Critically discuss the above statement.
Analysis of wife’s equity to set aside the husband’s transaction due to undue influence. Establish the principles of the doctrine of undue influence first to establish the foundation stones of which third party undue influence occurs. Equity was introduced to act as an enhancement of common law, commonly known as the second great subdivision of English law. Equity’s foundation is a judicial assessment of justice in contrast to the sometimes harsh and inflexible rule of common law. Historically, common law was known as the law, in contrast with equity. Equity sets aside contracts in the event of a party gaining a benefit through undue influence which is when an agreement is obtained by indecent pressure which is not duress at common law since no factor of violence to the individual was involved" (GH Treitel, The Law of Contract).
Equity is relevant to banks, as the courts prior to O’Brien analysed the problem of ‘indecent pressure’ by banks, in terms of agency. However O’Brien changed this and banks can now claim for the wrongdoing of banks who has exercised undue influence in order for them to induce them into an agreement, therefore contracts made between banks and customer can be set aside on the grounds of equity. Types of undue influence
The COA adopted these classifications of undue influence in BCCI v Aboody and was implemented by Lord Brown-Wilkinson in Barclays Bank v O’Brien 1993. Class 1, is actual undue influence. In order to show this the claimant must prove favourably that the wrongdoer applied undue influence on the claimant to enter into the transaction which is disputed. Barclay’s bank v O’Brien would not indicate actual influence as the undue influence was not applied to the husband (claimant) but to his wife (third party). What is Manifest disadvantage?
Originally it was a requirement that the claimant seeking to find relief through actual undue influence must also establish that they had suffered a manifest disadvantage (See BCCI v Aboody above). However, it was held in CIBC Mortgages v Pitt  1 AC 200 (case summary) that manifest disadvantage was not required in cases of actual undue influence. However this term caused confusion and confusion within the law, as in the case Aboody. Lord Browne-Wilkinson rejected manifest disadvantage as a requirement for actual undue influence in Pitt,  1 A.C. 200 he also expressed doubts about the correctness of the decision even in respect of presume undue influence. Similarly, in Barclays Bank Plc v O’Brien19 he observed that prove of a relationship of undue influence in a class 2B relationship will give rise to a presumption of undue influence.
Class 2 Presumed undue influence: the complainant simply has to show, in the first occurrence, that there was a present relationship of trust and confidence amongst the complainant and the wrongdoer of a nature that is reasonable to presume that the wrongdoer mistreated that relationship in obtaining the complainant to participate in the disputed transaction. Consequently in presumed undue influence circumstances there is no necessity for evidence that actual undue influence existed in relation to the specific transaction disputed. When a confidential relationship has been evidenced, the burden then transfers to the wrongdoer to show that the complainant entered into the questioned transaction freely, such as showing that the complainant had independent guidance. A confidential relationship can be recognized in two ways: 2A:- some relationships such as; medical...