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Contracts • Defenses to Enforcement and Formation
K#072
Legal Definition
Undue influence requires: (1) undue susceptibility to pressure by one party, and (2) excessive pressure by the other party. Contracts induced by undue influence are voidable and can be rescinded.
Plain English Explanation
Undue influence usually happens when you have two parties that have a relationship where one party is inherently in a higher position of power over the other. For example, a relationship between an employer and an employee, or a relationship between a caregiver and the person they are providing care to. The law wants contracting parties to be as fair as possible with one another, so when you see a fact pattern involving someone in a unique position of authority or power or if you see someone in a current state of weakness being taken advantage of by another party, you should examine whether undue influence is present.
Hypothetical
Hypo 1: Bob is a therapist. Sam is his patient. Bob has invested in some local real estate developments. During Sam's therapy, Sam talks about how he feels like he isn't ready for retirement. Bob tells Sam about his real estate projects and encourages Sam to invest. Sam isn't interested in investing. Bob continues to bring it up, and points out that Sam's friends are investing and he will be left behind and regret it if he let's the opportunity pass. After several sessions of pressuring Sam, he finally agrees to invest. Result: Bob used his unique position of power and influence over Sam to wear him down and get him to invest in Bob's real estate project. If Sam wants to continue through with it, that's fine -- however, if Sam later regrets his decision, he is allowed to rescind the agreement due to undue influence, which makes the contract voidable if Sam wishes.
Visual Aids
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