Law of Contract: Undue Influence Essay

3663 Words Nov 21st, 2012 15 Pages
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?
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The second defendant who was the wife of the first defendant stood as guarantor. The plaintiff sued the defendant. The second defendants defended plaintiff claim and alleged undue influence on the part of the first defendant on her at the time she executed the guarantee agreement. The court held that, section 16 of the Contracts Act 1950 as well as decided cases makes it clear that there is no presumption of undue influence between husband and wives. However, where a wife has been induced to stand surety for her husband debt by his undue influence, she has equity as against him to set aside the transaction.

c. The making of the gift to Victoria, or the contract entered into with Victoria was unfair to the Joe. In the case of Tate v Wiliamson, Tate is a student who intends to sell some property to settle his tuition fees. He found the defendant who is a lawyer for advice on the sale. The defendant bought Tate’s property at 7,000 without informing Tate that the actual value of the property is 20,000.The Court held, the contract must be set aside because there is trust between the defendant's relationships with Tate. This is because Tate has referred to the defendant to obtain counsel and by the defendant was not entitled to buy the property without making the disclosure.Such a relationship was described as; wherever 2 persons stand in such a relation that while it continues, confidence is necessarily reposed by one, and the influence which necessarily

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