Boris Ignachkov This summary explores the Boustany v Pigott [1995] case, a pivotal decision in contract law, focusing on the doctrine of unconscionable bargains. Essential reading for law students studying equitable principles in contractual agreements.
Legal Principles and Key Points in Boustany v Pigott
- In the case of Boustany v Pigott 1995 69 P Cr 298 an appeal is made against a decision, in an attempt to have a lease set aside on the grounds of it being an unconscionable bargain.
- A transaction where one party is in a much stronger position than the other.
Facts of the Case Boustany v Pigott
- The claimant (C), Mrs. Boustany’s, affairs had been, as agreed, managed by her cousin (B). being aware that the cousin was away on one occasion, the defendant (D), Mrs. Pigott, invited Mrs. Boustany over, at which point Mrs. Pigott spent time flattering the claimant.
- Later Mrs. Pigott took the claimant to a solicitor where the claimant agreed to lease a premise to D for less than 1/6 of the market value for the duration of 10 years. Despite warnings against the latter C agreed to the transaction.
Issues in Boustany v Pigott 1995 69 P Cr 298
- To prove that a transaction is unconscionable the claimant (C) must establish that the defendant (D) was aware that C was in a vulnerable position and then knowingly took advantage of this during the transaction.
- In these exceptional circumstances, legal advice was actually given to the claimant.
Held by the Court (House of Lords)
- The legal advice provided was declared, insufficient in its attempted use to have the claim of unconscionable bargain discharged given that the claimant was under continuous pressure while she was being given the advice.
- The lease was set aside for an unconscionable bargain.
Lord Templeman
- Lord Templeman (p. 303) provided a list of points regarding the occasions and the way in which equitable fraud can vitiate a contract:
- The jurisdiction of Equality is not something that is called upon when a transaction is hard unreasonable or foolish. To assert the use of equity the agreement must be unconscionable in that, ‘one of the parties to it has imposed the objectionable terms in a morally reprehensible manner, That is to say in a way which affects his conscience.’
- ‘Unconscionable refers, not only, to the terms of the bargain but also to the behaviour of the stronger party which must be characterised by some moral culpability or impropriety.
- There must also be a combination of unequal bargaining power and an abuse of that power.
- Unconscionable conduct must actually be present and terms being unfair or imbalanced are not to be considered sufficient.
- The claimant in any given case, the party seeking relief, is burdened with the task of proving and providing unconscionable conduct to the court, “namely that unconscionable advantage has been taken of his disabling condition or circumstances.”
Significance of the Case on the Development of the Law
The Boustany v Pigott [1995] decision has profound implications for contract law, particularly in the area of unconscionable bargains. It underscores the necessity for courts to protect parties from unfair and exploitative agreements, reflecting on several historical and related cases:
- Relation to Lloyds Bank Ltd v Bundy [1975]: This case established that a contract could be set aside if one party disproportionately dominates the will of another, which resonates with the principles upheld in Boustany v Pigott, where undue influence and vulnerability were key considerations.
- Comparison with Williams v Walker-Thomas Furniture Company [1965] (US Case): Like Boustany, this American case dealt with unconscionable bargains, emphasizing the importance of fairness in contracts where one party is significantly disadvantaged, a principle that has influenced English common law.
- Echoes of Commercial Bank of Australia Ltd v Amadio [1983]: In Amadio, the High Court of Australia set aside a guarantee under the principles of unconscionability due to the guarantors’ ignorance and reliance on their son’s assurances, paralleling Boustany‘s focus on the exploitation of vulnerability and lack of independent advice.
Exam Questions and Answers
Below you will find answers to questions that are most commonly asked based on this case.
What specific criteria must be met for a bargain to be considered “unconscionable” in current UK law?
In UK law, a bargain is considered unconscionable when one party exploits their position of power over another who is significantly weaker or under duress, lacking in information, or advisement. For a contract to be deemed unconscionable, there must be an absence of meaningful choice for the weaker party coupled with contract terms that are unreasonably favorable to the stronger party. Recent cases like Patel v Mirza [2016] refine this understanding, emphasizing the importance of transparency and fairness in preventing the enforcement of unethical agreements.
How has the interpretation of unconscionable bargains evolved in UK law since the Boustany v Pigott decision?
Since Boustany v Pigott, the doctrine of unconscionable bargains has evolved to include a broader spectrum of situations where inequality of bargaining power exists. The Consumer Rights Act 2015 has furthered this development by setting clear standards for fairness and transparency that businesses must adhere to, especially in consumer contracts. The Act protects consumers against unfair terms and conditions that create a significant imbalance in the parties’ rights and obligations. This statutory progression works alongside case law to ensure more equitable dealings in contract law.
What are the ethical considerations for solicitors when advising clients in potentially unconscionable bargains post-Boustany?
Post-Boustany, solicitors are ethically obligated to ensure that their clients fully understand the terms of a contract and the implications of any power imbalances. Solicitors must provide impartial and thorough advice, especially when representing clients who may be vulnerable or disadvantaged. This responsibility is emphasized in legal standards and guidelines issued by the Solicitors Regulation Authority (SRA), which advocates for maintaining the highest level of integrity and professional conduct in legal practice. Failure to adhere to these ethical standards can lead to professional misconduct proceedings and undermine the fairness of contractual agreements.