Multiservice Bookbinding v Marden [1979] Ch 84

Chancery Division

Basic Facts: Directors of a company secured a £36,000 mortgage with onerous clauses, including a clause linking payments to the Swiss Franc's value. By October 15, 1976, the total interest due was £45,380.

Issue for the Court: When will a court intervene against unfair terms in a mortgage?

Held: The term was valid. Although the term was unreasonable it was not void for being oppressive or unconscionable, but harsh and unconscionable terms in a mortgage contract may be unenforceable, particularly where there was inequality of bargaining power.

• Browne-Wilkinson J ruled that: A mortgage term can only be declared void if it is unconscionable or unfair. Unreasonableness alone does not suffice. Terms are unconscionable if they exploit a significant inequality in bargaining positions or if the lender acts in a morally reprehensible manner.