This arises when a party obtains benefit from the other, whether under a contract or by means of a gift, by exerting an influence over the latter which prevents him from exercising an independent judgment. Undue influence is a doctrine of duress as too narrow. Accordingly, the doctrine was developed to cope with situations of constructive fraud in which contracts or dispositions of property were made without free or genuine consent. The allegation of undue influence ids therefore based on the fact that the complainant entered into the contract ( or made a gift of property) without free consent, in that the other party exerted an influence over him, which prevented him from exercising an independent judgment in the matter. And, for influence to be regarded as undue within the meaning of the rule of law which will be sufficient to vitiate a will, it must be an influence exercised by coercion or fraud. Boyse v. Rossborough 10 ER 1211.
The presumption of undue influence may arises in teo cases:-
1. Where there exists a special fiduciary relationship between the contracting parties, and
2. Where no special fiduciary relationship exists between the parties.
Where there exists a special fiduciary between the parties, for example, relationship of solicitor and client, doctor and patient, spiritual adviser and disciple, trustee and beneficiary, parent and child, guardian (i.e. person in loco parentis) and ward, the existence of undue influence in relation to the contract or exchange of gifts between such parties is presume, and need not be proved as a fact, but place the burden of proof on the party in whom confidence was reposed to established that the transaction was not procured by undue influence. It is evident from that the transaction was not procedure by undue influence. It is evident from the list of special fiduciary relationships enumerated above that the relationship arises in any situation where one person occupies a position of dominance over the other. In such a case, equity imposes on the dominant person a duty to be faithful to the confidence that is reposed in him by the other.
Where a presumption of undue influence exists, the presumption can be rebutted if the dominant person can show that in fact he exerted no influence for the purpose of obtaining the contract or gift; in other words, that the contract was the result of the free exercise of the independent will of the plaintiff. The privy Council held in Johnson v.
Williams (1935) 2 WACA 248 at p.255, that:
The most obvious way is by establishing that gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person so completely as to satisfy the court that the donor was acting independently of any influence from the done and with the full appreciation of what he was doing.
It follows from the above statement of the Privy Council that the presumption of undue influence is rebuttable by the party in whom confidence was reposed, by showing that there was no abuse of the special fiduciary relationship, and that the transaction was fair.
The fairness of the transaction is often established by showing that the ‘weaker’
independent advice is not enough. It must also be shown that the advice was taken, or that the advice must be given with a knowledge on the part of the adviser of all relevant circumstances and must be such as a competent and honest adviser would give if acting solely in the interest of the donor, Johnson v. Williams (1935) 2 WACA 248, at p.256. In Taylor v. Brew (1942) 8 WACA 201, the settlor, Mrs. Taylor, inherited a considerable fortune on attaining 21 under the will of her maternal grandmother. Her father, who was also her solicitor and for whom she had an intense dislike persuaded to make a settlement of her property by a trust deed. A clause was inserted without the instruction or knowledge of the settler. This clause vested the whole property in the father, should the daughter die intestate. It was held that the trust deed was null and void on the ground of undue influence exercised by the father over his deceased daughter
The above case is similar to the English case of Lancashire Loans Ltd. v. Black (1934) 1 KB 3880. There a daughter married at the age of 18 and thereupon left her parental home and lived with her husband. Her mother was very extravagant and frequently borrowed money from money lenders. When the daughter came of age she, at her mother’s request, raised £2, 000 on her reversionary interest under her father’s will in order to pay off her mother’s debts to moneylenders. The mother continued to borrow money from moneylenders, and a year later she asked the daughter to sign a document so that she (the mother) might be able to borrow some more money. The mother and the daughter signed a joint and several promissory note for £775 at 85 per cent interest. The daughter, who did not understand the transaction, signed document at the request of her mother. The only advice the daughter received was that of a solicitor who also prepared the documents.
In an action by the moneylenders on the promissory note against both the mother and daughter, it was held that, the daughter was under the influence of her mother when she entered into the transaction in question, and also that she had no independent advice, and that as the moneylenders had notice of the facts which constituted undue influence on the part of the mother, they were in no better position than the mother. The transaction was, therefore, set aside, so far as the daughter was concerned. According to the Court:
There is no rule of law that the marriage of a daughter, coupled with her departure from the parental home, necessarily puts an end to the domination f her parents.
Whether or not the parental dominion has completely ceased is a question of fact depending on the particular circumstances of each case.
However, as was established in the Privy Council case of Inche Noriah v. Shaik Allie Bin Omar, (supra), independent advice is not the only way in which the presumption can be rebutted. In other words, it does not necessarily follow that there must be an independent advice in all cases in order to rebut the allegation of undue influence. The defendant is entitled to show by other means that the contract was made I the existence of
the free will of the other party. Moreover, where the independent advice has been given, the failure of the plaintiff to take it, does not affect the validity of the agreement. The important fact is that the advice was indeed given. Again, even where there is an independent advice, this will not be effective unless given the legal adviser had full knowledge of all the relevant circumstances. In Inche Noriah case Supra, a Malay woman of great age and wholly illiterate made a deed of gift of valuable property in Singapore to her nephew, who managed her affairs. She was advised by her lawyer, who did not know that the gift constituted practically the whole of her property and did not tell her that she could equally benefit her nephew by will. It was held that the gift could be set aside on the ground of undue influence.
There is no presumption of undue influence between an engaged couples Zanet v.
Hyman (1961) 1 WLR 1442, or between husband and wife, Ilowes v. Bishop (1909) 2 KB 390. Undue influence may, however be proved to exist in fact in this as in other cases, and when it is proved, the contract is voidable.
Even where there is no special fiduciary relationship between the parties, yet the court may hold that the circumstances were such that one of the parties to the contract exerted undue influence over the other party to the contract. The term, undue influence, is regarded as any conduct on the part of one of the parties which affects the contract between them and makes it unconscionable to allow the parties to be bound by the contract concluded under such circumstances. Therefore, once it is found that there are some elements of domination by one over the other, in the agreement, the court will set aside the agreement, but only if it can be shown that the will of the other party was so overborne as to prevent is exercise of an independent judgment. Even then, it is not sufficient to establish that a person has a power to overbear the will of the other; it must be proved as a fact that in the particular case that power was exercised. In other words, in the absence of any special fiduciary relationship between the parties, the burden lies on the party alleging undue influence to prove same as the contract presumed to be avoid.
For example, there is undue influence by X over Y if X presses Y to pay or promise him some money by a threat of criminal prosecution against Y or against Y’s spouse or close relative, Williams v. Bayley (1866) LR 1 HL 20, or by a threat of destruction of Y’s property, or leakage of Y’s secret. The onus of proving pressure lies on the complainant.
4.0 CONCLUSION
Like duress, the effect of undue influence is to make the contract voidable; therefore, the contract will be valid until avoided, i.e., set aside at the suit of the aggrieved person.
Taylor v. Brew (1942) 8 WACA 220, However, the action will fail under the following circumstances:
a. If it can be shown that the victim of undue influence affirmed the transaction after the undue influence had ceased.
b. If the transaction occurred after the relationship giving rise to the presumption of undue influence had ceased.
c. It ht injured party fails to bring an action in court within a reasonable time. In such a case, the claim for relief will be barred by lashes, as delay defeats equity. Thus in Allcard v. Skinner (1887) 36 Ch. D 145, the plaintiff was introduced by her spiritual adviser to a Mother Superior of a Protestant institution. On becoming a sister, she surrendered all her property to the Mother Superior. She however, remained a sister for eight years and afterwards gave up. Six years after she had left the sisterhood, she brought an action to set aside the gift.
It was held that although she had been subjected to undue influence, her claim was nevertheless rejected on the ground of undue delay in bringing the action. In the interval between leaving the sisterhood and the bringing of her action, the undue influence had been removed. Her acquiescence amounted to a confirmation of the gift.
d. If third parties have in good faith acquired rights from the transaction.
5.0 SUMMARY
We have discussed the concept of duress and the types. These are two types namely:
a. Discuss at common law b. Economic duress
Note duress makes the contract voidable at the option of the party who has suffered it where certain condition has been met.