Royal Bank of Scotland v Etridge (No 2)

March 05, 2024
Micheal James

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This landmark case, also known as “The Wives’ Cases”, dealt with the complex legal issue of undue influence in contracts, specifically involving spouses and guarantees for loans. The House of Lords examined whether wives were pressured into guaranteeing their husbands’ loans, potentially rendering the agreements invalid.

Facts of the Case

  • Eight cases were joined, involving wives who had signed guarantees for loans taken by their husbands for business ventures.
  • The wives claimed they were unduly influenced by their husbands to sign the guarantees, often without fully understanding the implications.
  • Key concerns included the unequal benefit (husband’s business) and the risk of losing the family home used as collateral.

Legal Issues

  • Undue influence: Did the husbands exert undue pressure on their wives, vitiating their consent to the guarantees?
  • Presumed undue influence: Did the nature of the transactions and the relationship create a presumption of undue influence, shifting the burden of proof to the bank?
  • Bank’s knowledge and responsibilities: Was the Royal Bank of Scotland (RBS) aware of potential undue influence and did they have a duty to take steps to protect the wives?

Decision and Reasoning

  • The House of Lords held that actual undue influence was not proven in all cases, but established the key concept of presumed undue influence in these specific circumstances.
  • Factors like the one-sided benefit, risk to the matrimonial home, and lack of independent legal advice created a presumption of undue influence.
  • The burden shifted to RBS to prove they took reasonable steps to ensure the wives understood the risks and acted independently.
  • The Court determined that RBS failed to fulfill their duty by not ensuring independent legal advice, particularly considering the vulnerability of the wives and the nature of the transactions.

Impact and Significance

  • The case significantly strengthened the protection of spouses from potentially unfair financial consequences due to spousal pressure.
  • It clarified the concept of presumed undue influence and its application in similar scenarios involving unequal bargaining power.
  • Established a duty of care on banks to act responsibly and advise vulnerable individuals like spouses in loan guarantee situations.


Royal Bank of Scotland v Etridge (No 2) significantly impacted commercial loan practices and emphasized the importance of protecting vulnerable individuals from undue influence. It highlighted the shared responsibility of both parties involved in such transactions and the need for informed consent, independent advice, and fair dealing.

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