Undue influence: the concept
The equitable doctrine of undue influence operates to release parties from contracts that they have entered into, not as a result of improper threats, but as a result of being ‘influenced’ by the other party, whether intentionally or not. The precise concept may be due for reconsideration, however at the present there are authorities which are treated as being concerned with undue influence.
In Williams v Bayley, for example, the claimant had agreed to give a mortgage over his colliery as security for debts incurred by his son, who had forged his father’s signature on promissory notes. The creditors had threatened that the son would be prosecuted if the mortgage was not given. The agreement was set aside as being obtained by undue influence. This case involved ‘pressure’ being placed on a party in much the same way as occurs with duress. It is possible that the expansion in the type of threats which are now treated as potentially giving rise to duress would mean that they would now be put in that category.
One of the main difficulties with undue influence, as with duress, is to find the limits of legitimate persuasion. If it were impermissible to seek to persuade, cajole or otherwise encourage people to enter into agreements, then sale representatives would all be out of a job. ‘Influence’ in itself is perfectly acceptable: it is only when it becomes ‘undue’ that the law will intervene. Clarity in deciding when that has occurred is not assisted by the fact that the word ‘undue’ has two potential meanings. It can be used to indicate some impropriety on the part of the influencer. The influence is ‘undue’ because an imbalance of power between the parties has been used illegitimately by the influencer. Alternatively the word can be used simply to indicate that the level of influence is at such a level that the influenced party has lost autonomy in deciding whether to enter into a contract. This does not imply any necessary impropriety on the part of the influencer.
There is an issue in whether the concept is ‘claimant-focused’ or ‘defendant-focused.’ If it is claimant-focused, then what matters is whether the claimant acted autonomously in entering into the contract; if it is defendant-focused, then what matters is whether the defendant has deliberately taken advantage of the claimant’s weaker position. How do the courts decide when influence has overstepped the limits of acceptability and become ‘undue’? The basic test in English law is that it is only where there is some relationship between the parties which leads to an inequality between them that the law will intervene. The starting point for the law’s analysis is therefore not the substance of the transaction, but the process by which it came about.
For more information on:
- Actual undue influence