Contract Law

Unconscionable Bargain Cases

Lloyds Bank v Bundy [1975] QB 326

Key Points

• Lord Denning laid down a now-defunct doctrine of inequality of bargaining power, which subsumes duress, undue influence and unconscionable bargain, but was later rejected by the House of Lords in National Westminster v Morgan

Facts

• Bundy (D) was an elderly and infirm farmer who gave a personal guarantee and a charge over his home to Lloyds Bank (C) in order to secure the overdraft of his son’s company
• The bank manager who obtained the transaction from D admitted that he knew that C was implicitly relying on him for advice
• D and his son have had a long-term relationship with the bank as customers as well as with the bank manager
• When the son’s company ran into trouble, C sought to enforce the charge and guarantee; D argued undue influence in defence