Contracts Law: Undue Influence

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.