unconscionable conduct

 Introduction:

 A contract is only legal if both parties have freely accepted its terms since English contract law is innovated on the notion of concurrence. In circumstances when one party's authorization may not be freely given, the English contract law has created several procedures that may render a contract imperfect on the base that one party's agreement was affected by the other party. This module consists of misrepresentation, duress, undue influence, and unconscionable conduct.

Misrepresentation:

A misrepresentative promise given by one party to entice some other party to engage in a contract is referred to as misrepresentation in contract law. This might be a dishonest or legitimate misstatement. In this article, we will talk about the idea of misrepresentation using legal precedents. Unintentionally misrepresentations are those that are made. Whether or whether the representor had a solid foundation for thinking the statement to be accurate will determine whether or not it was an innocent misrepresentation. It is not fair misrepresentation if the representor has no reasons for thinking the claim to be truthful. This was formed in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964], where the House of Lords held that a person can be held liable for any loss sustained as a result of a negligent misrepresentation if they give advice or information to another person with the knowledge or intent that it will be followed. The plaintiff in Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd [1965] bought an automobile from the defendant based on the defendant's claim that the vehicle had a new engine. It was eventually discovered that this was untrue. According to the ruling of the court, the plaintiff was allowed to withdraw the contract since the defendant had committed an honest misrepresentation. A false statement made with the purpose to deceive is called a fraudulent misrepresentation. In such circumstances, the harmed party may demand compensation or contract cancellation. The House of Lords determined that to establish fraud, the following three components must be proven: a fictitious statement that was made intentionally or carelessly with the purpose that the plaintiff would act on it and incur damage as a result. In Redgrave v. Hurd (1881), the plaintiff bought a legal firm from the defendant after learning that the defendant had misrepresented the firm's yearly revenues, which were just £210. The court determined that the claimant was accountable for making a false representation and the complainant was allowed to annul the agreement when the court decided that the defendant was accountable for making false statements. A fraudulent misrepresentation is made carelessly and without the intent to deceive. In certain situations, the damaged party may demand compensation but not a cancellation of the contract. The House of Lords determined in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 that a person can be held accountable for any harm sustained as a result of a careless misrepresentation if they offer advice or information to another person with the knowledge or intent that it would be followed.

Duress:

The application of force or pressure to persuade one participant to sign an agreement without their permission is known in contract law as duress. Physical harm, threats, or other types of intimidation may be used in this. With the use of case law, we shall examine the idea of duress and its ramifications in contract law in this article. A party trying to escape a contract may claim that they were compelled to enter it without their permission as a defence against its execution. This could happen if one party makes threats to hurt the other party or their assets if they don't accept the contract's requirements. In such cases, the agreement entered while under duress is often viewed as unenforceable. An instance of duress in contract law is Barton v. Armstrong [1976] AC 104. In this instance, the defendant, a client, had threatened the plaintiff, a solicitor, with criminal prosecution unless he consented to work for him under disadvantageous conditions. The plaintiff attempted to get the contract voided because she was coerced into signing it. The claimant had been under economic stress, the court said, and the contract was voided. The case of Universal Tankships Corp. of Monrovia v. International Transport Workers Union [1983] 1 AC 366 is another illustration of coercion in contract law. A bargaining agreement between the parties, in this case, was contested by the defendant on the basis that its workers had been forced to accept the conditions. The defendant failed to establish that their employees had been intimidated or threatened, thus the court determined that there had not been any coercion. It should be recognized that not every situation allows for the defence of duress. It is often only acknowledged in situations when the pressure being applied is illegal or unlawful, such as when there has been a physical assault, criminal charges, or blackmail. Duress is typically not accepted as a defence if the pressure being applied is legal, such as in discussions between two parties if there is no illegal behaviour. In the framework of duress court decisions, "legitimate pressure" refers to the financial pressure that is regarded as a standard component of business negotiating and does not amount to coercion that would render a contract void. In other terms, it is pressure rather than illegal or wrongdoing that is thought to be appropriate. In Pao On v. Lau Yiu Long [1980] AC 614, where Lord Scarman outlined two prerequisites for the constraint of the will that vitiates consent, the notion of economic duress was developed. Although valid economic pressure might be acknowledged as a beneficial negotiating tactic, the courts are in danger of overextending the definition of economic duress.

Mistake:

The mistake is a crucial idea in contract law that has a big influence on whether a contract is legal and enforceable.

The two categories of error recognised by the courts are unilateral mistakes and mutual mistakes.

Unilateral mistake, on the other hand, happens when just one party is in error regarding a substantial fact, whereas mutual mistake happens if both parties are in error regarding an existing fact. This article will discuss the idea of error in contract law and provide an example from recent case law. Raffles v. Wichelhaus [1864] EWHC Exch J16 is one instance of a situation where a mutual mistake impacted the legality of a contract. The two sides had settled on a cargo of cotton to arrive aboard the "Peerless" vessel as part of the cotton sales case. Yet, two "Peerless" ships were scheduled to arrive at about the same time. In October, one vessel came; in December, the other. While the seller thought the contract applied to the shipping in December, the buyer thought it applied to the shipment in October.

The contract was deemed invalid by the court because of a mutual mistake. Both parties planned to enter into a contract for the shipping of cotton, but they couldn't agree on which shipment they meant. As a result, there was no agreement between the two parties, as well as the contract, was invalid and useless. The case of Great Peace Shipping Ltd. v. Tsavliris Salvage (International) Ltd. [2002] EWCA Civ 1407 is another example of a unilateral mistake. In one instance, a boat had come ashore and its owner had enlisted the aid of a salvage business to assist in removing it. The owner signed a written agreement offered by the business without carefully reading or comprehending its provisions. The salvage company's culpability was restricted by a stipulation in the contract, which as the purchaser later claimed was not correctly disclosed. The owner's unilateral error, according to the court, rendered the contract voidable. The error made by the owner about the real meaning and implications of the provision was not due to negligence on its part.

Undue Influence and Unconscionable Conduct:

Two key legal principles in contract law—undue influence and unconscionable conduct—protect parties throughout the contract creation process against exploitation or unfair treatment. These ideas make sure that all parties to a contract have an equal amount of power to negotiate and are not exposed to harsh or unjust conditions. When one party uses undue pressure or influence to persuade another to sign a contract with unfavourable conditions, this is known as coercion. Many tactics, including emotional manipulation, promises, and threats, can be used to exert pressure. The contract may be deemed void or unlawful when undue influence is present. Unconscionable behaviour, on the other hand, is when one party abuses the weakness that is the other party's position or their ignorance of the contract's provisions. This may occur if the agreement's conditions are excessively one-sided or unjust. In such circumstances, the court may decide not to enforce the terms of the contract or may change them to make them more equal. The doctrine deals with situations where individuals are engaged in intimate relationships. That is difficult to prove as a result. The numerous instances of undue influence have been divided into an array of different categories by the courts. Bank of Finance and Industry International SA v. Aboody (1990 1 QB 923), The judge divides UI into two different classes:

Class-I: Real sway that one side has on the other. relies on evidence showing that certain UI incidents happened. Instead of using force, one side would utilise its position to sway the other party's judgement. The idea of pressure is wider than duress since there is no necessity for an unjustified threat or any kind of risk. Pitt v. CIBC Morgage's (1994) 1 AC 200: H is compelled to agree to a £1 million loan on the shared residence. The W said that she had agreed to the bank's request to take back the house since the H had insisted on it. According to the findings, this behaviour constituted "real" UI evidence. (Continual pressure coming from H). Class II: Two main things must be proven.

1)Class 2A; the parties established a relationship of trust and confidence that gave one party authority over the other. In some circumstances, it is impossible to avoid the assumption.

In special relationships, there always exists a bond of confidence and trust between the participants. Due to their connection of confidence and trust, party A will be affected by Party B since they are trusted by Party A. Here are a few instances of 2A class connections:

a doctor and a patient, a parent and a kid, a client and a lawyer, a ward and a guardian, etc.

adviser and follower of religion Allcard v. Skinner, 1887, 36 Ch.

Class 2B; the transaction in question cannot be explained by the parties' relationship with one another. The existence of a trust and confidence connection is not unavoidable, but it is demonstrated in this specific example.

Some categories do not give rise to automatic assumption, but may instead fall under class 2B. There is a close link between trust and confidence in these interactions, but this should not be assumed simply because the relationship exists. They are as follows:

 Husband and Wife

Customer and banker

Both the employer and the employee

These ties are not covered by class 2A, but if it can be demonstrated that a relationship of trust and confidence exists, there should be a presumption of influence. This is known as evidential presumption because the evidence of the relationship that exists in that specific instance must prove that one party possessed a position of influence over the other. Lord Scarman stated in National Westminster Bank v Morgan (1985) AC 686 that "the impugned transaction had not been caused by the existence or existence of influence by the bank in any sense relevant to a plea of undue influence."

Etridge (No 2) v Royal Bank of Scotland, 2002 2 AC 180.

The main distinction is that Class 2A now includes an automatic presumption based on the sort of relationship involved. There is a presumption of influence, but not necessarily of undue influence. It is necessary to demonstrate that the influence has a suspicious nature so that the court can rule that the influence was undue, but the existence of influence cannot be denied. The defendant can simply show that the influence was not abused.

In Class 2B, the claimant must individually show the undue nature of this influence, whereas, in Class 2A, the defendant can refute the presumption of influence entirely. H and W enter into a loan agreement that is secured by their marital house. W claims that she has the right to cancel the agreement with the bank. As a result of this, the bank cannot enforce the loan terms, including repossession, even if they have loaned the money in good faith. As a result, third-party rights may conflict with one another.

Constructive notice doctrine (DOCN)

1 AC 180 (Barclays Bank v O’Brien, 1994).

 

General conclusion:

To summarize, English contract law has created several processes that can void a contract where one party's consent is influenced by the other party. These techniques include deception, duress, undue influence, and unethical behaviour. Each of these components protects the parties by ensuring that contracts are entered into freely and fairly. While the main cases listed above are a useful beginning point for understanding these factors, it's crucial to keep in mind that the law is dynamic and prone to change over time, so it's critical to conduct research and check recent decisions and statutory legislation to ensure the accuracy of your work