Topic 2: Undue Influence Part I

WHAT IS UNDUE INFLUENCE?

Literally, undue influence is the control of one person towards the mind of another person in relation to some transaction in such a way to deprive the latter of the will to make an unconventional decision. This is occurred when someone have an ability to persuade the decision of other due to the relationship between the two party. Undue influence is to prevent deception of a person over others and not because of one’s folly, imprudence or want of foresight. The definition of undue influence can be found in Contract Act 1950 under section 14(b) and section 16(1).

A contract is said to be induced by ‘undue influence’ where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

Section 6(1) of the Contract Act 1950

CLASSIFICATION of UNDUE INFLUENCE

1. ACTUAL UNDUE INFLUENCE

The offender clearly uses the influence over the accuser for obtaining the transaction for example gift or contract. The complainant must prove that in his relationship with the wrongdoer, the domination position was held by the wrongdoer and to enter into a particular impugned transaction he used or exerted undue influence on the complainant.

Once the complainant prove that the wrongdoer used that dominant position to obtain the transaction, he has the right to have the transaction set aside, regardless whether it was fair or unfair to the complainant

Visu Sinnaadurai J. in Polygram Records Sdn Bhd v The Search

Even though the complainant did not suffer any unfairness or disadvantage, the main important thing is to prove actual claim of undue influence. Thus, there is no need to show special relationship exist between the parties although there is a relationship.

2. PRESUMED UNDUE INFLUENCE

Different from actual undue influence, the presumed undue influence require the complainant to prove that the wrongdoer was in dominant position in his relationship of trust and confidence with the complainant and the transaction was unfair to the complainant.

In particular and without prejudice to the generality of the forgoing principles, a person is deemed to be in a position to dominate the will of another-

(a) Where he holds a real or apparent authority over the other, or where he stand in a fiduciary relation to the other; or

(b) Where he makes a contact with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress

Section 16(2) of Contract Act 1950

DOMINANT POSITION – The wrongdoer was in position to dominate complainants will:

i. Real or apparent authority

ii. Fiduciary relationship

CLASS 2A & CLASS 2B

The practice to classify whether the relationship between two party falls under fiduciary relationship or trust and confidence under presume undue influence.

ClASS 2A

By the Law, it is a special relationship that give rise to one of the parties able to dominant the will of the other. For example, a Doctor is deemed to be in a dominant position over his patient.

CASES

ROSLI DARUS v MANSOR HJ SAAD

HELD: The defendant was in loco Parentis. The Plaintiff was unemployed andtotally dependent on the defendant for his daily maintenance. The DEFendant could be dominate the will of the plaintiff if he wanted to.

CLASS 2B

The complainant must prove there is existence of relationship of trust and confidence if the relationship falling within Class 2A. Example of relationship under Class 2B, a relationship between the Professor and his/her student.

CASES

TATE v WILLIAMSON

HELD: The sale of the property which was at undervalue from the nephew to uncle shall be set aside. The uncle stood in a cofidential relationship to his nephew and should not have purchased the property without the fullest communication to him of all material information that he had obtain as to its value. the fact that the nephew acted through independant solicitors was of no consequence which is surveyor’s report, which the defendant was bound to disclose.

MENTAL INCAPACITY