The court was asked whether the terms of a lease and lease back amounted to an unconscionable bargain and was unenforceable.
Held: The court affirmed the decision at first instance, but emphasised the need for unconscientious behaviour rather than a mere disparity of bargaining power. Unequal bargaining power or objectively unreasonable terms provide no basis for equitable interference in the absence of unconscientious or extortionate abuse of power where exceptionally, and as a matter of common fairness, ‘it was not right that the strong should be allowed to push the weak to the wall’.
Dillon LJ, Waller LJ, Dunn LJ
[1985] 1 WLR 173, [1984] EWCA Civ 2, [1985] 1 All ER 303
Bailii
England and Wales
Citing:
Appeal from – Alec Lobb (Garages) Ltd v Total Oil Ltd QBD 1983
To establish that a contract was unconscionable, a party had to have made an unconscientious use of its superior position or superior bargaining power to the detriment of someone suffering from some special disability or disadvantage. This weakness . .
Cited – Gilford Motor Co Ltd v Horne CA 1933
The defendant was the plaintiff’s former managing director. He was bound by a restrictive covenant after he left them. To avoid the covenant, he formed a company and sought to transact his business through it. At first instance, Farwell J had found . .
Cited – Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd HL 1968
Agreement in Restraint of Trade Unenforceable
The defendant ran two garages under solus agreements with the plaintiffs who complained when the defendants began to purchase petrol from cheaper alternative sources. The House was asked whether the solus agreements were be regarded in law as an . .
Cited – DHN Food Distributors Ltd v Tower Hamlets London Borough Council CA 1976
The business was owned by DHN and the land upon which the business was operated was owned by a wholly owned subsidiary, Bronze. The Council acquired land owned by Bronze on which DHN operated its cash and carry warehouse. The Council submitted that . .
Cited – Amoco Australia Pty Ltd v Rocca Bros Engineering Co Pty Ltd PC 1975
A court looking to see if an unconscionable bargain had been reached could look at whether or not the transaction benefits the mortgagor. The fact that a covenantor had obtained and would continue to enjoy benefits under the relevant agreement which . .
Cited – Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company HL 1894
Exceptions to Freedom to Trade
The purchaser of the goodwill of a business sought to enforce a covenant in restraint of trade given by the seller.
Held: At common law a restraint of trade is prima facie contrary to public policy and void, unless it can be shown that the . .
Cited – The Vancouver Malt and Sake Brewing Company Limited v The Vancouver Breweries Limited PC 2-Feb-1934
(British Columbia) Lord Macmillan stated: ‘The law does not condemn every covenant which is in restraint of trade, for it recognizes that in certain cases it may be legitimate, and indeed beneficial, that a person should limit his future commercial . .
Cited – The Vancouver Malt and Sake Brewing Company Limited v The Vancouver Breweries Limited PC 2-Feb-1934
(British Columbia) Lord Macmillan stated: ‘The law does not condemn every covenant which is in restraint of trade, for it recognizes that in certain cases it may be legitimate, and indeed beneficial, that a person should limit his future commercial . .
Cited – Bennett v Bennett CA 1952
The wife sued for arrears of maintenance payments payable under a deed in consideration for which the wife covenanted not to proceed with the prayers in the petition for maintenance, to consent to their being dismissed, and not to present any . .
Cited – Chemidus Wavin Ltd v Societe pour La Transformation et L’exploitation des Resines Industrielles SA CA 1973
. .
Cited – Goodinson v Goodinson 1954
W covenanted that for so long as the weekly payments of maintenance for herself and the child were punctually made, she would not commence or prosecute any matrimonial proceedings against the husband. The husband fell in arrears and she claimed the . .
Cited by:
Cited – Chagos Islanders v The Attorney General, Her Majesty’s British Indian Ocean Territory Commissioner QBD 9-Oct-2003
The Chagos Islands had been a British dependent territory since 1814. The British government repatriated the islanders in the 1960s, and the Ilois now sought damages for their wrongful displacement, misfeasance, deceit, negligence and to establish a . .
Cited – Boustany v Piggott PC 1995
In discussing what was said to be unconscionable contract, the Board accepted that ‘It is not sufficient to attract the jurisdiction of equity to prove that a bargain is hard, unreasonable or foolish; it must be proved to be unconscionable, in the . .
Cited – Yorkshire Bank Plc v Tinsley CA 25-Jun-2004
The defendant’s husband had charged the matrimonial home on several occasions to the claimant. It was found that the first charges were affected by undue influence and could not be enforced. The defendant argued that the last charge which replaced . .
Cited – Strydom v Vendside Ltd QBD 18-Aug-2009
The claimant sought recovery of a sum paid to the defendant as a commission by his union during his claim for personal injuries at work, relying on a term he sought to have implied into his contract, that the costs position should not be . .
Lists of cited by and citing cases may be incomplete.
Updated: 29 July 2021; Ref: scu.186675
