Appellant: Henry Williams and Ors.
Respondent: James Bayley
Decided on: 21 June 1866
Jurisdiction: The House of Lords, UK
Area of law: Undue influence
Facts: A son committed forgery by signing his father's name on multiple promissory notes and deposited them into his own bank account. When the truth was discovered, the bank manager warned the son that he would face legal consequences unless a solution was reached. In order to avoid this threat, the father agreed to provide the bank with an equitable mortgage on his property as collateral for the promissory notes. Later on, the father attempted to have the agreement cancelled by claiming that he had been coerced into agreeing due to the threat made against his son.
Issue: Is the agreement between the father and the bank considered legal, considering that it was formed as a means to avoid pressing charges against the son for committing forgery?
Is there a possibility that the agreement could be invalidated due to undue influence?
Judgment: The House of Lords ruled that the agreement was capable of being cancelled. The negotiation took place with the understanding that if the father agreed to provide security for his son's promissory notes, then his son would be spared from the repercussions of his illegal actions. The father was afraid and not in control of his own decisions, and the bankers exploited this situation to force an agreement that would benefit them. This situation was characterized by an imbalance of power between the two parties, and one of them used undue influence to coerce the other into agreeing.
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