Undue Influence In Contract Law: Everything You Need to Know
Undue influence typically occurs when parties relate in a certain way such as in the special relationships between the following set of people.3 min read
2. Relationships Prone to Undue Influence
3. Detecting Undue Influence
4. The Court Is Fair and Knowledgeable
5. Remedies for False Claims of Undue Influence
Updated October 29, 2020:
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.
Forms and Elements of Undue Influence
To provide evidence for undue influence in a contract, an entity has to prove that the victimized party is someone with disadvantages, which makes them prone to be affected by such pressure, and that the influencing party is a person in a special relationship with their victim, which gives them an advantage over their victim.
Undue influence can take several forms such as:
- Importuning (insistently bothering someone to do something).
- Exhortation (strongly urging someone to do something).
- Flattery (excessively and insincerely complimenting someone to gain advantage).
- Deception (misleading someone).
- Insinuation (cunningly making indirect suggestions to gain advantage).
Relationships Prone to Undue Influence
Undue influence typically occurs when parties relate in a certain way such as in the special relationships between the following set of people:
- A husband and wife.
- A parent and child.
- A fiancé and fiancée.
- A guardian and ward.
- A doctor and patient.
- A lawyer and client.
- A pastor and parishioner.
Detecting Undue Influence
When the court tries to detect the use of undue influence to create a contract, it looks out for the following:
- An aggressive initiation of transaction.
- The prevention of a relationship from external supervision.
- The discouragement of a disadvantaged party from trying to find independent advice.
Furthermore, it also looks out for unnatural or suspicious transactions such as the sudden change in the terms of a will right after the owner of the will is diagnosed with a terminal illness or is pronounced incompetent. This is especially significant if the changes are made at the request of a potential beneficiary.
The Court Is Fair and Knowledgeable
However, courts don't jump to conclusions without thoroughly examining the facts. Merely suspecting that a party was unduly influenced isn't enough. The law allows loved ones and intimate associates to provide advice and consolation for people in need without the fear of a lawsuit.
Courts also know that the concept of undue influence can serve as a weapon for malicious people who would like to render a perfectly legal transaction invalid for selfish reasons. The court also knows that argument and persuasion, in themselves, shouldn't be mistaken for undue influence. An important element indicating undue influence is a lack of the exercise of free will when signing a contract.
Except where a confidential relationship exists between the parties such as that of a child and parent, for instance, courts will typically assume that what is considered undue influence by the suing party was mere persuasion. If a party can prove that they've been unduly influenced into the signing of a contract, the court can relieve them of their contractual obligations.
Remedies for False Claims of Undue Influence
People who are falsely accused of applying undue influence are allowed to prove their innocence. One of the essential proofs that an accused should provide that they didn't apply undue influence is to show that the supposed victim got independent counsel without their help. A third, disinterested party can help to serve as a witness to disclaim or confirm the information provided by the accused. If the victim entered into the contract completely willingly, then, there can't be a claim of undue influence.
Next, if the suspicious contract is closely looked at by the court and found to be legitimate for the parties involved, then, the accused can't be pronounced guilty of applying undue influence. Even if the supposed victim is in a special relationship with the accused, if the accused isn't taking advantage of them for personal gain, there would be no legal grounds for making a claim of undue influence.
It is advised that you contact a business lawyer for an issue of undue influence. A business lawyer is better equipped to detect whether or not you're a victim of undue influence or whether you've been falsely accused of applying undue influence. The business lawyer will be able to explain the complicated, legal process to you and give you pointers in the right direction to protect your interest legally.
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