- Construction of contract — Formation of contract
The equitable doctrine of undue influence operates to protect weaker parties from the abuse of their relationships by stronger parties. The five main topics within this chapter are: (i) undue influence can be (a) proved, and is then called ‘actual undue influence’, or (b) it can be inferred to have arisen, and it is then called ‘presumed undue influence’; (ii) for the purpose of presumed undue influence, the law recognizes certain standard relationships of trust and confidence (solicitor and client, guardian and ward, etc); non-standard relationships might be shown, on the facts of the case, to involve such a relationship; for example, this is necessary with respect to marital relationships and relations between banker and customer; (iii) the presumption that there has in fact been an abuse of a relationship is activated within the presumed category if the relevant transaction or gift ‘calls for explanation’; (iv) if actual undue influence, or the presumed form, is shown, it is incumbent on the stronger party to satisfy the court that, nevertheless, the weaker party entered the transaction, or made the gift, with free and informed consent; (v) one important context is the giving of guarantees by spouses or partners to support the receipt by the other spouse of partner of a business loan.
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