Concepts in Creative Accounting

Concepts in Creative Accounting Creative Accounting is usually depicted as a smeared subject and hence considered as an adverse deed. It is quite common that as and when the words â€Å"Creative Accounting† are indicated, the thinking that surfaces in one’s head is that of manipulation, dishonesty and fraud. It is apparent that if at all any error appears when resorting to Creative Accounting; it is not because that the tool is faulty, but the user is to be blamed. Progressively more companies have avoided disasters by adopting Creative Accounting and there are also numerous instances of companies which could wriggle out of adversities by using it. If creative accounting adheres to ethical and legal standards as well as the generally acceptedInternational Journal of accounting principles (GAAP), they can produce enormousprofits to the business and its shareholders or help strive through tough and challenging periods. Furthermore, attempting to completely illegalise it is impractical and narrows the gr owth of the accounting profession with such restrictions. Alternatively, educating accountants on ethical behavior and promoting professionalism could be a better solution. In 2008, Hooper, Davey, Liyanarachchi, Prescott has defined Creative accounting as a method whereby accountants use their understanding of accounting rules to manipulate the figures stated in the financial statement of a business. Basically it deals with various matters of conclusions and perseverance of conflicts between perplexing approaches to the presentation of the consequences of financial dealings and transactions. In 2008, Hooper et al. opined that on a wider perspective creative accounting can be considered as worthy provided an accountant puts this tool in use with a judgement based on sturdy moral and ethical footing to objectively portray the performance of a company. Nevertheless, creative accounting can also be construed as an evil accounting exercise, as there are negative zones that permit literally ‘creative accounting’. A pertinent instance for this is the common practice of submitting a well looking report to the shareholders without violating the boundaries of the letter of the law (Hooper et al., 2008). The lack of rigidity within the criteria and law compromises probabilities for manipulation and distortion; activities that may be considered unethical by most of humanity. In 1995, Breton and Taffler stated that it is a hard task for individual shareholders to distinguish the facts and the results of accounting manipulation because of lack of personal expertise, unresponsiveness or a reluctance to undertake a meticulous scrutiny. This botch on the stakeholders’ part is not a serious issue as far as the market proficiency is concerned. While concluding their research, Breton and Taffler opined that though there is certainly a scarcity of creative accounting strategies in the perspective analysts, the number of accounting professionals required is relatively low â€Å"for the market as a whole appropriately to process window dressed numbers†. However, in 1999, Healy and Wahlen backed with reports stated that creative accounting prior to equity issues does have an impact on share prices, vividly establishing that the potential investors do not necessarily take interest in creative accounting. The major areas where creative accounting can make vital contributions are: governing elasticity, lack of rules, an opportunity for managerial judgment in respect of expectations about the future, the scheduling of some dealings, the use of simulated businesses and lastly the reclassification and presentation of financial results. Accounting regulations normally allows policy options; valuation of asset is a good instance for it. International Accounting Standards offer a selection between carrying non current assets at either depreciated historical or cost revalued amounts. It is up to the Business entities to change their accounting policies depending on the situation on ground. Schipper stated in 1989 that any change in policy is comparatively noticeable in the year in which it is adapted; but in the following years such changes may not be easily distinguishable. There are several areas which are not amply covered by proper regulations. One good example for this is relating to accounting regulations for various stock options. No clear cut mandatory guidelines are set as yet in this area. Even in some of the developed countries such as Spain; accounting regulations in some areas are extremely scant. The crediting process and the size of the pension liabilities and certain norms for accounting financial instruments can be stated as some of the examples. There is opportunity for managerial judgement for appraisal in discretionary areas. In 1988, Mc Nichols and Wilson took bad debts provision as an example and examined the discretionary and non-discretionary elements in it. In order to render a good look to the accounts, the Management can decide upon the timing of even genuine transactions. For instance, if a company has made an investment at historic cost which can be vended for a higher price, being the current value. It is the prerogative of the managers of the business to opt as to which year they sell off the investment so as to show an increased profit in the financial statements. Artificial business transactions may be incorporated to manipulate balance sheet amounts and to hobble profits between different accounting periods. This can be accomplished with the tacit connivance of a third party; such as banks, which is willing to enter into two or more correlated deals. A vivid example for this can be found in an agreement for selling an asset to a bank and then lease the said asset for the rest of its life span. The sale value under such a sale and leaseback agreement can be inclined above or below the present value of the asset as the variance can be remunerated for by reduced or increased rentals. These are poorly researched in the literature. In 2001, Gramlich et al. suggested that companies may manipulate balance sheets to reclassify liabilities so as to report a more rosy liquidity and leverage ratios. The presentation of financial numbers provides a distinct style of creative accounting that is based on cognitive reference points. In the year 2000, Niskanen and Keloharju described that â€Å"the idea behind this behaviour is that humans may perceive a profit of, say, 301 million as abnormally larger than a profit of 298 million†. There were many other studies such as one undertaken by van Caneghem in 2002 have clearly showed that some trivial fiddling of figures does happen in order to achieve some noteworthy landmarks. In 2002 Naser and Pendlebury questioned senior business auditors about their involvement of creative accounting. According to them a substantial proportion of all types of companies use creative accounting procedures to certain magnitude. Several research studies scrutinized a specific aspect or practice of creative accounting. The entire studies confirmed that creative accounting using a precise technique. In 1976 Barnea et al. explained classificatory smoothing with the deployment of extraordinary items and their results, founded on a study of 62 US companies, indicate that classificatory smoothing does happen. A large number of accounting appraisals and estimates are allowed by IFRSs. Thefeature of accounting estimates is that the amount considered for a preciseelement reflected on the financial statements is not an exact figure. Mulford and Comiskey (2002:64, 26) is of the view that the areas of flexibility within the IFRSs could indicate the areas of creative accounting. According to Baralexis (2004:440) since the IFRSs is an essential condition for creative accounting, there are two types of creative accounting the legitimate and the illegitimate. It is very hard to differentiatebetween creative accounting and the realistic application of business judgement. When all the aspects discussed above is taken into consideration, the very question automatically raised would be as to why flexibility is allowedwithin the IFRSs in the first place if the menace of manipulation of financialinformation is apparent. Healy and Wahlen (1999:366) opined that the financial statements are the best evidence for the knowledge of a manager about his company. They further stated that accounting standards should allow managers to make judgements and thereby conveying the necessary data to the users of financial reports which could possiblyenhance the worth of accounting.Mr. Arthur Levit, the former chairman of Securities and Exchange Commission (SEC) defends the practice of flexibility in accounting standards with the following observation:â€Å"Flexibility in accounting allows it to keep pace with business innovations.† (Levitt 1998:16).McBarnet and Whelan (1999:39) noted that in the UK, where the use of IFRSs is extensively prevalent toprepare financia l statements, the emphasis is on principles rather than on rules.They maintain that doctrines are considered as the only means to seize the intricacy ofaccounting. THE EFFECT OF ESTIMATES IN FINANCIAL STATEMENTS BY ELIZABETH JOHANNA RAUBENHEIMER Creative accounting is of great assistance to sustain or increase theshare value by maintaining debt level to lower risk and bypresenting enhanced profits in the financial statements. Due to the high share price, the company will be able to amass new capital easily and will be of immense help during takeover efforts. There are some authors who is of the view that delaying tactics resorted by management in publishing the financial figures to the market with an ulterior motive to extract some benefits from the delay can be described as creative accounting. However, if the management’s objective is not to hurt the interest of the investors, such actions cannot be termed as fraudulent. Use or Abuse of Creative Accounting Techniques Normally, businesses choose to portray a stable trend of growth in profit instead of displaying explosive profits with a chain of intense increases and drops. It can be achieved by setting unreasonably high provisions for liabilities against assets in bright years to enable a reduction in these provisions thereby improving the profits in bad years. The supporters of this tactic is of the view that it is a measure against the ‘short-termism of adjudging an asset on the basis of the profits earned in the immediate ensuing years. This approach also shuns high anticipations during bright periods so that the management is not embarrassed when the performance is not that good as expected in the following years. It is contended against this backdrop that if the business environment of a firm is indeed explosive or impulsive; then the stakeholders have every right to be aware of this fact so that income smoothing may obscure enduring fluct uations in the profit movement. In 1991, Revsine contemplated the issue and opined that both managers and investors are benefited from loose accounting standards that allow managers with autonomy in scheduling the reporting of income. He went on to add that accounting as a system has the principal duty to constantly checking the agreements between managers and other agencies such as financial institutions, monitor the market mechanisms to ensure that they are operating effectively, be alert so that the accounting manipulation potentials can be detected in time and reflected accordingly in the pricing and contract decisions. The works on the morals of prejudice in accounting policy choice is appraised at the macro level of the accounting watchdog. Correspondingly, these literatures can be applied to the prejudice in accounting policy options at the micro level of the administration of businesses that is inherent in creative accounting. It is very interesting to analyse the two contrasting stands propounded by Ruland and Revsine. A close scrutiny of the opinion of Ruland reveals that he makes an obvious differentiation between the deontological and teleological views. According to him, deontological views are moral rules which apply to actual actions and the teleological views are that any action should be adjudged on the basis of the moral substance of the results. Revsine appears to be more lenient towards teleological perspective of accounting in the private sector so that the managers have the liberty to opt the alternatives provided in ‘loose’ standards to attain their preferred goal. However, when he talks about deontological view of accounting in the public sector; he advocates more stringent criterions to avert such manipulation. Obviously, we tend to question whether the existence or non-existence of market restraints and controls excuses such moral contradiction. Ruland further explained the d ifference between a positive obligation to present an unbiased accounts and a negative responsibility where managers are duty bound to explain the states of affairs they fail to avert. We can conclude that Ruland accords precedence to the positives whereas in Revsines scheme of things, all results are reckoned to be linked with the manner of contracting and price-setting and the difference is not recognized. The duty to refrain would involve eluding the prejudices intrinsic in creative accounting while the duty to act would encompass following the magnitudes to be accomplished by creative accounting. In 1995, Leung and Cooper conducted a survey of 1500 accountants in Australia and established three ethical problems faced most frequently were conflict of interest, clients’ insistence to manipulate accounts and clients’ eagerness to evade tax. However, two surveys undertaken in USA on attitudes to creative accounting; both highlighted a variance in accountants’ attitudes to creative accounting contingent on whether it results from misuse of accounting regulations or from the manipulation of business dealings. Further researches by Fischer and Rosenzweig in 1995 discovered that MBA and accounting students were more cynical than accounting professionals of manipulated transactions. On the other hand, accounting practitioners were severely criticizing the abuse of accounting rules than the students. Similarly, Merchant and Rockness in 1994 through their extensive studies established that accountants were relentlessly criticizing when presented with various scenari os of creative accounting. They also pointed out that the accountants lashed out at abuse of accounting rules and they were less critical about manipulation of transactions. An attempt was made by Fischer and Rosenzweig to propose two probable reasons for accountants attitudes. First and foremost, accountants may resort to a rule-based approach to ethics instead of its impact on the users of the accounts. Secondly, accountants consider manipulation of accounting rules is their prerogative and within their purview and as such call for an ethical judgement, while the manipulation of business transactions falling under the domain of management and hence the same ethical scanner is not applied. Merchant and Rockness also stated that a variance in accountants attitudes towards creative accounting is greatly influenced by the impetus of management. It has been noticed that creative accounting founded on blatant self-centered motives invite greater censure than the impetus for promoting the interest of the company. Anyone, be it an accountant or a manager, who dares to adopt a position against creative accounting would certainly face a lot of pressure as any ot her whistleblower or dissenter. There were some extreme instances where loss of reputation was the result for failing to act. Apparently, accounting professionals and managers are required to exercise a fair amount of discretion and judgment on a regular basis and as such it is imperative for them to have a thorough knowledge of ethical sensitivity relating to various creative accounting practices. There could be extensive pressure put on managers and accountants to involve themselves in creative accounting. In order to satisfy the shareholders and to impress the stock market, companies might compel accountants and managers to twist the quarterly financial reports to appear them attractive. Even the accountants and managers may have concern that the management might evaluate their performance without according much weightage to the precision of the financial statements prepared by them; but as to how far the statements are in favour of the management. Therefore, the practicing accountants are required to possess adequate knowledge, good discretion and judgement, sound moral values and courage to face and wi thstand the pressure from the management side. Hence, if the curriculum for accountants and managers can instill ethical sensitivity to creative accounting, it could perhaps assist in reducing their penchant to involve in these malpractices. Attitudes of Students and Accounting Practitioners Concerning the Ethical Acceptability of Earnings Management To conclude, the evidence suggests that creative accounting is a very effective tool. However, if it is not used wisely or falls in the possession of the wrong people, it will have negative impact rather than contributing value addition. If creative accounting adheres to ethical and legal standards as well as the generally acceptedInternational Journal of accounting principles (GAAP), they can produce enormousprofits to the business and its shareholders or help strive through tough and challenging periods. Furthermore, attempting to completely illegalise it is impractical and narrows the growth of the accounting profession with such restrictions. On the other hand, if accountants are educated on the importance of ethical behavior and professionalism is promoted, this could help solve the problem.

The Homeless Problem in America Essay -- Government

The Homeless Problem in America In Charles E. King’s â€Å"Homelessness in America†, he writes about the population of homeless people in America and the fact that children are part of the growing population of the homeless in America. Also, in â€Å"My Anger and Sadness Over Pesticides†, Cesar Chavez writes that pesticides have endangered the lives of farm workers and their families. In addition, in â€Å"The Gulf War is Still Being Fought†, Joelle Foshee writes that even though the gulf war has ended, a new war is still being fought and this new war is known as the â€Å"Gulf War Syndrome†. These are all injustices in America today. However, homelessness in America is the injustice I have chosen to address because the population of homeless people has grown higher due to insufficient help from the gove...

The Canadian Town of Cheltenham :: Canada

The Canadian Town of Cheltenham PART A ------ Cheltenham is located in the town of Caledon. Cheltenham was found in 1822 by Charles Haines. Cheltenham is located close to the Credit River and the Canadian National Railway known as the C.N.R. The absolute location of Cheltenham is 43 45' North and 79 55' West. The setting of Cheltenham is a valley with the Nigara Escarpment behind it. Cheltenham is located at the south west point of Caledon. Cheltenham is located north of Toronto. Now in 1989 Cheltenham is mostly residential. There is some open space but very little industry now. There is one general store located in the centre of cheltenham. There is a cemetary located opposite of The Fire Hall. Cheltenham was chosen as a town because of the Credit River and the Canadian National Railway. The railway produced trasportation for goods to be delivered to other cities. The cheap efficient rail transportation also ment that Cheltenham's businesses had to compete against goods manufactured by mass production in larger urban centers to the south. Therefore the economy of Cheltenham would rise. The Credit River produce lots of Hydro electric power for the people of Cheltenham. The two main reasons why the site was chosen for a town was the transportation produced by the C.N.R. and the hydro electric produced from the Credit River. Part B ------ The land use at the mill pond area between 1850-1870 in Cheltenham was mostly industrial uses. Most of the industries or buildings were located very close to each other because they all depended on each other. The industries in Cheltenham were located close to the Credit river.

Nothings Changed :: Papers

Nothing's Changed When you phoned last night I was clipping my nails. I stood at the window of my bedroom; the phone cradled between my chin and shoulder, and clipped my nails as I listened to your voice. It had, after all, been some time since I heard it and I was, as ever, mesmerised. "I'm coming to town on Friday. I thought we could meet for a drink or something," you said, as if we were and always had been quiet, calm friends. "Sure. Sounds good." I watched the tiny clippings, brittle slivers of dead cells, fall to the floor. We arranged a meeting and you hung up. I remained at the window, the phone burning the palm of my hand. Eventually I replaced it on the hook and sat on the table overlooking the street below. I placed my hands palm down, feeling the cold on my skin. To drown the memory of your voice I looked at them minutely. My nails were short and functional, with sharp edges, not the perfectly soft rounded ones of before. My hands. The lifetime of hands; the language of hands. Here were the scars of a lifetime spent trying to unearth something, what I wasn't sure. My hands have aged with me, the knuckles have become red raw from the years of slave driving manual work, scars from unforgotten accidents, a story behind each one. I turned them over to look at the palms, lined now, the heel roughened by years. There was a scar beneath my ring, whitened by time. The silver mood ring, which flashes golden in the sun, and burns red whenever you are near. Do you remember the night you gave it to me? The first time you whispered in my ear that you loved me, and the expression on your face when I said it back? These hands, they had held starfish and crabs, caught by my brother and father on the long summers days spent at the beach down in Sussex where my grandmother lived by the sea.

How does knowledge of the foundations and history of nursing provide a context in which to understand current practice? Essay

In order to be a success in anything, one needs to have a foundation. Children’s foundations are created by their parents. Concrete manmade objects have deep structural foundations. Beliefs such as religious or spiritual beliefs are less tangible. But like nursing, the history and the role models that came before us are the foundations upon which we continue to practice. Through trial and error and through painstaking groundwork, our founders such as Florence Nightingale and others (†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.20..) have provided the foundation for the future growth of nursing. I noticed three trends from the required timeline reading: Florence Nightingale looked at trends affecting the health and healing of patients. By doing so, she help to reform how the health organization looked at sanitary conditions, thereby improving the infection rate (Creasia & Friberg, 2011). The research for the containment of infectious microbes continues today. In the last year or so, the new policy â€Å"gel in, gel out† has been implemented in many hospitals as they discovered that nurses often did not wash their hands between patients. Antiseptic gel has been placed just inside every patient room, along with being in the corridors. Another trend that began way back when and continues today is the need for continuing education in nursing. Linda Richards (nee 1841-1930) received the first diploma in nursing, and went on to organize schools for further the education of women. (†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦) These women were already tending to the sick, but by enriching their knowledge, they became better caregivers. Today, the trend continues. There is a push for all nurses to get their BSN’s. To understand the theory behind their actions will improve healthcare outcomes. Isabel Adam Hampton Robb was the first president of the American Nurses Association. She recognized the power that nurses have if they unite in their beliefs. She was a founder of the American Journal of Nursing (NursingWorld, 2013), which still exists today. The American Nurses Association and its peer reviewed journal, NursingWorld also remain in existence. These journals continues to inform and educate the nursing profession with current information, new polices and theories. These trends show us that the nursing profession is an ever changing profession, that need to evolve with our ever changing society.

Principles of public Speaking Essay

Course Name:Principles of public Speaking Assignment # 6 Title: Why banning the use of cell phones while driving should be mandatory nationwide? (With changes) General Purpose: Persuade Specific Purpose: Persuade my audience that banning the use of cell phones while driving should be mandatory nationwide Central idea: Lawmakers should pass a legislation banning the use of cell phone while driving nationwide I. Introduction: A: Cell phones are as common in the market today as a wrist watch on your arm.Every one has one including the very young as well as the extreme elderly.People are constantly talking,texting,playing games or surfing on the internet on their cell phones.These devices are harmless until individuals decided to get behing the wheel and drive.Therefore,the government should pass legislation to ban cell phone usage while driving nationwide. B: Consider that one day you get a phone call from someone telling you that there was an accident and your child is dead because a person using their cell phone was not paying attention to the road.Would you be devasted?I sure would.im sure you believe that it would never happen to you,but do you want to take that risk?how many more people have to die before you even consider the ban on cell phones while driving?According to the NHTSB,texting is 6 times more dangerous than driving intoxicated.Finally,texting is not a teen –only problem with 47% of adults admitting to texting while driving C: II. Body of the presentation: Distracted driving is an epidemic Lawmakers should act responsibly and enact measures of how to prevent innocent citizens from being a victim to these accidents.Im sure there,s more that can be done regarding this issue. As a result of this epidemic,some states have aready implemented laws in order to address this issue.Today,my mission will be to convince you to make a pledge and stop using cell phones while driving. Distracted driving is becoming a nationwide epidemic According to the AAA foundation for traffic safety,distracted driving contributes to up to 8,000 crashes every single day and the numbers are climbing unless something is done about it. Many of the cell phones being manufactured today have the capability of performing multiple task.So what happen when you hear your phone ring or buzz indicating that you have a nessage?The amount of times it takes just to acknowledge that you have a message is enough to cause a serious accident and sometimes fatal. C. This epidemic has got to the point where lawmakers need to seriously consider how to stop accidents 1. Several states have already pass laws restricting text message while driving and many require drivers to use hands-free devices while talking on the phones.since cell phone become more affordable,there has been an increase in cell phones usage while driving. 2. Statistic from a report in 2009 showed that 56% teenagers admit to talking on their cell phone behind the wheel while 13% admit to texting while driving.(Car Accident Cell) These numbers could be low because the statistic were base on information that was provided voluntary. Conclusion: In today society our technology is more advanced than ever before.So far advanced is our society,that we can easily use cell phones to speak to anyone,anywhere and at any time.For example,we can ues cell phones while driving,or speak to someone in another country.We can use them in the business world to conduct meetings or rely vital information to co-workers or conduct trade with other businesses.Cell phones are use to schedule appointmen,fax,e-mail,call for assistance,report emergencies,and keep in contact with love ones and friends.Driving while using a cell phone is very common and prove a major threat to people,s lives on the road.Cell phone must be banned while driving.

Undue Influence

As James Munby firmly stated, â€Å"it is impossible to define, and difficult even to describe, at what point at which the influence becomes, in the eye of law, undue. † The doctrine of undue influence has been agreed upon as â€Å"the ground of relief developed by the courts of equity as a court of conscience. † It is an ordinary behaviour to influence individuals and persuade them to enter into transactions. However, the aim is to ensure that the influence exercised is not abused.On the grounds of these concepts, it is impossible to set a flawless higher definitive criterion to be directly applied in every case to recognize whether undue influence had been exercised or not. Attempting to do that has been problematic. Firstly, courts have not been able to always distinguish between undue influence and unconscionability dealing. Secondly, titles categorizing undue influence as either â€Å"claimant-sided† or â€Å"defendant-sided† have not been successful in presenting undue influence as an independent doctrine.Thirdly, subdividing undue influence into categories and setting rules under them increased the possibility of misconceptions arising. Since undue influence is an equitable doctrine, the criteria set to define it ought to only provide a framework for judges to exercise their jurisdiction. Hence, it allows them to assess cases flexibly based on the particulate facts provided rather than looking at undue influence as a common law doctrine and applying the rules set strictly.A main difficulty in attempting to set a comprehensive definitive description of undue influence is its numerous resemblances with the unconscionability notion. The usage of the word â€Å"unconscionable† in describing undue influence has established an opinion that it is based on the Unconscionability Bargains doctrine. Furthermore, misconception can be recognized in the case Lloyds Bank Plc v Lucken, where Mr. Lucken had pressured Mrs. Lucken to obta in a loan using her house’s security. Mrs. Lucken ultimately agreed to Mr. Lucken’s request, and the money was lent to one of Mr.Lucken's eventually failing businesses. She later claimed that the charge was impeachable because Mr. Lucken had exercised undue influence upon her. The Court of Appeal refused relief disputing that the pressure placed was not â€Å"unconscionable. † Tending to define undue influence in an excessive precise manner using the word â€Å"unconscionable† has rather caused confusion and difficulty in terms of separating it from unconscionability dealing. Therefore, even if the two doctrines share similarities, they should still be distinguished.Undue Influence is concerned with â€Å"the quality of the consent or assent of the weaker party,† while unconscionable dealing is concerned with â€Å"the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disabili ty in circumstances where it is not consistent with equity. † Legal certainty requires that they be distinct; hence there should not be an attempt to limit undue influence under a precise definition unless it would be used to represent and clarify that it is an independent doctrine.There has been an ongoing debate on whether undue influence is categorized as a â€Å"claimant-oriented† or â€Å"defendant-oriented† doctrine. The defendant approach suggests that it is â€Å"illegitimate† or â€Å"unconscionable. † As Lord Hoffman stated in R v Attorney-General for England and Wales, â€Å"undue influence has concentrated in particular upon the unfair exploitation by one party of a relationship which gives him ascendancy or intense over the other. † Including â€Å"unacceptable means† and â€Å"unfair exploitation† within the definition makes it powerfully appear as defendant focused.Furthermore, claimant-sided orientation defines t he influence as being â€Å"overbearing† and â€Å"too high. † It originally aimed to differentiate unconscionability from undue influence, but rather obliquely connected it to another doctrine. It was pointed by Birks and Chin when they said, â€Å"Some jurists will still be attracted by the simplicity of the defendant-sided analysis, and they will point out, correctly, that the number of cases in which there is no unconscionable behaviour is very small†¦If there are two doctrines, there are two doctrines†¦The correct approach will be to treat both undue influence and duress as plaintiff-sided factors which ground relief based on a degree of impairment of the plaintiff's capacity to make decisions. † Even though they tend to separate the two doctrines, they still tend to relate it to duress. A new approach can be taken -that presents undue influence as a flexible doctrine- including the presence of flaws within the claimant and defendant oriented defi nitions.It can be said that undue influence can be both â€Å"excessive† (claimant-focused) and used in an â€Å"improper† or â€Å"unconscionable† manner (defendant-focused) depending on the facts of the case. Some of cases set under presumed undue influence had been miscategorised after directly applying the rules rather than interpreting the facts valuably. To prove that presumed undue influence has been exercised, the claimant has to establish â€Å"a relationship of trust and confidence† and consequently prove a â€Å"transaction that calls for an explanation. Scepticism is apparent, as shown by Lord Browne Wilkinson when he describes those certain relationships as â€Å"a matter of law [that] raise the presumption that undue influence has been exercised. † In other words, the relationship itself might give rise to a presumption of undue influence as applied under the two requirements. It should be observed each relationship should be interpr eted individually rather than being grouped into a certain type. If jurists apply the rules rigorously, they will only be; as Lord Nicholls refers to in Etridge, presuming that influence exists.Presumed undue influence taxonomy appears to have characteristics that divert undue influence from its essence meaning. It had been subdivided into firstly, â€Å"certain relationships as a matter of law raise the presumption that undue influence had been exercised,† and secondly, that â€Å"the complainant proves the existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer. † Even if certain relationships do fall under the categories, they should not override the evidence set in the case facts that show whether undue influence has been exercised.It is supported by Lord Nicholls of Birkenhead when he says, â€Å"The types of relationship, such as parent and child, in which this principle falls to be applied, cannot be liste d exhaustively. Relationships are infinitely various†¦It would be absurd for the law to preserve that every gift by a child to a parent, or every transaction between a client and his solicitor or between a patient and his doctor, was brought about by undue influence. † Due to the flaws within their definitions, the subdivisions set under presumed undue influence would only aid in describing the various parameters of previous cases.However, once jurists intend to view them as firm rules that should be applied to any case that seems to relate to a certain criteria, they will be contradicting the overall idea that the doctrine is equitable. Flaws within the definition of actual undue influence caused it to overlap with other doctrines, hence emerging to misinform its overall implication. In Royal Bank of Scotland plc v Etridge , Lord Hobhouse defined it as â€Å"an equitable wrong committed by the dominant party against the other which makes it unconscionable for the domina nt party to enforce his legal rights against he other. † Also, Lord Nicholls emphasized that uncertainty builds up after subdividing the doctrine to actual undue influence, as it â€Å"compromises overt acts of improper pressure over or in such as unlawful threats. † Thus, it has â€Å"much overlap with the principle of duress as this principle has subsequently developed. † Flaws within the definition are evident, since it doesn’t seem to directly reflect a complete definition of undue influence that doesn’t overlap with other doctrines.Furthermore, in Bank of Credit and Commerce International SA v Aboody, the Court of Appeal dismissed the appeal because it had not been shown that the transactions were manifestly disadvantageous to Mrs. Aboody, because even though Mr. Aboody had unduly influenced her, he had not acted with any improper motive. It appears that the Court of Appeal; after recognising that the case is similar with others which had previ ously been classified as actual undue influence cases, had directly applied the rules set strictly under it without recognising that equity cases are variant and can be each judged valuably by their unique facts.The nature of the requirement â€Å"manifestly disadvantageous† was not used as its originator Lord Scarman had intended. This had been shown in the earlier case Bank of Credit and Commerce International SA v Aboody. â€Å"In a narrow sense, such a transaction plainly ‘manifestly' is disadvantageous to the wife. She undertakes a serious financial obligation, and in return she personally receives nothing. But that would be to a relationship of solicitor and client or medical advisor and patient, in the case of husband and wife there are intent reasons why such a transaction may well be for her benefit. The latter extract added the factor of â€Å"intention. † Intention appears to be a subjective matter that would be proven under the facts of a certain cas e, rather than applying the rules set under the categories of undue influence. Such cases therefore, â€Å"cannot be approached solely on a mathematical basis: it involves a value judgment. † This directly relates to the original nature of undue influence, where its flexibility should be granted rather than it being applied under regulations.The label â€Å"manifestly disadvantageous† should not be rejected, but only be set to clarify possibilities of what Lords may adopt in certain undue influence cases as Lord Scarman has proposed in National Westminster Bank Plc v Morgan. Overall, since it is a well vitiated concept known to be an equitable jurisdiction, courts should apply the doctrine of undue influence flexibly based on the facts of the case. There have been many subdivisions and titles that were set under undue influence. Firstly, arguments on whether undue influence is claimant-oriented or defendant-oriented.Secondly, divisions that are known as actual and pres umed undue influence (as well as subdivisions and requirements under them). Such criteria can be useful in describing the different parameters on what undue influence is generally all about. However, if the intention is to use it strictly to decide whether undue influence has been exercised or not, the flaws within their definitions might lead to misconceptions. Accordingly, returning to the basic definition that has been agreed upon would reduce the bewilderment and increase the possibilities that courts make correct jurisdictions. ——————————————- [ 2 ]. Bank of Scotland v Bennett [1997] 1 F. L. R. 801. [ 3 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 749 [ 4 ]. Devenny and Chandler , Unconscionability and the Taxonomy of Undue Influence [2007] JBL 541 [ 5 ]. [1998] 4 All E. R. 738 [ 6 ]. Devenny and Chandler , Unconsciona bility and the Taxonomy of Undue Influence [2007] JBL 541 [ 7 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 753 [ 8 ]. ibid 752 [ 9 ]. [2003] UK PC 22 [ 10 ]. McKendrick, E.Contract Law (6th edn Palgrave MacMillan, New York 2005) [ 11 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 752 [ 12 ]. Birks, P and Chin, NY, â€Å" On the nature of undue influence† , in Beatson, J and Friedmann, D (eds), Good Faith and Fault in Contract Law ( Clarendon, Oxford 1995) 95 [ 13 ]. ibid 758 [ 14 ]. Barclays Bank v O'Brien [1994] A. C. 180 at 189 [ 15 ]. Enonchong, N. â€Å"Presumed undue influence: continuing misconceptions? † (2005) LQR (accessed 12 December 2008) [ 16 ]. Royal Bank of Scotland plc v Etridge [2002] 2 AC 773 [ 17 ]. Stone R. and Cunnington, R. Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 758-759 [ 18 ]. Royal Bank of Scotland plc v Etridge [2002] 2 AC 773 [ 19 ]. [2002] 2 AC 773 [ 20 ]. McKendrick, E. Contract Law   (6th edn Palgrave Macmillan, New York 2005) 365 [ 21 ]. ibid [ 22 ]. [1990] 1 Q. B. 923 at 953 [ 23 ]. Stone R. and Cunnington, R. : Text, Cases and Materials on Contract Law ( Routledge-Cavendish, Oxon 2007) 756-757 [ 24 ]. Collins , H. The Law of Contract (4th edn LexisNexis, London 2003) 144-145 [ 25 ]. Devenny and Chandler , Unconscionability and the Taxonomy of Undue Influence [2007] JBL 541 [ 26 ]. [1985] 1 AC 686 at 709