Chapter 10 Key facts checklist

Chapter 10 Key facts checklist

Undue influence
  • An agreement may be avoided where it was entered into as a result of unfair influence resulting from the parties' relationship.
  • Undue influence is an equitable doctrine with contextual links to the common law doctrine of duress. Undue influence is particularly, although not exclusively, concerned with improper (or undue) pressure within relationships (e.g. between a husband and wife).
  • It is common to distinguish between actual undue influence (where, similar to duress, the claimant can affirmatively prove improper pressure) and presumed undue influence (where the claimant is assisted in proving improper pressure by an evidential presumption). The evidential presumption is often a very useful tool given the subtleties of relational pressures. In some circumstances there will be an evidential presumption of influence which may develop into an evidential presumption of undue influence where there is something in the transaction ‘which is suspicious or calls for an explanation’ (i.e. of such a size, nature, or context as to raise suspicions).
  • In the case of presumptive undue influence, the conclusion of influence may arise automatically in the case of certain types of protected relationships but needs to be established on the facts in other cases on the basis that there is a relationship of trust and confidence between the particular parties. In both cases there needs to be something in the transaction ‘which is suspicious or calls for an explanation’ (i.e. of such a size, nature, or context as to raise suspicions).
  • Where undue influence is established as between the contracting parties, the victim can have the transaction set aside although see general bars to rescission on Chapter 9.
  • Three party situations: where a person enters into a contract with X as the result of the undue influence not of X but of Y (who is not party to the contract). For example, as a result of her husband’s undue influence a wife gives security in order to support the debts (e.g. a loan) of her husband (i.e. her contract is with the lender—someone other than the person exercising the influence), the lender will be affected by the actions of the person exercising the undue influence (her husband) where that lender has actual or constructive notice of the other’s undue influence. This may occur where the lender is ‘put on inquiry’ (and may occur in all cases where a wife stands surety for her husband’s debts and not for any joint purpose). A lender is required to take precise steps (involving ensuring that the practical implications of the proposed transaction have been explained to the wife) or that lender risks losing its security.
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