undue influence

Undue influence is an equitable doctrine which applies when improper pressure does not amount to duress under the common law. For there to be undue influence, there needs to be a misuse of a relationship of trust between the parties which induced someone into entering into the contract. Undue influence can be actual or presumed.

Where there is actual undue influence which is to the detriment of the plaintiff, the burden of proof is on the plaintiff to show that undue influence was applied. However, with actual undue influence, it is not necessary to show that a special kind of relationship existed or that there was a manifest disadvantage in entering into the contract.

Presumed undue influence

With presumed undue influence, there must be “a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused the relationship in procuring the complainant to enter into the impugned transaction.” (Barclays Bank plc v O’Brien [1993]).

This presumption applies to the following relationships:

1. parent and child;
2. trustee and beneficiary;
3. solicitor and client;
4. doctor and patient; and
5. religious advisor and disciple.

In National Westminster Bank plc v Morgan (1985), the House of Lords held that the two elements which must be present to establish presumed undue influence were:

1. a fiduciary relationship with there being a dominant party; and
2. the transaction must be actually disadvantageous to the weaker party.

It is for the dominant party to show that there has been no undue influence in that the weaker party received independent advice and exercised their own free will when entering into the transaction.

Contracts entered into as a result of undue influence are voidable.

Usage: The contract for the sale of the house was set aside due to the undue influence exerted by the trustee over the beneficiaries.

Related Words: duress; restitutio in integrum; equitable remedies; court of equity; fiduicary duty; account of profits; equitable damages; constructive trust; contract; agreement; mistake; rectification; rescission; void; ab initio; voidable.

Undue influence is an equitable doctrine which applies when improper pressure does not amount to duress under the common law. For there to be undue influence, there needs to be a misuse of a relationship of trust between the parties which induced someone into entering into the contract. Undue influence can be actual or presumed.

Where there is actual undue influence which is to the detriment of the plaintiff, the burden of proof is on the plaintiff to show that undue influence was applied. However, with actual undue influence, it is not necessary to show that a special kind of relationship existed or that there was a manifest disadvantage in entering into the contract.

Presumed undue influence

With presumed undue influence, there must be “a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused the relationship in procuring the complainant to enter into the impugned transaction.” (Barclays Bank plc v O’Brien [1993]).

This presumption applies to the following relationships:

1. parent and child;
2. trustee and beneficiary;
3. solicitor and client;
4. doctor and patient; and
5. religious advisor and disciple.

In National Westminster Bank plc v Morgan (1985), the House of Lords held that the two elements which must be present to establish presumed undue influence were:

1. a fiduciary relationship with there being a dominant party; and
2. the transaction must be actually disadvantageous to the weaker party.

It is for the dominant party to show that there has been no undue influence in that the weaker party received independent advice and exercised their own free will when entering into the transaction.

Contracts entered into as a result of undue influence are voidable.

Usage: The contract for the sale of the house was set aside due to the undue influence exerted by the trustee over the beneficiaries.

Related Words: duress; equitable remedies; court of equity; fiduicary duty; account of profits; equitable damages; constructive trust; contract; agreement; mistake; rectification; rescission; void; ab initio; voidable.