Undue Influence (1)
Intro: The essay/problem/dilemma involves the Law on Vitiating Factors (VF). A VF is one which invalidates an otherwise perfectly formed contract. Undue Influence (UI) is pressure, other than physical violence put on a party not in a business context, there is influence placed on a party so they enter a contract without their free will.
There are 2 types of UI: Actual Undue Influence - No special relationship exists between the parties ... parties alleging the UI must prove it. This rarely comes to court.
CASE: "Williams v Bayley". In this case a son forged his father's signature in order to get credit from the bank. The bank was pressuring the father to pay the son's debts otherwise his son would get transported. HELD: This was UI as there was no special relationship between the father and the bank. In the CASE: of "BCC v Aboody", this type of UI was categorised as a 'Class 1' relationship.
Presumed UI: A special relationship exists between the parties therefore the victim needs only to prove the relationship and the court will 'Presume UI' exists. The other party must try and disprove that they used UI (i.e. by ensuring that the victim understood contract by receiving independent advice. In "BCC v Aboody", 2 classes emerged Class 2A and Class 2B. Class 2A: Is between parent/child; doctor/patient; trustee/beneficiary; solictot/client and spiritual leader/disciple. CASE: "Lancashire Loans v Black". In this case a mother dominated her daughter to stand as a guarantor for a bank loan. When the mother failed to pay back the loan, the bank tried to enforce the guarantee. HELD: The daughter successfully claimed UI as she was dominated by her mother... contract was set aside.