Legal Principles and Key Points
- In the case of Fry v Lane 1889 40 CH D 312, it was found that where a purchase is made from an ignorant poor man, at a considerable under-value a Court of Equity will set aside the transaction.
Facts of the Case
- John Brown Fry who died on 11th October 1854, by his will, left the residue of his property to trustees upon trust for his widow for life, and upon her death, he gave the residue to such of the children of his late brother George Fry as should be then living and the issue then living of any who were then dead, such issue taking their parents share.
- The testator’s widow survived him and di not marry again. She died on 17th august 1886.
- The property constituting the residue then consisted of £823, a freehold farm, roughly three miles from Bristol and a leasehold house in Milk Street, Bristol. A total of around £130 a year in net income produced.
- The C in this case wished to sell their interest to D of whom were advised by D’s solicitors.
- D sold the property for a far greater sum than he paid, and the court then ordered the release of C’s interest and that they be given the proportion of the proceed from the sale in proportion to their interests.
Issues in Fry v Lane 1889 40 CH D 312
- The issue in this case was whether equity should step in to provide fairness for disadvantaged poor people when dealing with large transactions such as conveyancing.
Held by High Court (Chancery Division)
- It was held that the transaction was to be set aside as un ‘unconscious bargain’.
- Kay J considered that the point of law is one of very considerable importance. Considering the judgment wording of the trial judge, Kay stated that it is obvious that the words “merely on the ground of undervalue” do not include the case of an undervalue so gross as to amount to itself evidence of fraud in Earl of Aylesford v Morris. P.321
- “The circumstances of poverty and ignorance of the vendor, and absence of independent advice, throw upon the purchaser, when the transaction is impeached, the onus of proving, in Lord Selborne’s words, that the purchase was fair, just and reasonable”
- ‘Where a purchase is made from a poor and ignorant man at a considerable undervalue, the vendor having no independent advice, a court of Equity will set aside the transaction.’