In short, under influence is an equitable doctrine that involves one party taking advantage of another more vulnerable party for financial gain. The concept of undue influence is most commonly used in the context of a contract law. In contract law, when one party of a contract (the “wrongdoer”) exerts power over another party (the “victim”) to the extent that the free will of the other party is called into question, courts may declare the contract to be unenforceable and voidable by the victim party, as those actions would likely meet the undue influence definition.
Often the victim party, or witnesses to the contract, will assert that the victim party had been taken advantage of in some way. For example, the victim party may assert that the dominant party had more education, information, money, or utilized their close relationship with the victim party to manipulate them into giving the dominant party something they desired.
When a victim party, or those close to them, realize that the contract may have been entered into through the use of undue influence, that party may then choose to file a legal claim against the dominant party in court in order to return them to the state they were in before the undue influence was exerted over them.
Why Does Undue Influence Make a Contract Voidable?
As noted above, a victim party may seek to have a contract voidable due to undue influence. The reason that undue influence makes a contract voidable rather than void, is because there are often cases in which the contract is beneficial to the party that is accusing the other party of taking advantage of them.
For example, a child may exert undue influence over their parent in order to coerce their parent to invest in a certain business. However, if that investment was actually fair and beneficial to the parent party, the court will allow that party to keep the contract or void the contract and receive back the initial investment.
What Are Some Undue Influence Examples?
Courts often grant undue influence as a legal remedy, as the legal system has an interest in seeing a wronged party made whole, and to ensure that vulnerable parties are protected. There are many different examples of the types of relationships where undue influence may occur.
However, some of the most common undue influence contract examples where one party may be taken advantage of include:
- Familial Relationships: One of the most common occurrences of undue influence being exerted over a vulnerable party is when the parties share a familial bond. For example, oftentimes close or distant family members may take advantage of the elderly member of their family in order to get some financial gain. In fact, financial exploitation of the elderly is very common, and is reported by one of every twenty older adults. Other close familial relationships include:
- Husband and wife;
- Parent and child; and/or
- Legal Relationships: Another common occurrence of undue influence is when the two parties have a legal relationship. For example, attorney-client relationships or trustee-beneficiary relationships, can both give a rise to the presumption of undue influence when the attorney or trustee takes advantage of the party to which they owe a fiduciary duty;
- Doctor-Patient Relationships: Similar to legal relationships, Doctors also owe their patients numerous different fiduciary duties including:
- The duty of loyalty;
- The duty of care;
- The duty of good faith and fair dealing;
- The duty of competence; and
- The duty to avoid conflicts of interest.
In addition to the above relationships, undue influence may also simply occur when one party is more knowledgeable or educated than the other, and takes advantage of that fact in order to coerce the party into entering a contract. Importantly, a court will have to make findings that one party was vulnerable and the other party took advantage of those vulnerabilities and their superior position to coerce the other party into entering into the agreement.
When a situation occurs wherein one party feels that they have no choice but to agree to a contract, because of the dominant party’s influence, courts will often utilize the undue influence doctrine to protect that victim party by making the contract voidable.
Elements of Undue Influence: How to Prove Undue Influence
In order to prove undue influence the victim party must typically prove different legal elements. Typically, there are four elements which must be proven by the victim party in order to prove that undue influence occurred:
- The victim must show reasons why they were susceptible to someone else’s influence, such as demonstrating one of the relationships outlined above, or that they were recently traumatized of injured;
- The victim must then explain how the other party had the opportunity to take advantage of them in the situation;
- The victim must then demonstrate that the other party did take advantage of that opportunity, likely by manipulating or coercing them; and
- There must be evidence of the contract or agreement which the dominant party bullied the innocent party into, which financially or otherwise harmed the innocent party.
Undue influence may also occur in estate planning, such as during will drafting. When contesting a will based on undue influence, the will contestant must generally show:
- That there was an existence of an undue influence, the effect of which was to overpower the mind of the testator; and
- The product of that undue influence was a will that would not have been made, but for that undue influence.
Are There Any Defenses to an Undue Influence Charge?
There are a few different defenses to an undue influence charge. For example, the accused wrongdoer could show that there were other outside parties involved in the transaction, and the accuser received advice from another party outside the situation.
Another defense could be that the contract was a fair contract to both parties, and was not actually harmful to the party that is accusing the wrongdoer of undue influence. For example, if the contract was for an investment, and the investment resulted in financial gain, a court will likely not find that undue influence was exerted as there are no damages. The accused party could also show that they did not have any prior relationship with the accuser, and did not actually take advantage of the situation to benefit themself.
In the context of will drafting, the following situations alone are generally not enough to create a presumption of undue influence:
- Opportunity to Exert Influence Was Present: The mere opportunity to exert influence is not sufficient enough to create a presumption of undue influence. Thus, just because one party receives a bigger share of the estate, and that party had the most communication with the testator, is not sufficient proof to demonstrate undue influence;
- Alleged Victim Was Old or Ill: Just because an alleged victim is old or ill, does not mean that there is a presumption of undue influence. There must be additional facts that tend to demonstrate that the party took advantage of that illness or the party’s age to coerce the party into executing a will that they would have not otherwise executed; and
- Uneven Distribution: Once again, the mere fact that some of the testator’s children or heirs received more under a will than others, is not enough evidence to prove undue influence.
Should I Contact a Contracts Lawyer if I Have an Undue Influence Issue?
If you believe that you, or someone close to you, have been coerced or manipulated into a contract or agreement due to undue influence, you should immediately contract a well qualified and knowledgeable contract lawyer.
An experienced contract lawyer will be able to review the contract that was executed, as well as any other evidence you possess, to determine whether or not you are a victim of undue influence. If the lawyer determines that you may have suffered from undue influence, the attorney can then assist you in filing a legal claim against the wrongdoer in order to recover for your financial losses. Finally, the attorney can represent you in court, as necessary.