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(B) ACTUAL UNDUE INFLUENCE

A crucial distinction needs to be drawn between two grounds of restitution which are recognized in Equity, although they are often both called undue influence. The first ground arises where the defendant compels the claimant to pay a sum of money or to enter into a contract as a result of lawful threats. This ground is founded upon the principle of compulsion, rather than exploitation, and for this reason it is analysed in Chapter 10. Since the essential feature of this ground is that the defendant has pressurized the claimant, it should properly be called ‘undue pressure’[1] to distinguish it from undue influence. The other ground of restitution, which is called actual undue influence, is concerned with those cases where the defendant is shown to have unfairly exploited a position of influence over the claimant. This ground of restitution is properly treated as founded on the exploitation principle.[2] [3] That actual undue influence is not founded on the principle of compulsion was recognized by Millett LJ in Dunbar Bank plc v Nadeem,38 who stated that ‘neither coercion, nor pressure, nor deliberate concealment is a necessary element in a case of actual undue influence’.

  • [1] Lloyd’s Bank Ltd v Bundy [1975] QB 326, 338 (Lord Denning MR).
  • [2] Rv Attorney-General for England and Wales [2002] UKPC 22.
  • [3] [1998] 3 All ER 876, 883.
 
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