Page 15 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes
Dominate

Real and apparant authority Fiduiary relationship 1. Mental capacity as to age
2. Apparent authority
3. Illness

The party in the dominating position uses that portion to obtain unfair advantages.

Example: A, a man enfeebled by disease or age, is induced by B’s influence over him

as his medical attendant to agree to pay B an unreasonable sum for his professional services,
B employs undue infl uence.
Some of the relationships which raise a presumption of undue infl uence are:
1. Parent and child;

2. Guardian and ward;
3. Doctor and patient;
4. Spiritual guru and disciple;
5. Lawyer and client;
6. Trustee and benefi ciary.
However, the presumption of undue influence can be rebutted by showing that the party said

to have been influenced had independent legal advice of one who had full knowledge of the

relevant facts. There is no presumption of undue influence in the relationships between
1. Husband and wife;
2. Master and servant;
3. Creditor and debtor;
4. Landlord and tenant.

The burden of proving that the contract is not induced by undue influence lies on the party who
is in a position to dominate the will of the other. On the other hand, in relationships where undue

influence is not presumed the party alleging undue influence must prove that it existed.

Consequences of Undue Infl uence

An agreement caused by undue influence is voidable at the option of the party whose consent

was obtained by undue influence. However, any such contract may be set aside either absolutely

or if the party who was entitled to avoid it has received any benefit there under then upon such

terms and condition as the court deems fi t.
Example: A, a money lender, advanced ` 1,000 to B, a household lady, and by undue
infl uence induced B to execute a bond with interest at 8 per cent per month. The court may set
the bond aside ordering B to repay ` 1,000 with such interest as the court may deem just.

10 LOVELY PROFESSIONAL UNIVERSITY