Unconscionability in English law is a field of contract law and the law of trusts, which precludes the enforcement of voluntary (or consensual) obligations unfairly exploiting the unequal power of the consenting parties. "Inequality of bargaining power" is another term used to express essentially the same idea for the same area of law, which can in turn be further broken down into cases on duress, undue influence and exploitation of weakness. In these cases, where someone's consent to a bargain was only procured through duress, out of undue influence or under severe external pressure that another person exploited, courts have felt it was unconscionable (i.e., contrary to good conscience) to enforce agreements. Any transfers of goods or money may be claimed back in restitution on the basis of unjust enrichment subject to certain defences.
Considerable controversy is still present over whether "iniquitous pressure" must actually be exercised by a defendant in order for a voluntary obligation to be voidable. While it seems clear that in cases of undue influence the pressure need not come from the person who may lose the contract,[1] it is open to debate whether circumstances exist where an obligation should be voidable simply because the person was pressured by circumstances wholly outside a defendant's control.
One of the most prominent cases in this area is Lloyds Bank Ltd v Bundy,[2] where Lord Denning MR advocated that there be a general principle to govern this entire area. He called the concept "inequality of bargaining power", while the American case espousing an equivalent doctrine, Williams v. Walker-Thomas Furniture Co. (1965),[3] termed the issue one of "unconscionability". Note that even though it is accepted that an "inequality of bargaining power" is relevant to the doctrine of undue influence, Lord Denning's broader dictum on a general equitable principle of an "inequality of bargaining power" was later rejected by the House of Lords in the 1985 case National Westminster Bank plc v Morgan.[4]
If a man fails to fulfil an agreed contract – unless he had contracted to do something forbidden by law or decree, or gave his consent under some inquitous pressure, or was involuntarily prevented from fulfilling his contract because of some unlooked-for accident – an action for such an unfulfilled agreement should be brought in the tribal courts, if the parties have not previously been able to reconcile their differences before arbitrators (their neighbours, that is).
- ^ e.g. in the case of a husband who pressures his wife to sign a mortgage agreement with a bank, and the bank takes subject to the wife's equitable interest when it is found that her signature was inequitably procured.
- ^ Lloyds Bank Ltd v Bundy [1975] QB 326
- ^ Williams v. Walker-Thomas Furniture Co. 350 F.2d 445 (C.A. D.C. 1965)
- ^ National Westminster Bank plc v Morgan [1985] UKHL 2, [1985] AC 686, [1985] 1 All ER 821 (via BAILII)
© MMXXIII Rich X Search. We shall prevail. All rights reserved. Rich X Search