Undue influence occurs when an individual manipulates another’s decision-making due to the relationship dynamic between the two. Often, one party possesses a position of power driven by elevated status, advanced education, or strong emotional ties. The more dominant individual leverages this power to persuade the less powerful party into decisions that may not align with their best interests.
Undue influence is a key principle in equity law where one person exploits their authoritative position over another, undermining the latter’s ability to exercise their own free will. This manipulation can disadvantage the weaker party, leading them into less favorable agreements. In actionable legal scenarios, a victim of undue influence can potentially void compromised contractual terms.
Key Takeaways
- Power Imbalance: Undue influence typically occurs when a more influential party controls the decisions of a less powerful party to reach their desired outcomes.
- Legal Voiding: Depending on the degree of coercion and additional factors, certain agreements can be legally nullified.
- Varying Magnitude: Undue influence ranges from minor personal favors to significant transactions involving billions of dollars.
Deep Diving Into Undue Influence
Undue influence manipulates a weaker party’s decisions using the power dynamic present in the relationship. This coercion usually benefits the stronger party while disadvantaging the weaker one. Relationships with embedded risks of undue influence, such as doctor-patient or parent-child bonds, often have specific legal guidelines to prevent such abuses.
In these relationships, the burden of proof falls on the influential person to demonstrate they did not exploit the other party. Similarly, previous interactions can raise suspicions of betraying the trust, leading to undue influence for personal advantage.
A Perfect Example of Undue Influence
Consider Bert, who is Ernie’s therapist and is involved in various real estate projects locally. Ernie, though hesitant about making home investments now, chats with Bert about available units in a development project Bert participates in. Despite Ernie feeling ill-equipped financially and personally, Bert, leveraging his influence as a therapist, persuades Ernie to invest against his better judgment. While detrimental financially to Ernie, the investment benefits Bert significantly by increasing his project’s value. This is a clear case of undue influence.
Undue Influence in Financial Markets
Financial markets globally face endemic issues of undue influence. From leveraging private information for induced sales or purchases to pressuring board members for favorable votes, the financial spectrum’s problems are extensive. Employing third-party counsel or mediators during deals or significant trades can considerably mitigate undue influence.
Remember, recognizing the subtleties of undue influence can protect your autonomy and interests in personal and financial realms.
Related Terms: coercion, consent, voidable contracts, real estate, fiduciary relationships.
References
- Cornell Law School, Legal Information Institute. “Undue Influence”.
- Fraser, Ian W. “Ware v. Ware and the Presumption of Undue Influence in Confidential Relationships”. Alaska Law Review, vol. 38, no. 2, pp. 342-343.
