Contracts Regulation in UK Law

Given that there are two innocent parties, each enjoying rights, the earlier right prevails against the later right if the acquirer of the later right knows of the earlier right (actual notice) or would have discovered it had he taken proper steps (constructive notice).

The difficulty is to establish the relationship between the law as laid down in Morgan and the long standing principle laid down in the abuse of confidence cases viz. the law requires those in a fiduciary position who enter into transactions with those to whom they owe fiduciary duties to establish affirmatively that the transaction was a fair one: see for example Demarara Bauxite Co. Ltd. v. Hubbard [1923] A.C. 673; Moodie v. Cox and Hatt [1917] 2 Ch. 71 and the discussion in the Aboody case, at pp. 962G–964C.

The first matter is that the plaintiffs chose to appoint the son, who was the debtor, to procure from his parents the security which he and they needed to further the transaction on which they were engaged. The person whom they chose to appoint, being a son, could be expected to have some influence over his elderly parents, and that is something of which the plaintiffs could or should have been aware.

He then made one or two suggestions for limiting her liability, but got the impression that she was indifferent to his suggestions as though she thought it would be a waste of time to put them forward However, while he was still attempting to give his advice to Mrs. Aboody, her husband had burst into the room uninvited and in a high state of excitement.

By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other.

It was no part of the solicitor's duty to advise her not to sign. It was enough if she would receive such advice as would leave her in no doubt of her right to decide whether she was willing in all the circumstances to take a risk which had been explained to her.

The bank's legal department is not obliged to commit the professional discourtesy of communicating directly with the solicitor's client and tendering such advice itself. Nor is it obliged to inform the solicitor of his professional duties. This will be a fortiori the case when the documents submitted by the bank to the surety's solicitor contain a certificate that she has been advised of the effect of the document and her right to have independent legal advice.