student A

student A

Issue

Samuel wants Juan to transfer over land he owns for a 35% market value because Samuel is taking care of him. Samuel is Juan’s nephew and Juan is totally dependent on Samuel. Samuel threatens Juan that if he doesn’t transfer the land over than he will no longer takes care of Juan, so Juan enters into the contract. Juan is a victim of undue influence.

Rule

The book states that, “Undue Influence arises from relationships in which one party can greatly influence another party, thus overcoming that party’s free will. A contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable.”

Analysis

Juan enters into this contract with his nephew Samuel because he is fearful that Samuel will not take care of him anymore. It says that Juan is totally dependent on Samuel so it sounds like Juan cannot care for himself anymore but it sounds like he is coherent. The law does protect elderly people and this looks like Juan can enter the contract but it is voidable by the court because it is not his free will. Juan can set aside this contract by claiming other things like duress too.

Conclusion

The courts will likely not force the contract that Juan entered into with Samuel because this is a case of undue influence over an elderly person.

Other student answer

Issue:

Samuel is Juan’s nephew, Juans care giver and support.  Juan is 100% dependent on Samuels help.  Samuel tells his elderly uncle Juan that unless he sells a piece of land for 35% below its market value to him, he will no longer support and take care of him.  Juan does agree to enter into a contract, but can he get out of this contract?

Rule:

The rule of contracts that would apply to this situation is Undue Influence.  Undue Influence comes from relationships in which one party can greatly influence another party, thus overcoming that party’s free will.

Application:

Undue Influence requires that the party being taken advantage of does not exercise free will, in the making of a true contract.  Samuel is not Juans legal guardian, but he did take on that role when he allowed his uncle to move in with him.  If Juan relies on Samuel completely to live, then there is a fiduciary relationship.  Even though they are family, there is more to it than that.  Samuel and Juan have a fiduciary relationship because Samuel holds an ethical and financial role in Juans’ life.  Samuel is a dominate party unfairly influencing Juan to sell the land cheaper than market value, and Samuel benefits from it.

Conclusion:

There is clear and convincing evidence that Juan did not act out of his free will, instead was given an impossible choice.  Juan could either not get the care and support he needs, or sell his nephew land at a significantly lower price than market value.  Samuel is the dominate party in the relationship because he financially and physically supports Juan.  Samuel is taking advantage of his uncles position to benefit from it and that is not legal.  I know that the existence of a fiduciary relationship alone is not enough to prove undue influence, but Samuel is doing more than just the moral high ground.  Juan has every right to set aside the contract he entered with Samuel under undue influence.

ISSUE

Juan, who is an elderly man, lives with his Nephew Juan and relies on Samuel to fully support him. Samuel insists that his uncle must transfer a tract of land that he owns to him if he wants to continue receiving his support. He asks for a purchasing price of 35% less that it’s market value. Juan accepts this offer and enters into contract with Samuel.

RULE

The rule that applies in this case is referred to as “undue influence.” The court will presume that the contract was created under undue influence if it appears to benefit the party leading the initiative. This rule prevents one party from unfairly dominating another party.

APPLICATION

When Samuel gave Juan an ultimatum to obtain his land at a lower price that its value, it appears to be blackmail. Juan is being forced into this agreement because he has no choice, as his nephew is his sole provider. According to our textbook, “a contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable.” Minors and elderly people are often unjustly influenced because they are at the will of their caretakers. Undue influence arises when the dominating party unfairly persuades the other party to enter contract.

CONCLUSION

Since this contract obviously only benefits Samuel, and Samuel happens to be the dominating party, the courts would recognize that and allow Juan to set the contract aside. It would be deemed as unreasonable and would not be enforced because all parties should enter a contract in their own free-will. It may be questionable as to why Juan owns equity, yet is solely supported by his nephew, but that information would be irrelevant to the court and Juan would still be protected by the law.