Where one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage, the contract is voidable.
Explanation
Application examples
Scenario
A retired elderly man of limited education had a long-standing relationship with his accountant spanning fifteen years. The accountant prepared documents transferring the man's commercial property to the accountant at one-fourth of its market value. The man signed without seeking independent advice. The accountant claims the man understood the terms and acted with full knowledge.
Analysis
The relationship establishes dominance: the accountant held financial knowledge and control over the elderly man's affairs for years. The terms reveal grossly unfair advantage: property transferred at one-fourth market value suggests the sale was unconscionable. Although the accountant claims understanding, the absence of independent legal advice and the severely disadvantageous terms together raise a strong presumption of undue influence. The burden shifts to the accountant to disprove influence.
Outcome
The contract is voidable at the elderly man's option. He may rescind the transfer unless significant time has passed, he has ratified the contract, or restitution is now impossible. The accountant must prove genuine independent advice was available and actually sought.
Scenario
A young doctor recently hired by a hospital agreed to a five-year employment contract with a salary significantly below market rate and a non-compete clause preventing practice within fifty kilometres for two years after termination. The hospital manager verbally assured her the contract was standard. She signed the document without reading it carefully or consulting a lawyer.
Analysis
The hospital occupies a position of economic dominance—the young doctor is professionally dependent on the opportunity. However, the terms, while unfavourable, are not so grossly unconscionable as to immediately suggest improper influence. No evidence shows the manager actively misused the relationship to procure the contract; the manager's assurance about standardness is not itself undue influence unless it was false. The absence of independent legal advice is relevant but not decisive in a commercial context between relatively sophisticated parties.
Outcome
The contract is likely not voidable for undue influence. The doctor may have remedies under employment law or for misleading statements, but the mere existence of dominance and lack of legal consultation does not satisfy both elements of undue influence in a commercial employment setting.
Scenario
A terminally ill man executed a will leaving his entire estate to his live-in nurse, his closest companion for three years, excluding his adult children entirely. Medical evidence confirms he was mentally competent. The nurse had not sought the will but accepted its execution. The children challenge the will claiming undue influence.
Analysis
The nurse's position created psychological dependence and trust—she controlled daily access and care. However, the man's competency suggests his will was not dominated in the sense of being incapable of independent judgment. The absence of the nurse actively soliciting the gift is significant. For undue influence to apply, there must be active misuse of position, not merely the existence of a close relationship and resulting gift. The mere fact that the will differs from expected family distribution is insufficient.
Outcome
The will is unlikely to be set aside for undue influence based on these facts alone. While the nurse's position was dominant, the absence of active inducement or procurement by her, combined with the testator's proven competency, means the legal elements are not satisfied. The children would need evidence that the nurse solicited, encouraged, or manipulated the testator's decision.
How CLAT tests this
- Examiners present a dominant relationship without any unfair terms, testing whether candidates mistakenly assume dominance alone constitutes undue influence; the second element (unfair advantage obtained through that dominance) is essential and must be separately established.
- A fact pattern shows harsh contract terms combined with a dependent relationship, but no evidence that the dominant party actually deployed influence to obtain those terms; candidates must recognise that circumstantial unfairness does not automatically prove active misuse, though it may shift the burden of proof.
- The scenario involves duress (threats of violence or financial ruin) rather than undue influence (psychological dominance), and candidates conflate the two; duress is an external threat, undue influence is internal will-manipulation, and the doctrines carry different defences and remedies.
- One party is nominally weaker by age or education, but the other party actually depends on the first for economic survival or personal wellbeing; candidates must identify that influence flows from actual relational power, not from social hierarchies or assumed vulnerability.
- Facts are presented within a family context (parent-child, spouses, siblings), importing presumptions about undue influence that apply to wills and inheritance but not necessarily to commercial contracts; candidates must distinguish the heightened scrutiny in testamentary and succession matters from general contract law principles.