Undue influence and bank guarantees

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Mee, John
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Given the experience of other common law jurisdictions, it is remarkable that there have been so few written decisions of the Irish courts in relation to the problem of the sexual (or emotional) transmission of debt. In Ireland, as in other jurisdictions, lenders routinely seek guarantees from spouses, parents and other family members. When the lender subsequently seeks to enforce the guarantee, it is not uncommon for the surety to seek the assistance of equity on the basis that the principal debtor exercised undue influence (or committed some other equitable wrong) in inducing her or him to sign the guarantee. Yet the Irish case which is the subject of this note, Ulster Bank v. Fitzgerald appears to be the first in modern times in which the problem has squarely arisen (although the relevant legal issues were canvassed to some extent in two other recent cases, Bank of Ireland v. Smyth and Bank of Nova Scotia v. Hogan). While, with respect, the judgment of O’Donovan J in Fitzgerald is open to the criticism that it deals too briefly and too casually with complex legal problems, it does raise important issues concerning the relationship between Irish law and English law in this area. These questions are lent further interest by the fact that the House of Lords in Royal Bank of Scotland v. Etridge (decided just a few weeks before Fitzgerald and not considered by O’Donovan J therein) has revisited in detail the ground charted in its earlier decision of Barclays Bank v. O’Brien. This note considers the decision in Fitzgerald and ventures some reflections on the future of Irish law in the light of this decision and the recent developments in English law.
Transmission of debt , Bank guarantees , Lender , Undue influence
Mee, J. (2002) 'Undue influence and bank guarantees', Irish Jurist, 37, pp. 292-306. Available at : https://www.jstor.org/stable/44027027 (Accessed: 4 July 2024).
© 2002, Thomson Reuters (Professional) Ireland Limited and contributor.