Undue Influence in Contract Law Key Cases and Clas

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Raghunath Prasad v Sarju Prasad1Raghunath Prasad v Sarju PrasadIssueWhether the contract between the parties is induced by undue influence?Facts:The dispute involved joint family property owners, Raghunath Prasad andhis son Sarju Prasad. The latter, facing legal issues, mortgagedproperties to his father, borrowing ten thousand rupees at 24%compound interest. Alleging undue influence, Sarju Prasad contendedthat exorbitant interest rates took advantage of his mental distress.Held ( -ve )The Court held that the plaintiff was unable to prove that the defendantdominated his position, and the contract was induced by the undueinfluenced. Hence, the conditions of the three steps process are notfulfdled.Tj2£ a?¥?iinterestratefi’o mdate of the execution.Thus, essentially, three things/steps:1. In a position to dominate2. Uses that position to obtain contract3. The burden of proving it was not undue influence falls on the oneaccused of it* "In a position to dominate---------" has been categorised into----------two .

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Polygram Records Sdn Bhd v The SearchFactsThe defendant had previously signed a contract with the plaintiff to haveexclusive recording rights for the defendants. However, at the end of1987, the group decided to record an album under a new company, Go-Search, a company that was incorporated by the defendants' themselves.This caused the plaintiff to take action against the defendants for breachof contract.HeldThe plaintiff was in a position of trust and confidence and could influencethe defendants into the second contract, the claim of undue influencefailed.Ratio decidendi:In cases of presumed undue influence, the defendants needed toestablishmanifest disadvantage or prove that the contract wasunconscionable, and they could not do so. This is connected tos28of theContracts Actand the case ofBank of Credit and CommerceInternational SA v AboodyLegal principle:1. relationship of trust and confidence /2. proof of manifest disadvantage XFl Failed UIA presumption of undue influence may arise from a relationship of trust andconfidence where one party can dominate the will of another. However, thispresumption is likely to fail without proof of manifest disadvantage or anunconscionable contract--------------------------------------------------------------Case Review - Polygram Records Sdn Bhd v The Search.pdf

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Common law classification are:1.Direct/Actual undue influence□Directly influences a person2.Presumed undue influence□It is presumed that the person had been influenced due to therelationship□It is rebuttable□This appears to be reflectedunder s.16□However, there appears to be a 'new' classification of Undue InfluenceUndue Influence in Contract Law _________Class 1: Actual Undue Influence□Definition: The claimant must prove that the wrongdoer exertedundue influence to induce the transaction.□Key elements:1.Affirmative proof is required—mere suspicion is not enough.2.Direct evidence of coercion, pressure, or manipulation isnecessary.□Application in PBQs:oLook for explicit actions by the wrongdoer (e.g., threats,pressure, manipulation).oIdentify whether the complainant was deprived of free will.oThe burden of proof is on the claimant.Class 2: Presumed Undue Influence□Definition: The claimant only needs to show a relationship oftrust and confidence, leading to a presumption of undueinfluence.□Key elements:oNo need to prove actual coercion.oTwo subcategories:□Class 2A (Automatic presumption)□Class 2B (Factual presumption)Class 2A: Presumed Undue Influence (Certain Relationships)

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