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Facts[]

John Walsh had recently suffered a stroke, and was, according to doctors, "definitely not capable of transacting business". Marshall, a local farmer, obtained Walsh's signature on a document agreeing to purchase Walsh's land for $7,000. Two months later, Walsh's affairs were formally turned over to the administration of Canadian Permanent Trust, appointed under provincial mentally incapacitated persons legislation. The trust company refused to close the deal arguing that it was unconscionable for inadequate consideration, that the argument was not fair and reasonable, and the inequality of power.

Issue[]

  1. Is the purchase void for unconscionability?

Decision[]

Finding for the defendant, contract rescinded.

Reasons[]

Kirby held there were two criteria to be met:

  1. that Walsh was incapable of protecting his interests; and
  2. that it was an improvident transaction for Walsh.

With respect to the first criterion, it is not material whether Marshall was aware of Walsh's incapacity, simply that he was incapacitated. With the second criterion, the onus rests with the Marshall to show that the price given for the land was fair. On the evidence, Marshall failed on both accounts and the contract was rescinded.

Ratio[]

When testing for inequality, two criteria must be met:

  1. the party must be unable to protect their interests - no need that the other party be aware of this;
  2. the transaction must be improvident - the onus is on the stronger party to demonstrate that the offer was fair.
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