Question

Legal Principle:
1. The act of using influence on another and taking undue advantage of that person is called undue influence.
2. In order to prove undue influence, there has to be a pre-existing relationship between the parties to a contract.The relationship has to be of such a nature that one is in a position to influence the other.If it is proven that there has been so influenced need not enforce the contract or perform his obligations under the contract.

Factual Situation: A, advances a sum of money to his son, B during his minority. When B becomes major, A by misusing his parental influence, gets a bond from B, of an amount more than the amount due. B refuses to give the amount stated in the bond.
Issue: Is B bound by the bond?

• A. No, B is not bound by the bond. Contract is voidable at the option B being caused by undue influence.
• B. B is bound by the bond.
• C. It will be the discretion of the court to decide.
• D. None of these.

Answer 1

The correct option is A No, B is not bound by the bond. Contract is voidable at the option B being caused by undue influence.

A contract is said to be induced by undue influence where,

1. One of the parties is in a position to dominate the will of the other and;
2. He Uses that position to obtain an unfair advantage over the other.

Presumptions: Undue influence may be presumed to exist in the following cases:

• Where he holds a real or Apparent authority over the other
  

Eg Master and Servant.

• Where he stands in a fiduciary relationship to the other. Fiduciary relationship means a relationship of mutual trust and confidence - a person who stands in a fiduciary relationship with another must exercise his power for the benefit of that other. It is supposed to exist in the following cases:
  

1. Between father and son
2. Solicitor and client
3. Trustee and beneficiary
4. Promoter and a company
5. Spiritual advisor and his devotee
6. Guardian and ward

• where he makes a contract with the person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress

Eg Doctor and patient.

The question whether a party was in the position to dominate the will of the other is a question of fact. Undue influence, is a type of moral coercion. It is such an influence which compels a person to do a thing which he otherwise would not have done if he had been a free agent. Undue influence includes any influence by which the exercise of free and deliberate judgement is excluded.

Undue influence is presumed until the contrary is proved when the relation of the parties is such that one is entitled to the confidential advice of the other.

For example: solicitor and client, parent and child. In general cases of confidential relationship, the party seeking to avoid a contract must prove undue influence, because every influence cannot be categorised as undue.