Fry v Lane (1889) 40 Ch D 312

Key point

  • Sale of property at considerable undervalue by ‘poor and ignorant’ persons without independent advice will be set aside by equity

Facts

  • Two plumber brothers agreed to sell their reversionary interest in their aunt’s estate in substantial undervalue

Held (High Court)

  • The transaction was set aside as an unconscionable bargain

Kay J (at p. 322)

  • ‘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.’
  • ‘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”.’

Commentary

  • In modern law the equivalent of poor and ignorant has been given the more socially correct label of  ‘member of the lower income group’ and ‘less highly educated’ in Cresswell v Potter
  • In more recent cases the courts have moved away from simply considering the terms of the transaction and the circumstances of the party that was disadvantaged to the unconscionability of the conduct of the party that procured the transaction: see Boustany v Pigott and Portman BS v Dusangh