Unconscionable Bargain

[Animal]

I'm trying to understand the consequences of an unconscionable bargain.

If a lender makes a remortgage to someone who is clearly in difficulty and unable to pay the new mortgage amounts and the court finds it is an unconscionable bargain, how would this be resolved?

I understand that the court would attempt to roll back to the start of the agreement, but how would that work when a remortgage takes place? One cannot restore the original mortgage...

Anyone able to explain?

[Caspar]

Re: Unconscionable Bargain

As far as I understand this, and it is VERY limited, if a court has deemed something unconscionable, they will not allow the perpetrator of the conduct, in this case the remortgage company, to benefit.

One would assume that this could mean one of two things; one that they force the remortgage company to offer the loan interest free; two that the loan is declared null and void and everyone is put back in the position they were prior to any transaction taking place.

I stress this is a very amateur take on your question though.

[Animal]

Re: Unconscionable Bargain

As far as I understand this, and it is VERY limited, if a court has deemed something unconscionable, they will not allow the perpetrator of the conduct, in this case the remortgage company, to benefit.

One would assume that this could mean one of two things; one that they force the remortgage company to offer the loan interest free; two that the loan is declared null and void and everyone is put back in the position they were prior to any transaction taking place.

I stress this is a very amateur take on your question though.

That was my understanding, but I have been unable to find a case that I could relate to the above situation. To put everyone back would be impossible as the old mortgage could not be reinstated, but that would mean the defendant would potentially lose their home. Clearly not a desirable position... :-)

The loan interest free is seems to be a better option, which presumably would also mean any interest that had previously been paid would have to be refunded...?

[SpringerSpaniel]

Re: Unconscionable Bargain

The court can impose a fair interest rate, with refund as Caspar has said of excess paid under unfair terms.

'Unconscionable bargain' allows the court to re-open and re-write the entire agreement.

[charitynjw]

Re: Unconscionable Bargain

I would have thought that restitution for unjust enrichment would be the way forward.

Isn't 'unconscionable bargain' difficult to prove - it needs much more than an inequality re parties?

[Animal]

Re: Unconscionable Bargain

Thanks Guys. Don't suppose anyone can offer links to any cases, especially involving mortgages. I'm looking for how the cases are resolved rather than the actual legal arguments.

[charitynjw]

Re: Unconscionable Bargain

http://www.bailii.org/uk/cases/UKHL/1985/2.html

(Not sure it helps much)

[Animal]

Re: Unconscionable Bargain

Thanks, yes it does help my understanding. I had been trying to find that one but my searches didn't uncover it...

If anyone has any similar cases revolving around unaffordable loans (as opposed to undue influence), I'd be very grateful.