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Lloyds Bank Ltd v Bundy, [1974] EWCA

Facts:

D mortgaged home to bank to borrow money for his son. When D needed to secure more credit the bank manager gave him papers to have over night and D consulted a lawyer. When had to get more security the new bank manager came to house w papers and they were signed right then. D mortgaged more then he thought and now the bank is foreclosing on his home

Issue(s):

Was there some form of unconscionablility between D and the bank regarding the last doc signed?

Ratio:

Separate categories – all of these are arrangements that could lead to inequality of bargaining power:
1. Duress of goods – this type of transactions is voidable.
**a. It is when one man has the goods, in stronger position, and another needs the goods to the stronger demands from the weaker more than is justly due.
**b. Colore officii – under this category, deals with someone in official position
2. Unconscionable transaction – transaction set aside
**a. A mans weakness is exploited by another far stronger than himself
3. Undue influence
**a. 2 types:
***i. Where stronger guilty of some fraud or wrongful act
***ii. Stronger not guilty of fraud, but, bc of the relationship between the parties, has got advantage for himself from weaker
****1. Presumption of undue influence, with certain kinds of relationship (ex parent child, doctor patient)
4. Undue Pressure – where special relationship abused
5. Salvage agreements – only void if manifestly unjust
**a. When vessel sinking and needing help, rescuer in stronger position

Analysis:

Consideration from bank was grossly inadequate, relationship between D and bank was one of trust, the relationship between D and son was one of affection and he had influence over D.

What are the grounds that you would 1st look for to get D off?
*Fraud
*Non est Factum
*Misrepresentation
*Then move to unconscionability

Holding:

This case falls w/in the category of undue influence of the 2nd class – the last doc was voided.


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