Undue influence

Overview

Undue influence, where established, will render a contract voidable. It occurs when there is an inequality of power between the contracting parties which results in the weaker party entering into a contract with the dominant party. Not all such transactions will result in a remedy - but where the influence that exists between the parties can be classified as 'undue' the weaker party will have the choice of rescinding the contract.

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Undue influence may take two forms; express undue influence (where the dominant party acts in such a way as to effectively deprive the other of their free will - this overlaps with duress) and presumed undue influence which occurs where the dominant party holds a position of trust or confidence over the weaker party (such as solicitor and client - in such a case it will be presumed that the influence that existed between them when entering the contract was 'undue' unless the dominant party can prove otherwise)


General rules

Express - or actual - undue influence arises when a gift/contract results from unfair and undue pressure by the beneficiary and not free and independent judgment.

See Thorne v Kennedy [2017] HCA 49

See Justice Starke, Johnson v Buttress (1936) 56 CLR 113 at 126 ➤


Presumed undue influence

Undue influence may be presumed from the relations existing between parties. There is no exhaustive list of relations giving rise to a presumption of undue influence. It includes

  • parent and child

  • guardian and ward

  • trustee and cestui que trust

  • solicitor and client

  • physician and patient

  • cases of religious influence.

More broadly, the presumption of undue influence arises whenever 'the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter' (Chief Justice Latham, Johnson v Buttress (1936) 56 CLR 113 at 119 ➤)

In cases where undue influence is presumed, the donee must prove that the gift was the free/voluntary exercise independent will.

Leading case: Johnson v Buttress (1936) 56 CLR 113


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Last updated: 18 October 2019