Undue Influence

 

Hi everyone! 

Today I'm going to share about undue influence >.< 

Basically, Undue influence is an equitable doctrine, where the courts step in to prevent one party from using its influence to persuade another party to enter into a contract.

Section 16 of the Contracts Act 1950 provides that undue influence occurs when one party who is said to be in a dominant position, uses it to take an unfair advantage over the other by forcing him/her to enter into a contractual undertaking.

Undue influence has 2 classes :

1) Actual undue influence where the wrongdoer expressly uses the influence on the complainant for the purpose of containing the transaction (e.g gift or contract). In these cases, it is necessary for the claimant to prove affirmatively that the wrongdoer exerted undue influence on the complainant to enter into the particular transaction which is impugned. For example, can be seen in the case of Morley v Loughnan [1893] and Williams v Bailey [1866]

2) Presumed undue influence arises when undue influence was presumed to have been exerted due to a relationship of trust and confidence between the parties. Regarding this, the complainant only has to show, in the first instance, the wrongdoer in the dominant position in his relationship of trust and confidence with the complainant. The complainant also needs to show that the transaction was unfair. For example, you can refer to the case of Allcard v Skinner.

What is the dominant position? 

The dominant position is where the other party in a position to dominate the complainants will either in real or apparent authority or in a fiduciary relationship. There are two ways to differentiate the classification of fiduciary relationship or relationship of trust and confidence under indue influence :

1. Class 2A
2. Class 2B

Class 2A : The relationships where undue influence is presumed have been held to be: parent & child (Wright v Vanderplank (1855); solicitor & client (Wright v Carter (1903)); doctor & patient (Mitchell v Homfray (1881)); trustee & beneficiary (Ellis v Barker (1871)); and religious adviser & disciple (Roche v Sherrington (1982)). For a case example see:

Allcard v Skinner (1887) 36 Ch D 145.

Class 2B : If the complainant proves the existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence.

In a class 2B case, therefore, in the absence of evidence disproving undue influence, the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer without having to prove that the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence in relation to the particular transaction impugned. For example the relationship of husband and wife or siblings. Class 2B can be seen in the case of Polygram Records Sdn bhd v The Search and Tate v Williamson