#17465 - Contract Law Vitiating Facots Undue Influence - Contract Law: Vitiating Factors

UNDUE INFLUENCE • When two parties enter a contract and one is alleging that they were put under improper influence or not acting voluntarily, therefore want the agreement to be set aside • Involves the same pressure being placed on a party as duress however, there need not be a threat • With undue influence, often there is no explicit threat able to be isolated. • Based more on nature of relationship and facts and circumstances of the case • Contract voidable • The advantage of raising a presumption: predictability - less evidence needed for your argument - you can depend on categories already defined. The shift of the burden of proof goes from the plaintiff, to the defendant who must raise evidence to rebut the presumption • The difficulty in Ireland w/ this is that a lot of cases involve wills and often one of the parties to the agreement is deceased < evidence far more difficult < presumption much more advantageous in these situations TWO CATEGORIES Actual undue influence • When it's alleged that one party exerted undue influence on the other to force them into a contract. This will usually, but not always be the other party to the contract Contractors Bonding Ltd V Snee 1992 requirements to prove actual undue influence relayed. that the other party (or someone who induced the transaction for his own benefit) had the capacity to influence the complainant; o the influence was exercised; o its exercise was undue; o its exercise brought about the transaction; and the transaction was to the manifest disadvantage of the complainant. Carroll v Carroll ''arises where no relationship gives rise to any presumption of undue influence, but the parties so alleging undue influence adduce evidence which satisfies the court, on the balance of probabilities, that the transaction was not the result of the free exercise of the will of the donor.'' *the requirement that consideration = market value or that it must be to the complainant's advantage Is often criticised and there is constant reference to the freedom to enter contracts. As we saw with consideration, 'people can enter into bad bargains'. Undue influence and duress deal with voluntariness, not value. Why should it matter that the contract was to the complainant's disadvantage if they weren't acting voluntarily? It should be set aside if undue influence is exerted, period. O'Flanagan v. Ray-Ger Ltd (1963-1993) Joint share-holders in a company. Mr O'Flanagan very ill with cancer to the knowledge of Pope. Pope said to have a much more domineering personality (stronger party). An agreement between them was reached when Pope brought him to pub - if one of them passed, their share of the business would go to the surviving party instead of widow and children. O'Flanagan passes and the family then find out about the arrangement. Challenged under undue influence. Court agreed for a few reasons:- Meeting place away from usual premises and advisors Between one ill business partner and his colleague Person benefitting had much more domineering personality Disparity between their ability to make good business decisions. Lack of candour from D raised considerable suspicion This last point shows that falsified evidence can be fatal to D's success. Presumed undue influence • Where it's presumed that one party exerted undue influence on the other based on their relationship. RELATIONSHIPS • A relationship where it's normal for such party to place trust and confidence in the other (fiduciary) • Why? Presumed that stronger party in position to exert undue influence on weaker one • This is only a presumption even before hearing evidence - may be rebutted • Onus is on the D to prove that it is not the case How may it be rebutted? o Was the consideration full market value? o Opportunity get legal/financial advice before entering? o Opportunity to consult with friends? If the evidence is not sufficient to convince the court that