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Conoco Ltd v Khan & Khan [1996] EWCA Civ 968 Court of Appeal

The defendants, Mr and Mrs Khan, owned a petrol station which was run by Mr Khan. Mr Khan entered an agreement with the claimant supplier of petrol whereby the defendants were to borrow £300,000, which was to be secured on the petrol station, to be repaid by 5 annual instalments. The loan was to pay for the supply of petrol during that five years. Also by the agreement the defendants were not to purchase petrol from any other supplier. The defendants breached the agreement by purchasing petrol elsewhere. The claimants terminated the contract and demanded the balance outstanding under the loan standing at £240,000. Mrs Khan raised class 2 b undue influence in her defence stating she took no part in the running of the business and always signed what her husband asked her to. She did not speak English and had no knowledge of the affect of what she signed. She trusted her husband implicitly not to prejudice her interest. She had not been given any advice at all as to what she was signing.

Held:

The bank was not put on enquiry. The agreement was a commercial agreement under which she was to obtain benefits. The claimant would have no reason to consider that the wife should obtain independent advice.
 
Back to lecture outline on undue influence in Contract Law