Future Business Leaders of America (FBLA) Business Law Practice Exam

What constitutes undue influence in a contract?

1. An equal bargaining position between parties

2. Overly persuasive actions that exploit a person's position of power

3. A final decision made by a judge

4. A lack of consent in the agreement

The correct answer is: Overly persuasive actions that exploit a person's position of power

Undue influence in a contract occurs when one party takes advantage of their position of power over another party, utilizing overly persuasive actions that manipulate the decision-making process. This form of influence often involves a relationship where the influenced party relies heavily on the influencer, such as in cases of fiduciary relationships, elder care, or situations involving a caregiver and a dependent person. The crux of undue influence is that the persuaded party does not enter into the contract freely and willingly but rather is coerced in a way that compromises their independent judgment. In this context, the significance of having a position of power cannot be understated; it sets the stage for exploitation when one party can exert pressure or manipulate the relationship for their own benefit. This makes the contract potentially unenforceable, as it fails to meet the essential criterion of voluntary consent, crucial in contract law. The other options do not align with the notion of undue influence. An equal bargaining position lacks any elements of coercion or manipulation, while a final decision made by a judge pertains to the outcomes of legal proceedings rather than the dynamics of individual influence in contract formation. Lastly, a lack of consent is a broader concept that may encompass undue influence, but it does not specifically address the unique circumstances of coercive persuasion