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Alec Lobb (Garages) v Total Oil (Great Britain) Ltd

[1985] 1 All ER 303

Case summary last updated at 04/01/2020 19:20 by the Oxbridge Notes in-house law team.

Judgement for the case Alec Lobb (Garages) v Total Oil (Great Britain) Ltd

D loaned P some money and took mortgages on P’s property as security. When P got into financial trouble, D (contrary to its solicitors’ advice) agreed to lease P property for  one-off premium and a v. low rent in return for which P would grant a lease-back at a normal rent and supply D with petrol for the whole term of the lease-back. P claimed that this was an unconscionable bargain because of the unequal bargaining power at the time of the agreement and should be set aside. CA denied this claim. 

 Dillon LJ: There was unequal bargaining power (i.e. weakness of P) but D did no take advantage fo this by using its power coercively or in a usurous way etc and therefore there is no presumption of fraud as there was in Aylesford. The unequal bargaining power requirement is fulfilled despite P having legal advice, since it had no other source of getting finance, D did not want to accept any other terms, it was in financial difficulty etc. Mere presence of advice doesn’t change this. However D was not oppressive in its use of power. For a deal to be shown to be “unconscionable”, it has to be more than merely “unreasonable”. Thus, here, it is unnecessary for D to show that the transaction was “fair, just and reasonable”, since P has not done enough to raise the presumption of fraud. 

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