Undue influence is taking advantage of another person, through a position of trust, in the formation of a contract. When there is a consequential remedy in restitution, that is because the test for the unjust factor of coercion is independently satisfied. Duress and undue influence essentially means that a person or party has been forced into a contract. In contract law, a defense that can be used by a party to argue against the formation of a binding contract between two parties. Undue influence legal definition of undue influence. Section 15 of the act defines coercion as the committing or threatening to commit any act forbidden by the indian penal code or the unlawful detaining, or threatening to detain any. A husband exerted actual undue influence over his wife in order to get her to sign a charge securing the family home on the debts owed by the company in which the husband and wife owned shares. The couple were unable to repay the mortgage and the bank sought to repossess the home. Duress and undue influence introduction law teacher. Virtually any act of persuasion that overcomes the free will and judgment of another, including exhortations, importunings, insinuations, flattery, trickery, and deception, may. The oneyear project used both quantitative and qualitative approaches.
A judicially created defense to transactions that have been imposed upon weak and vulnerable persons that allows the transactions to be set aside. Contract law is based on the latin phrase pacta sunt servanda. Undue influence to this point, the handbook has focused on a conceptual framework and assessment tools for understanding decisional capacity. However, a contract may be void for mistake or possibly illegality or voidable for misrepresentation, duress or undue influence. Psychologists working with older adults may come across a related but distinct area of law, that of undue influence. Important concepts in contract law munich personal repec archive. Undue influence in equity lecture equity gives relief on the ground of undue influence where an agreement has been obtained by certain kinds of improper pressure which were thought not to amount to duress at common law because no element of violence to the person was involved gh treitel, the law of contract. In the course of studying contract law you will see many equitable principles in place see, for example, estoppel, undue influence and the remedy of specific.
This thesis will examine the law of undue influence. This means the use of false imprisonment, threats, force, psychological pressure, or coercion to influence someone to act in a way that is not in their best interest or to act in a manner they do not wish to act. The chapter begins with an examination of the doctrines of duress and undue influence, taking each in turn. The follbwing article provides the history of undue influence and the law, the definitions of undue influence. Undue influence in contract law is the inappropriate pressure or the unlawful intensity of persuasion applied by a trusted, more powerful party on a trusting, less powerful party to enter into or refrain from entering into a legally binding agreement written or oral against their will, which falls slightly short of duress. Not all such transactions will result in a remedy but where the influence that exists between the parties can be. If undue influence is proved in a contract, the innocent party is entitled to set aside the contract against the defendant, and the remedy is rescission. Undue influence was introduced to deal with cases where a contract was entered into as a result of pressure, but this pressure did not amount to duress. It is used to explain an unequal contract relationship in which one party, who is dominant over the other for any number of reasons, uses their influence to persuade the other party to agree to a situation that is not beneficial to them. The effect of these doctrines on a contract is that it makes the contract voidable at the request of the aggrieved party.
Contract law requires more than the broad modeling of. Roseanne tells ryan that shell sue him for every penny hes worth, alleging food poisoning and unsanitary conditions, unless. Contract law duress, undue influence flashcards quizlet. New essays cambridge university press, cambridge, 2001. In this case the sum will be owing as a debt as soon as the time for payment arises.
Law made by judges is called case law law decided by judges as recorded in cases and published because contract law was made up in the. Contracts which are entered into as a result of one party putting pressure on the other are dealt with under the doctrine of undue influence in equity. The customary distinction between collective agreements and or dinary contracts assumes that there is. A person who has been induced to enter into a transaction eg, a gift. In barclays bank plc v obrien 1993 3 aer 417 the house of lords divided contracts which may be rescinded for undue influence into 2 categories. A situation in which an individual is able to persuade anothers decisions due to the relationship between the two parties. As the law of undue influence was applied and developed by the court of chancery, it developed into two distinct classes. In contract law, obligations arise because one party has made an agreement with another intending that it should be legally binding. Undue influence in contract and probate law by abraham nieyod, ph. It will examine the theoretical basis of undue influence, the general misconceptions in the law, the impact of the etridge case, and related doctrines of duress and unconscionability. The rise of modern american contract law richard orsinger. They are merely two different ways of establishing the same thing. Undue influence is an equitable doctrine that involves one person taking. In exerting undue influence, the influencing individual is often able to take advantage of the weaker party.
This is where someone enters into a contract as a result of undue pressure. Duress in contract law is focused on the concept of undue influence. Normally undue influence can only be successfully claimed by a minor or an elderly person who has a guardian responsible for overseeing their legal or financial. In chapter 2, relevant legal definitions are given to describe undue influence. In a contract for the sale of land in instalments the instalment will be due. We use cookies to give you the best possible experience on our website.
Undue influence situations are also seen in contract law with documents such as deeds, powers of attorney, and contracts. In the context of contract law, this refers to where a party uses duress against the other party in order for them to enter into a contract which they either do not want to, or where the terms of the contract are unfavourable to them. The most important sources of contract law are state case law and state statutes though there are also many federal statutes governing how contracts are made by and with the federal government. Undue influence arises in a situation where a confidential relationship exists and one party has such influence over the other party that the other partys free will is dominated to the benefit of the influencing party. Undue influence australian contract law julie clarke. There is duress where one party contracts under the influence of a constraint which makes him fear that his person or his wealth, or those of his. The different types of duress are considered, as well as the requirements for it to be present.
References of the discussion are mainly made to the common law principles with occasional reference to the australian law and malaysian law. B prima facie position if the undue influence is caused by a third party to the transaction such as a husband or brotherinlaw then it is not normally possible to resile on the transaction with the third party bank or investor. In all those situations, courts consider evidence indicating that undue influence may or may not have already happened. Undue influence is usually only claimed in the event that the party is in a relationship wherein another person is able to influence their decisions. This is an extract of our undue influence document, which we sell as part of our laws202 law of contract notes collection written by the top tier of univerity of otago students.
A financial institute which regulate financial transactions and works with lending funds to customers and securing assets for them. The doctrine of undue influence is an equitable principle used by courts to set aside certain transactions or estate documents where an individual exerts such influence on the testator, grantor or donor that it cannot be said that hisher decisions are wholly independent. Most contracts arise in the context of commercial relationships e. In common law, there are 3 basic essentials to the creation of a contract. Case law confirms that the doctrine may be applied not only to. Under section 14 the indian contract act, 1872 states that a consent is free when it is not caused by coercion. By continuing to use this site you consent to the use of cookies on your device as described. In exerting undue influence, the influencing individual. On my view, actual and presumed undue influence are not two different things. A voidable contract is one where one party has a choice of either continuing with the contact or rescinding the contract. Undue influence, where established, will render a contract voidable. This is an equitable doctrine which applies where one party uses their influence over the other to persuade them to make a contract. Coercion and duress are two commonly confused terms under the law of contract. It occurs when there is an inequality of power between the contracting parties which results in the weaker party entering into a contract with the dominant party.
Print duress and undue influence in contract enforcement worksheet 1. Undue influence exists where a contract has been entered as a result of pressure which falls short of amounting to duress, the party subject to the pressure may have a cause of action in equity to have the contract set aside on the grounds of undue influence. Under common law, there are two doctrines to consider. Undue influence can arise where there is a relationship between the parties which has been exploited by one party to gain an unfair advantage. In this video i introduce the concept of undue influence.
The parties to a contract may make payment of a sum of money independent of performance of a contract. An occurrence of undue influence can be difficult to establish conclusively in court. Research methodologies applied in this research are doctrinal and statutory analysis. The following is a more accessble plain text extract of the pdf sample above, taken from our laws202 law of contract notes.
Undue influence is a doctrine which evolved from common law. Undue influence is defined under section 16 of the indian contract act 1872 if a contract is entered into by obtaining consent through undue influence the contract is voidable. Undue influence always involves a relationship between the two parties, with one. South african law, with its romandutch roots, but strongly influenced by english law, has.
A deconstruction of the postal rules in contract 1992 12 oxford journal of. The use of undue influence by one party over another puts the free will of one of the parties entering the contract into question, and therefore leads to the contract being unenforceable and voidable by the victim party. A person who enters into a contract is often under some sort of pressure to do so. Inequality of bargaining power and the doctrine of. A presumption of undue influence can be established if the party in the superior position influenced the dependent party to agree to a contract that benefited the superior party.
South african contract law is essentially a modernized version of the roman dutch law of. The contract cannot be considered to be a valid agreement under these circumstances. The burden of proof that the contract was not induced by undue influence lies upon the person who was in a position to dominate the will of the other in situations where it is apparent that a confidential relationship exists between the parties, the law raises a presumption that undue influence has been exercised and the onus of proof is upon. This is an argument made in birks and chin, on the nature of undue influence in beatson and friedmann eds, good faith and fault in contract law 1995.
Knowledge, understanding and skills 1 understand the general nature of the law of contract 1. There is sometimes an automatic presumption of undue influence by the courts. Undue influence in english law is a field of contract law and property law whereby a transaction may be set aside if it was procured by the influence exerted by one person on another, such that the transaction cannot fairly be treated the expression of that persons free will historically the doctrine had predominantly been invoked where the person who is exercising undue influence over. Influence that prevents someone from exercising an independent judgement with respect to any transaction.
The reasoning behind duress and undue influence is to protect the freedom of contracts, which has been achieved by the courts invalidating a contract that has been formed by any coercion. English contract lawbibliography wikibooks, open books. Thus, when a contract is set aside for duress at law or for undue influence at equity, that is the relevant contract doctrine at work. Duress and undue influence in contract enforcement video. Rescission for undue influence eoin odell, 5 jan 1998. In this article, we argue that, although contract law may be unable to replicate the optimal contract envisioned by eco4. Undue influence operates where there exists a relationship between the parties which has been exploited by one party to gain an unfair.