot withdraw his ‘offer’ because people (i.e. anyone who has already bid for the book) have relied on that ‘offer’ by making a bid and it would as a result be unfair to withdraw that ‘offer’? I am not sure. It won’t have cost people who have already made a bid anything to make a bid. And while they might, in making a bid, have taken a risk that they will end up having to buy the Harry Potter book for their bid price, they could avoid that risk at any point up and until the deadline by withdrawing their bid (as in (3), above). So it’s not clear that it would be that unfair to them if A was allowed to withdraw his ‘offer’ before the deadline.

There are other complications attached to this kind of problem question – in particular, in relation to the issue of ‘referential bids’ – but they are dealt with in the contract textbooks and need not detain us here.

Undue influence

Posted on by
Reply

What is it?

Generally speaking, the contract textbooks are particularly bad at defining what we are talking about when we refer to ‘undue influence’. For example, Neil Andrews’ textbook on contract law says that:

‘Undue influence can, but need not, involve coercion. As Lord Nicholls said in the Etridge case (2002): (1) it ‘comprises overt acts of improper pressure or coercion such as unlawful threats’ but (2) it has a broader ‘connotation of impropriety’, and this can take the form of ‘overt acts of persuasion’. Thus, actual undue influence can cover a range of improper conduct, including coercion, misleading statements, half-truths, cunning persuasion, artful steps and guile’ (p 321).

So just about anything then. Here’s My View:

D exerts undue influence over C if: (i) C is willing to do whatever D tells her to do; and (ii) D uses that power he has over C to get C to act in a particular way.

(It should be noted that My View is very close to the view expressed by Mindy Chen-Wishart in her essay on ‘Undue influence: beyond impaired consent and wrongdoing towards a relational analysis’ in Burrows and Rodger (eds), Mapping the Law: Essays in Honour of Peter Birks (2006).)

So, on My View, a relationship of undue influence will normally arise between C and D in two basic situations.

The first is where C thinks that D knows better than her what she should do. In other words, C regards D as being an authority figure. Bank of Credit and Commerce v Aboody (1990) involved this kind of relationship of the undue influence. The key players were a husband and wife, whose income was primarily derived from a family business which was running into trouble. The family business was run by the husband. The wife regarded her husband as the expert on business matters and deferred to his judgment on all such matters. The business needed money, which BCCI was willing to lend so long as the loan was secured by a charge over the family home. The husband told his wife that the family business needed the loan, and that she should sign the form consenting to BCCI having a charge over their home. She signed. It was found that she has acted under undue influence in so doing.

The second situation which will normally give rise to a relationship of undue influence is where C is infatuated with D, and will do anything D wants so as to please D. In other words, C is enthralled by D. This kind of relationship of undue influence existed in Re Craig (1971), where it was found that the deceased had made many gifts to his ‘secretary and companion’ under undue influence. He was clearly infatuated with her and had made the gifts just in order to please her.

If a court thinks that: (i) either of these kinds of relationships existed between C and D; and (ii) that C made a gift or entered into a contract because of that relationship, then it should – in My View – find that the gift or contract was made under undue influence. If a court does not think that (i) and (ii) are true, then it should refuse to find that C’s gift or contract was made under undue influence. (Though it could still find that the gift or contract was the result of duress or misrepresentation or unconscionable conduct on the part of someone else.)

Actual and presumed undue influence

On My View, actual and presumed undue influence are not two different things. They are merely two different ways of establishing the same thing. (This is an argument made in Birks and Chin, ‘On the nature of undue influence’ in Beatson and Friedmann (eds), Good Faith and Fault in Contract Law (1995).)

In an actual undue influence case, C actually proves that she made a gift or contract because of D’s undue influence. This is what the wife did in Aboody: she actually proved that she was willing to do whatever her husband told her to do in business matters, and that she had approved the charge over her house because her husband had told her to do so.

In a presumed undue influence case, C raises a presumption she did what she did because she was willing to do whatever D told her to do. It will then be up to D to rebut the presumption and show that – no, actually, C did what she did because she was acting out of her own free will. Usually the only way for D to do this is to show that C received independent legal advice before doing what she did. (Though as the case of Credit Lyonnais v Burch (1997) shows, there can be situations where the C’s receiving, or declining to receive, independent legal advice can reinforce the impression that C is not acting of her own free will. There are some transactions (in the Burch case, taking out a mortgage on one’s flat to secure a loan to one’s employer) that are so improvident that if C still wanted to enter into such a transaction having received independent legal advice, one would inevitably conclude from that fact alone that C is acting under someone else’s influence or under pressure exerted by someone else.)

There are two ways C can raise a presumption that she did what she did because was willing to do whatever D told her to do.

In what is known as a ‘Class 2A’ case (following the language of the House of Lords in Royal Bank of Scotland v Etridge (No 2) (2002)), C raises a presumption that her relationship with D was the kind of relationship where she would do whatever D wanted her to do, and she then raises a further presumption that the gift or contract she made, was made because she was simply doing what D wanted her to do. She does this by showing that that gift or contract was so generous or so burdensome that it ‘calls for explanation’. In other words, it is hard to explain why C made that gift or contract if she wasn’t just doing what D wanted her to do.

In what is known as a ‘Class 2B’ case, C actually proves that her relationship with D was the kind of relationship where she would do whatever D wanted her to do, and then she shows that the gift or contract she made ‘calls for explanation’, thereby raising a presumption that she made that gift or contract because she was simply doing what D wanted her to do.

In order to get a better grasp of these different ways of establishing that a gift or contract was made under undue influence, let’s consider some hypothetical cases:

(1) C and D are engaged. C gives D a car for his birthday. She now claims the gift was made under undue influence. C will not be able to raise a presumption of undue influence in this case. While the relationship between an engaged couple is such that the courts are willing to presume that each partner in the relationship will do whatever the other wants, the gift here is not so extravagant that it ‘calls for explanation’. It can easily be accounted for as a simple expression of C’s love for D. So if C wants her car back, she will have to actually prove that she gave D the car because he asked her to, and she was so enthralled by D that she would have done whatever D wanted her to do.

(2) C and D are engaged. C signs over the title deeds to her house to D. C will have no problem raising a presumption that she was acting under undue influence in transferring her house to D. This will be a class 2A case. She will be able to rely on the fact that she was engaged to D to raise a presumption that she was willing to do whatever D wanted her to do. And the magnitude of C’s gift to D will be such that it ‘calls for explanation’, thus raising a presumption that C transferred her house to D because she was so enthralled by D that she would do whatever he wanted her to do. It will then be up to D to rebut this presumption by showing that C was acting of her own free will in transferring the house. This will be difficult, though not impossible. If D merely relies on the fact that C had independent legal advice before transferring the house, that will probably not be good enough (see the discussion of the Burch case, above). But the presumption could be rebutted if D could show, for example, that C owned multiple houses and that she signed over one of them to D because she wanted him to have some financial security should anything happen to her before they got married.

(3) C and D are married. C consents to bank B having a charge over her house to secure a loan to a business run by D’s brother. If C wants to raise a presumption that she approved the charge under undue influence exerted by D, she will have to actually prove that her relationship with D was such that she was willing to do whatever D wanted her to do. The courts will not be prepared to presume that such a relationship existed between C and D just because they were married. This contrasts with the courts’ willingness to presume that such a relationship exists between engaged couples; obviously the courts take the view that while engaged couples can be presumed to be besotted with each other, once they get married, the shine comes off the relationship and it becomes more arms-length. But if C can establish that her relationship with D was unusual for a married couple in that she was willing to do whatever D wanted her to do, then she would be able to raise a presumption that she consented to the charge over the house because she was willing to do whatever D wanted her to do. The charge over C’s house ‘calls for explanation’: the fact that D’s brother benefited from the loan and she did not would mean that the most natural explanation of why C would agree to her house being charged to secure the loan is that D told her to consent to the charge, and she was willing to do whatever D wanted her to do.

(4) C and D are married. C consents to bank B having a charge over her house to secure a loan to the family business on which C and D’s income depends. C will not be able to raise a presumption that she consented to the charge as a result of D’s undue influence. Even if she can show that her relationship with D was unusual for a married couple in that she would do whatever D wanted her to do, she would not be able to raise a presumption that she consented to the charge over her house because she would do whatever D wanted her to do. This is because there is nothing about the charge over C’s house that ‘calls for explanation’. As the loan to the family business benefited C, that benefit provides the most natural explanation of why C would have agreed to have a charge over her house to secure that loan; we have no need to suppose that D was acting as a puppet master behind the scenes, pulling C’s strings to get her to approve the charge. So if C wants to establish that she consented to the charge because of D’s undue influence, she will actually have to prove that D told her to agree to the charge and she did so because she was willing to do whatever D told her to do.

So – to sum up: if C wants to get out of the gifts and contracts that she entered into in the above situations on the ground of undue influence, she will have to make a plea of actual undue influence in (1) and (4), but will be able to raise a class 2A presumption of undue influence in (2) and may be able to raise a class 2B presumption of undue influence in (3).

Criticisms of My View

My View seems to make sense of the notion of ‘undue influence’, and when the courts are prepared to find that someone made a gift or contract under undue influence. However, two criticisms of it might be made:

(1) The first criticism is that actual undue influence and presumed undue influence refer to two different things, not two ways of proving the same thing. Academics who take this view usually identify actual undue influence with ‘pressure’ or ‘coercion’, invoking Williams v Bayley (1866), where a father was allowed to get out of a mortgage guaranteeing his son’s debts on the ground that he had entered into the mortgage under undue influence, where the only ‘influence’ exerted on him was a threat that if he did not enter into the mortgage, his son would be prosecuted for forgery. While it is true that some 19th century pressure cases like Williams which were decided on the basis that the pressure amounted to actual undue influence, they were probably decided in that way because the concept of ‘duress’ as a factor vitiating gifts and contracts had not been fully developed at that stage. We have no need to follow such cases in identifying actual undue influence with ‘pressure’ or ‘coercion’. And if we insist on seeing actual undue influence as being something different from presumed undue influence, we will introduce a paradox into the law. In the case of the fiancée who gave her fiancé a car, or the wife who agreed to a charge over her house to secure a loan to the family business, the courts will say that the fiancée/wife cannot raise a presumption that she acted under undue influence, and will then refuse to allow the fiancée/wife to prove undue influence because a plea of ‘actual undue influence’ will be reserved for cases involving pressure.

(2) The second criticism is that My View is too wide, and overlooks the fact that undue influence always involves some kind of exploitation of C by D. So for undue influence to be established, it not only has to be shown that C was willing to do whatever D told her to do, it also has to be shown that used that power that he had over C to take advantage of her. In support of this view is the case of R v Her Majesty’s Attorney-General for England and Wales (2003). The defendant – a soldier in the SAS – was ordered to sign a confidentiality agreement under which he could not write about his experiences in the SAS. The defendant sought to have the agreement set aside on the ground that it had been procured by undue influence. The Privy Council refused to set aside the agreement, even though it was clear that the defendant had signed the agreement simply because he had been ordered to do so. Lord Hoffmann held that undue influence concentrates ‘in particular upon the unfair exploitation by one party of a relationship which gives him ascendancy over the other’, and that no such unfair exploitation had taken place in this case. Against views like this – which basically identify undue influence with unconscionable conduct – stands Allcard v Skinner (1887) in which the claimant handed over large sums of money and railway stock to the sisterhood in which she was a nun, having taken a vow of poverty. It was held that the claimant had made her gifts under the undue influence of the sisterhood’s Mother Superior (though the gifts could not be reclaimed as the claimant had delayed too long after leaving the sisterhood before suing for them back). But the Court of Appeal was careful to emphasise that ‘no unfair advantage was taken of’ the claimant (Lindley LJ), and that the defendant was acquitted ‘most entirely of all selfish feeling in the matter. I can see no sort of wrongful desire to appropriate to herself any worldly benefit from the gift’ (Bowen LJ). Aboody was the same: there was no evidence that the husband in that case was trying to take any unfair advantage of the influence he enjoyed over his wife in telling her to agreeing to the charge over their house. But that didn’t stop the court finding that there was undue influence in Aboody.

A puzzle created by My View

However, if My View is correct, it creates a puzzle. The rule, established by the House of Lords in CIBC Mortgages v Pitt (1994), is that if C establishes (whether by positive proof or by raising an unrebutted presumption) that she entered into a contract under D’s undue influence, then C will be prima facie entitled to rescind the contract even if entering into that contract was in her interests. (The other party may be entitled to raise a defence, though – most obviously in the case where she provided value under the contract and she was not responsible for D’s undue influence and had no notice of it: Barclays Bank v O’Brien (1994).) So the wife in Aboody should have been allowed to escape the effect of the charge over her house, even though it was in her interests to agree to allow her house to be charged in order to secure the loan that was essential to keeping the family business afloat. But why?

Birks and Chin argue that she should have been allowed to rescind the charge because her consent to the charge was ‘impaired’. But as Mindy Chen-Wishart points out, this does not work, at least in cases where C regards D as an authority figure and D uses his authority to tell C to act in a way that is in her best interests. The wife in Aboody agreed to her home being charged because she put her trust in her husband to know what was best in business matters, and agreeing to the charge in order to secure the loan to the family business was actually the best thing to do in the circumstances. So in what sense was the wife in Aboody’s consent impaired? She was led to believe that agreeing to the charge was the best thing to do, and it was the best thing to do.

So the puzzle remains. There are three possible solutions:

(1)  In Allcard v Skinner, the Court of Appeal seems to have taken the view that even though the Mother Superior in that case had not taken advantage of the influence she possessed over the claimant, it was still important to hold that the claimant’s gifts could be set aside on the ground of undue influence so as to guard against the risk that someone like the Mother Superior would abuse the position of influence she had over the nuns. In a case where D possesses influence over C, the courts attempt to avert this risk by warning D that if he exercises his influence over C, they will set aside what D has done. Effectively, the courts impose a positive responsibility (duty is too strong a word) on D to negate the influence that he possesses over C and ensure that C is acting of our own free will. D can suggest how C should act, but cannot determine how C should act. So in a case like Aboody, where the wife’s husband made no effort to ensure that she was acting freely in deciding whether or not to consent to her home being subjected to a charge, the courts set aside the charge in order to guard against the possibility that the husband’s influence over his wife might have been used in an abusive way.

(2) Taking inspiration from Chen-Wishart’s suggestion that the key to understanding the law on undue influence is to think of it in ‘relational’ terms, it could be argued that the court sets aside transactions like the one in Aboody in order to preserve the integrity of the relationship between the influencer and the influenced. In Aboody, it was in the wife’s interests to agree to the charge over her home: it was the only way of saving the family business and keeping her repayments on the existing mortgage over the home. But the family business eventually went bust, and the BCCI sought to enforce the charge. At this point, the wife in Aboody could have been philosophical and thought, ‘Well, it just didn’t work out.’ But it’s more likely that the wife would have blamed her husband, thinking, ‘Why did he get me to agree to the charge over my home? He let me down.’ And thoughts like that tend to poison a relationship. In order to prevent that happening, the law will allow claimants like the wife in Aboody to escape the consequences of doing what someone else wanted them to do.

(3) There are some things that are so important that people should decide for themselves what to do about those things – even if someone else is better placed than them to decide about those things. (For example, think of what your reaction would be if someone asked you, ‘Shall I break up with my partner? I’ll do whatever you tell me to do.’) In a case like Aboody, it’s arguable that the decision about whether or not to consent to having a charge over one’s home was so important that the wife should have been left to decide for herself whether or not to agree to this. But she wasn’t: she allowed her husband to make the decision for her. By setting aside the charge (even though it was objectively in her best interests) the courts reaffirm the importance of people being allowed to decide for themselves certain fundamentally important issues.

If none of these solutions seem to work, then it may be that we should welcome the decision of the Privy Council in R v Attorney General for England and Wales, and its attempt to restrict the ambit of the law on undue influence to cases where influence has been used in an exploitative way – at least in cases where the influence originates in C’s regarding D as an authority figure. (I think we are on safe ground in saying that any gifts or contracts that are made as a result of C being enthralled with D should be set aside on grounds of undue influence, unless some defence applies.)