Equity and Trusts, the Concept of Unconscionability - Essay Example

The ruling effectively puts the law of Equity and Trust in a jeopardized situation, considering that the principle of unconscionability considers the intention of the act, as opposed to the adherence to the provisions of the transfer procedures and rules, a concept that was introduced in the case Lloyds Bank Ltd v Bundy [1974] EWCA, where the ruling observed that where one side to the contract is in a better position to have favorable terms in a contract than the other party mandatory terms can be introduced to justify equality. This is because, it is expected that for a transfer to be effective, the share transfer form should be filled in, and then submitted to the company, for the completion of the share transfer process in the name of the new shareholder.

However, the ruling in the case Pennington v Waine EWCA CIV 227 [2002] ignored this maxim and instead pitched the ruling on the intended actions of the transferor. This makes the principle of unconscionability vague in that; as the ruling provided in the case Tunkl v. Regents of the University of California, [1963], it is not possible to effectively establish the intentions of the transferor at the time of his/her death. The principle of unconscionability operates based on three concepts, which are exploitation of weakness, duress, and undue influence.

The holds that if any transfer is effected based on any of the three concepts, where the transferor was forced to undertake the action out of severe pressure being exerted on him/her, then the law, as was provided in the case Williams v. Walker-Thomas Furniture Co. [1965], considers such a transfer as unconscionable, since it was undertaken contrary to the good conscious of the transferor, thus making such a transfer ineffective. In such a case, the ruling considers the exertion of pressure that arises from the beneficiary of the contract and thus nullifies the agreement based on the transferor having been forced to undertake an action that was against his or her conscious will. However, the law is silent regarding the exertion of pressure on a transferor by circumstances that are entirely outside the defendant’s control, and thus the pressure arising from a non-beneficiary is not provided a remedy. Therefore, owing to the silent nature of the law regarding the action to be undertaken in case of the exertion of pressure by a third party, the law becomes vague and unspecific, which then renders the judgment made in the application of the principle of unconscionability, not a good law.

The principle of unconscionability was established in the Re Rose [1952], where the court observed that if everything had been done to transfer the title from the transferor to the transferee, but a delay has been caused by the operation of the law, then the gift of transfer remains effective, as long as the transfer is not affected by the contrary conscious will of the transferor. This provision pitches the validity of the delay in the routine operation of the law. However, in the case Pennington v Waine EWCA CIV 227 [2002], the delay was caused by the failure of Mr. Pennington to submit the transfer form to the company, and thus the delay, in this case, does not fit into the routine operation of the law. 

However, the explanation given by Lord Justice Arden, in this case, was that it would have been unconscionable for Ada, the transferor in this case, to change her intention and recant the gift of share transfer to Harold. Once again another aspect of the principle of unconscionability being too vague to make good law arises since the two judgments in this case were not based on the same legal principle, and neither did the ruling refer to the precedence in the Re Rose [1952] EWCA. This contravenes the two principles under which the two cases were ruled, thus creating ambiguity on the correct legal concept guiding the principle of unconscionability thus making it too vague to make for good law. Read More