What is Undue Influence?
When a contract is signed, there is always the possibility that one party will fail to fulfill the contract’s requirements. In this scenario, the injured party may file a lawsuit in an attempt to enforce the contractual obligations or, more commonly, compensation for losses caused as a result of the other party’s failure to perform. However, there may be a defense to the contract’s enforcement in specific situations. Undue influence is one of these defenses.
Undue influence is defined as unjustified or illegal influence or excessive pressure that forces another person to act against their free will, resulting in inequity. When a party’s seeming approval of a contract (or transaction) is obtained by undue influence, it is neither free nor real. When the alleged consent would have been denied if the acts constituting undue influence did not occur, it is deemed to have been obtained by undue influence. And so, a contract acquired via undue influence is voidable.
There are four situations that the civil code defines as undue influence:
- When earned trust is used to gain an unfair advantage
- When a power imbalance is used to gain an unfair advantage
- When a weak mental state is used to gain an unfair advantage
- When a person’s distress or needs are exploited for an unfair advantage
Influence isn’t defined as undue in and of itself. Instead, the impact must be undue, which usually necessitates deception. The following are some examples of associations that might lead to undue influence:
- Parent and child
- Employer and employee
- Guardian and ward
- Doctor and patient
- Religious leader and follower
- Attorney and client
- Government and citizen
In some circumstances, excessive influence may develop despite the parties’ lack of a traditional relationship. A salesperson, for example, may be able to exert undue influence over someone who is elderly, extremely young and inexperienced, mentally ill, uneducated, or has any other characteristic that would place them in a vulnerable position when pressured into signing a contract. The existence of undue influence from case to case relies on the question of fact.