Law of Contract: Undue Influence
Johnny is an old man. He has two children, Joe and Victoria. Johnny has informed everyone that when he dies, the property is to be shared equally among Joe and Victoria. He stays with Victoria and is totally dependent on her to look after him. Johnny loves his daughter and does whatever she tells him to do.
Two months ago, Johnny transferred all his property to Victoria. He passed away a few days ago. Joe claims that the contract is voidable. Discuss.
Answer:
The issues that arise in this case are:
1) Whether there is a relationship between Johnny and Victoria?
2) Whether Victoria used her dominant position to transfer all of Johnny’s property to her?
3) Whether Joe has the right to set aside/ rescind the contract?
4) Whether this presumption can be rebutted?
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contacting by any law to which he is subject according to section 11 of Contracts Act 1950.
Section 10 (1) of Contracts Act 1950 states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation and mistakes according to Section 14 of Contracts Act 1950.
A voidable contract is one where one party has a choice of either continuing with the contact or rescinding the contract: section 2 (j). Rescission ab initio means termination of contract on the original date of the contract.
Section 20 provides that when consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received
Two months ago, Johnny transferred all his property to Victoria. He passed away a few days ago. Joe claims that the contract is voidable. Discuss.
Answer:
The issues that arise in this case are:
1) Whether there is a relationship between Johnny and Victoria?
2) Whether Victoria used her dominant position to transfer all of Johnny’s property to her?
3) Whether Joe has the right to set aside/ rescind the contract?
4) Whether this presumption can be rebutted?
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contacting by any law to which he is subject according to section 11 of Contracts Act 1950.
Section 10 (1) of Contracts Act 1950 states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation and mistakes according to Section 14 of Contracts Act 1950.
A voidable contract is one where one party has a choice of either continuing with the contact or rescinding the contract: section 2 (j). Rescission ab initio means termination of contract on the original date of the contract.
Section 20 provides that when consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received