Unacceptable agreements may be refused when a person was under coercion or inappropriate influence or if his vulnerability was exploited if he was supposed to accept an agreement. Children, those unable to act mentally and companies whose representatives act totally outside their powers, are protected from the application of agreements against them if they are not really able to make a decision on the conclusion of an agreement. Some transactions are considered illegal and are not imposed by the courts on the basis of status or for public policy reasons. In theory, English law attempts to respect a principle that persons should only be bound if they have given their informed and actual consent to a treaty. In a certain sentence of treaties, the parties to the negotiation must behave with the utmost fidelity (or “uberrima fides”) by revealing all the essential facts. In one of the earliest cases, Carter v Boehm, Mr. Carter purchased an insurance policy for losses incurred at a British East India Company naval fortress in Sumatra, but did not tell his insurer Boehm that the fort was built solely to withstand attacks by the inhabitants and that the French were likely to invade. Lord Mansfield felt that the policy was not valid. As insurance is a speculative contract and the particular facts “most often knowingly of the insured,” Mr. Carter excludes “hiding what he knows in private.” The same policy has been extended for the sale of shares in a company. Thus, the developer and later director of a mining company from Guano to Erlanger against New Sombrero Phosphate Co did not disclose that he had paid the mineral rights to The Island of Sombrero half of what he had subsequently assessed. The House of Lords found that the purchasers of the shares had a right to their money despite a delay in exercising a right. Lord Blackburn also stated that the fact that the guano cannot be put back in the ground is not an obstacle to resignation.
The counter-constitution (i.e. both parties returned what they had received) when they could be achieved essentially in their monetary equivalent were sufficient. However, apart from insurance, partnerships, guarantees, fiduciary relationships, shares, a wide range of regulated securities and consumer credit contracts, the obligation for negotiating parties to disclose essential facts does not extend to most contracts. Although there is an obligation to correct the previous false allegations in Smith v Hughes, it was found that the general obligation was simply not to make active misrepresentations.