Undue influence

Contract Law
Part of the common law series
Contract theory
Classical theory  · Promise theory
Consent theory
Contract formation
Offer and acceptance  · Mailbox rule
Mirror image rule  · Invitation to treat
Consideration
Defenses against formation
Lack of capacity to contract
Duress  · Undue influence
Illusory promise  · Statute of frauds
Non est factum
Contract interpretation
Parol evidence rule
Integration clause
Excuses for non-performance
Mistake  · Misrepresentation
Frustration of purpose  · Impossibility
Illegality  · Unconscionability
Accord and satisfaction
Rights of third parties
Assignment  · Delegation
Novation  · Third party beneficiary
Breach of contract
Anticipatory repudiation  · Cover
Exclusion clause
Fundamental breach
Remedies
Liquidated damages  · Penal damages
Specific performance  · Rescission
Other areas of the common law
Tort law  · Property law
Wills and trusts
Criminal law  · Evidence
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Undue influence (as a term in jurisprudence) is an equitable doctrine that involves one person taking advantage of a position of power over another person.

Undue influence in contract law

If undue influence is proved in a contract (at least in Australia), the contract is voidable by the innocent party, and the remedy is rescission. There are two categories to consider:

• Presumed undue influence
• Actual undue influence

Presumed undue influence

First subgroup

In the first subgroup, the relationship falls in a class of relationships that as a matter of law will raise a presumption of undue influence. Such classes include:

• Parent/child
• Guardian/ward
• Priest/member of parish
• Solicitor/client
• Doctor/patient

In such cases, the onus of proof lies on a doctor, say, to disprove undue influence on a patient.

Second subgroup

The second subgroup covers relationships that do not fall into the first subgroup, but on the facts of case, there was an antecedent relationship between the parties that led to undue influence. The test is one of whether there was a relationship of such trust and confidence that it should give rise to such a presumption (see Johnson v. Buttress (1936) 56 CLR 113).

Actual undue influence

An innocent party may also seek to have a contract set aside for actual undue influence, where there is no presumption of undue influence, but there is evidence that the power was unbalanced at the time of the signing of the contract.

See also

• Compare with duress (contract law)