Cresswell v Potter [1978]

Cresswell v Potter [1978]

Cresswell v Potter [1978] 1 WLR 255 is a notable English contract law case that revolves around the exploitation of weakness, allowing escape from a contract. The central issue in this case is the alleged undue influence exerted on Ms Cresswell, a telephonist for the Post Office, leading to the conveyance of her property to Mr Potter.

Ms Cresswell, having divorced Mr Potter, entered into a contract to convey her interest in Slate Hall to him in exchange for release from mortgage liability. Subsequently, Mr Potter sold the property, making a significant profit. Ms Cresswell argued successfully that her consent to the contract was vitiated due to Mr Potter's exploitation of her weaknesses. She claimed vulnerability akin to that of a poor and ignorant person, as established in the precedent Fry v Lane [1888].

Megarry J, in delivering the judgment, outlined the requirements from Fry v Lane, the first being the person's status as poor and ignorant. He acknowledged that Ms Cresswell, given her occupation as a telephonist with limited means, met this criterion. The second requirement considered whether the sale was at a considerable undervalue. The third focused on whether there was any independent advice. Megarry J noted the absence of independent advice, emphasising the significant power imbalance between Mr Potter, his solicitor, and an inquiry agent on one side, and Ms Cresswell alone on the other.

On the matter of being ignorant, Megarry J considered Ms Cresswell's occupation and concluded that, in the context of property transactions, she could be described as ignorant. He observed that she satisfied the criteria of being a member of the lower income group and less highly educated.

Lord Justice Nourse later cited Megarry J's decision in Credit Lyonnais Bank Nederland NV v Helen Burch [1997], emphasising its relevance and adaptability to various transactions in changing circumstances. The case, therefore, stands as a demonstration of the jurisdiction's effectiveness in addressing iniquitous pressure and protecting vulnerable parties in contract law.
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