Business Law Semester 2 2024: Undue Influence
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Questions and Answers

What may allow the weaker party to avoid a contract?

Undue influence

The victim of undue influence must act quickly to have the contract set aside.

True

What are the two types of undue influence?

  • Actual undue influence (correct)
  • Presumed undue influence (correct)
  • Simple undue influence
  • Mutual undue influence

    • In which relationships is the presumption of undue influence typically applicable?

    <p>All of the above</p> Signup and view all the answers

    What were the circumstances regarding the Allcard v Skinner case?

    <p>A joined a religious order and took a vow of poverty, donating property which she later sought to recover.</p> Signup and view all the answers

    What outcome was determined in the Johnson v Buttress case?

    <p>The gift could be set aside on the basis of undue influence.</p> Signup and view all the answers

    B in Johnson v Buttress was known to be literate and independent.

    <p>False</p> Signup and view all the answers

    The relationship of devotee/religious advisor gives rise to a presumption of _____ influence.

    <p>undue</p> Signup and view all the answers

    What was the primary reason the transaction in Allcard v Skinner could not be avoided?

    <p>A waited too long to exercise her right to set aside the transaction.</p> Signup and view all the answers

    In the context of presumed undue influence, what must a party demonstrate to rebut the presumption of general controlling influence?

    <p>Clear knowledge and understanding of the transaction.</p> Signup and view all the answers

    Which factor contributed to the presumption of undue influence in Johnson v Buttress?

    <p>B's emotional dependence on J.</p> Signup and view all the answers

    What aspect of the relationship between B and J was determined in Johnson v Buttress?

    <p>It lacked evidence of emotional or financial control.</p> Signup and view all the answers

    What could A have done sooner after leaving the religious order to avoid the transaction in Allcard v Skinner?

    <p>Exercise her right to set the transaction aside.</p> Signup and view all the answers

    Why was the gift in Johnson v Buttress initially considered valid?

    <p>J provided a supportive environment for B.</p> Signup and view all the answers

    What did the court rule regarding the gift of land in Johnson v Buttress?

    <p>It could be set aside based on undue influence.</p> Signup and view all the answers

    What common factor is seen in both Allcard v Skinner and Johnson v Buttress regarding undue influence?

    <p>Both relationships had a significant power imbalance.</p> Signup and view all the answers

    Which party has the responsibility to prove that the weaker party was freed of undue influence in presumed undue influence cases?

    <p>The stronger party</p> Signup and view all the answers

    What is a critical condition for the weaker party to set aside a contract influenced by undue influence?

    <p>The weaker party must act reasonably soon after the influence has subsided</p> Signup and view all the answers

    Which of the following relationships does not typically fall under the traditional categories of presumed undue influence?

    <p>Friend/Friend</p> Signup and view all the answers

    What must the weaker party demonstrate when proving actual undue influence?

    <p>That the transaction resulted from undue influence</p> Signup and view all the answers

    In which scenario can presumed undue influence be established?

    <p>Where special trust and confidence are shown in a stronger party</p> Signup and view all the answers

    Which situation illustrates an example of presumed undue influence?

    <p>A lawyer convincing a client to invest in their business</p> Signup and view all the answers

    What is the outcome for a contract if the weaker party delays action after undue influence has subsided?

    <p>The contract may be affirmed</p> Signup and view all the answers

    Which of the following best describes 'actual undue influence'?

    <p>Influence that must be proven as a result of psychological coercion</p> Signup and view all the answers

    Study Notes

    Undue Influence Overview

    • Undue influence occurs when one party in a relationship exerts pressure over another, resulting in trust and confidence.
    • The dominant party may manipulate the decisions of the weaker party, allowing the latter to potentially void the contract.
    • Action must be taken soon by the weaker party to annul the contract after realizing undue influence, or it is considered affirmed.

    Types of Undue Influence

    • Actual Undue Influence: Requires the weaker party to provide evidence of undue influence affecting their decision-making.
    • Presumed Undue Influence: Occurs in specific relationships where undue influence is assumed; the burden of proof shifts to the stronger party.

    Presumed Undue Influence Relationships

    • Presumptions are made in traditional relationships, such as:
      • Parent/Child
      • Guardian/Ward
      • Solicitor/Client
      • Doctor/Patient
    • Outside traditional categories, influence is presumed if one party is shown to have placed significant trust in the other.

    Key Cases on Presumed Undue Influence

    • Allcard v Skinner:

      • Facts: A joined a religious order under a vow of poverty and donated property but later sought to recover it.
      • Issue: Can A avoid the gift transaction due to undue influence?
      • Decision: Cannot avoid the transaction; undue influence was presumed based on the relationship, but A lost the right to annul due to delay in exercising this right.

    • Johnson v Buttress:

      • Facts: An elderly man (B), unable to read or write, transferred land to J for her care of him and his deceased wife.
      • Issue: Can the land transfer be set aside on undue influence grounds?
      • Decision: The transaction can be annulled as B demonstrated significant trust in J, resulting in presumed undue influence. J failed to prove the transfer was voluntary.

    Undue Influence: Overview

    • Undue influence occurs when one party places trust and confidence in another due to their relationship.
    • The dominant party's influence may affect the decisions of the weaker party.
    • The weaker party can potentially void the contract if undue influence is established.
    • Timeliness is crucial; the victim must act quickly to set aside the contract, or risk being seen as affirming it.

    Types of Undue Influence

    • Actual Undue Influence: Requires the weaker party to prove that the transaction resulted from undue influence.
    • Presumed Undue Influence: The onus of proof shifts to the dominant party, who must demonstrate that the weaker party was not unduly influenced.

    Presumption of Undue Influence

    • Courts assume undue influence in traditional relationships that imply control:
      • Parent and child
      • Guardian and ward
      • Solicitor and client
      • Doctor and patient
    • Also applies to relationships where trust and confidence flow predominantly in one direction, even if not traditionally defined as controlling.

    Case Study: Allcard v Skinner

    • Facts: A donated property to a religious order upon joining and sought to recover it after leaving.
    • Issue: Could the gift be nullified due to undue influence?
    • Decision: The court ruled against A's claim.
    • Reason: A's relationship with the religious advisor suggested undue influence, but A failed to act promptly to rescind the transaction, losing her right due to affirmation.

    Case Study: Johnson v Buttress

    • Facts: B, an elderly man unable to read, transferred land to J due to her care for him and his wife.
    • Issue: Could the transfer be annulled on grounds of undue influence?
    • Decision: The court allowed the gift to be set aside due to undue influence.
    • Reason: Although not in a traditionally controlling relationship, B’s high level of trust in J justified the presumption of undue influence in the transaction.

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    Description

    This quiz covers topic 8 of the Business Law syllabus, focusing on the concept of undue influence and its implications in contractual relationships. Explore how relationships can create power dynamics that may affect decision-making and the validity of contracts. Understand when a weaker party can avoid a contract due to undue influence.

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