Aylesford v Morris (1873)

House of Lords

Basic Facts: C (Aylesford), a 21-year-old heir with significant debts, entered a loan agreement with D (Morris), who charged a 60% interest rate. C did not seek legal advice and later sought to have the loan set aside.

Issue for the Court: When can a contract be set aside due to exploitation or undue influence?

Held : The court ruled that fraud in this context refers to exploiting a party’s vulnerable position unconscionably. The transaction can be set aside if the stronger party cannot prove it was fair, just, and reasonable.

Lord Selborne LC stated that fraud means unconscionably exploiting a vulnerable party. If the weaker party is exploited due to a lack of knowledge or guidance, the contract can be set aside. The stronger party must demonstrate that the transaction was fair, just, and reasonable.

💡Leveluplaw : This case established principles around undue influence and exploitation in contract law, influencing later cases involving undue influence and exploitation.