Summary of Contract Law 101: Undue Influence

00:00:00 - 00:05:00

In this video, the Law-School Lumberjack outlines the doctrine of undue influence and its two-part test used to determine if it is present in a contract. The first step requires the plaintiff to establish that the relationship between the parties was one where undue influence could factor in the creation of the contract. The second step involves the non-vulnerable party proving that the contract was entered into by the vulnerable party out of their own free will. The Lumberjack explains that a direct contract between two parties is not necessary for undue influence to exist and that situations where one party is guaranteeing a loan or mortgage for another can potentially be deemed undue influence if there is a trust relationship and one party takes on liability without benefit.

• 00:00:00 In this section, the Law-School Lumberjack explains the doctrine of undue influence and the two-part test that is used to determine whether undue influence is present in a contract. The first step of the test requires the plaintiff to show that the relationship between the parties was one in which undue influence could factor in the creation of the contract, which is easier to establish if the relationship falls under an established category of fiduciary relationships, such as doctor-patient or lawyer-client. If the relationship is not an established category, the plaintiff must prove that the relationship was such that undue influence would be possible. The second step of the test involves the non-vulnerable party proving that the contract was entered into by the vulnerable party out of their own free will, which can be established through facts such as a certificate of independent legal advice or a fair market value being paid. The Law-School Lumberjack also discusses common red flags that may indicate undue influence, such as situations where an adult child takes advantage of an elderly parent in estate law.
• 00:05:00 In this section, the speaker explains that a direct contract between two parties is not necessary for undue influence to exist. A scenario where one party is guaranteeing a loan or mortgage for another, such as a husband and wife or parent and adult child, could potentially be deemed undue influence if there is a trust relationship and one party is taking on liability without benefit. While not automatic, situations like this can prompt suspicion of undue influence.