| RBS plc v Etridge (No 2) | |
|---|---|
| Court | House of Lords |
| Citation(s) | [2001] UKHL 41, [2002] 2 AC 773 |
| Case opinions | |
| Lord Nicholls, Lord Hobhouse, Lord Scott | |
| Keywords | |
| Undue influence, matrimonial home | |
Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44 is a leading case relevant for English property law and English contract law on the circumstances under which actual and presumed undue influence can be argued to vitiate consent to a contract.
Contents |
In eight joined appeals the common thread was that a wife had not fully understood legal advice that she had received, that the spouse’s business had gone broke and the house was being repossessed. So it is cases where the wife is standing as surety to a husband’s possible future business debts.[1]
Lord Nicholls held that if the banks ensured that the wife had had independent advice, it could not be responsible for that advice being defective. The presumption is rebutted if there is ‘expression of… free will’.[2] The idea of manifest disadvantage for presumed undue influence was rejected but replaced (like the milder tone in Allcard v Skinner) with a transaction that ‘calls for explanation’,[3] or one which ‘is not readily explicable by the relationship between the parties.’[4] In the ordinary case it is not ‘to be regarded as a transaction which, failing proof to the contrary, is explicable only on the basis that it has been procured by the exercise of undue influence.’[5] That is because it is nothing out of the ordinary. You are put on inquiry whenever a wife offers to stand as surety for her husband’s, or a company’s debts, where the loan is only going to be for the husband’s purposes. Once on inquiry, the bank must ensure that the spouse has independent advice and a certification that they have formed a truly independent judgment.[6]
Lord Scott and Lord Hobhouse cast doubt on the utility of class 2B.[7]
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