Presumed Undue Influence

Definition

Presumed undue influence refers to a situation in contract law where a party is assumed to have taken advantage of their position of power over another party, resulting in an unfair agreement. This legal concept typically arises in relationships where one party holds a significant amount of power or trust over the other, such as in cases involving guardians and wards, or attorney-client relationships. The presumption is that the influence exerted by the dominant party is so strong that it undermines the free will of the weaker party, leading to an imbalance in the contract.

5 Must Know Facts For Your Next Test

1. In cases of presumed undue influence, the burden of proof shifts to the dominant party to show that no undue influence was exercised.
2. This concept is particularly significant in situations involving fiduciary relationships, where trust and reliance are inherent.
3. Presumed undue influence can invalidate contracts if it can be shown that the influenced party did not have the ability to exercise free will.
4. Courts may look for signs of coercion or manipulation when determining if presumed undue influence was present in a transaction.
5. The presence of a confidential relationship is often a key factor in establishing presumed undue influence.

Review Questions

• How does the concept of presumed undue influence differ from undue influence?
  • Presumed undue influence differs from general undue influence primarily in how the burden of proof is allocated. In cases of presumed undue influence, once a confidential or fiduciary relationship is established, the law assumes that the dominant party exerted improper influence over the weaker party. This shifts the burden onto the dominant party to prove that no such undue influence occurred, whereas general undue influence requires evidence of coercion or manipulation without the same presumption.
• What role do fiduciary relationships play in establishing presumed undue influence?
  • Fiduciary relationships are crucial in establishing presumed undue influence because they inherently involve trust and reliance between parties. When one party has a fiduciary duty towards another, such as in attorney-client or guardian-ward scenarios, there is an expectation that they will act in the best interests of the weaker party. This relationship creates a presumption that any agreements made may have been influenced by the dominant party's position, thereby necessitating scrutiny and potentially invalidating those agreements if undue influence is suspected.
• Evaluate how courts assess cases of presumed undue influence and what factors they consider.
  • Courts assess cases of presumed undue influence by examining various factors that indicate whether a dominant party exploited their position over a weaker party. Key factors include the existence of a confidential relationship, signs of manipulation or coercion, and whether the influenced party had the capacity to make independent decisions. Additionally, courts will look at whether there was any evidence of pressure applied during contract formation and if the terms were disproportionately favorable to the dominant party. Ultimately, courts aim to protect vulnerable parties from agreements that undermine their free will due to an imbalance of power.

Related terms

Undue Influence: A situation where one party uses their position of power over another to manipulate or control them into making decisions they would not otherwise make.

Fiduciary Duty: A legal obligation for one party to act in the best interest of another, often found in relationships like those between trustees and beneficiaries.

Duress: A situation where one party threatens or coerces another into entering a contract against their will, often invalidating the agreement.