# Understanding Undue Influence: Definition and Real-World Examples

![Undue Influence: When someone uses their power or authority to unfairly influence a decision.](https://www.investopedia.com/thmb/ip0yacmf9NvXRf60sQu6DREJEfM=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/undue-influence.asp-final-97382b33ddc0423fb59c0684fa193801.png)

*— Investopedia / Julie Bang*

> **Definition**
>
> Undue influence is a situation where one individual leverages their power or position over another to coerce decisions that may not be in the latter's best interest.

## What Is Undue Influence?

Undue influence happens when someone uses their relationship to [sway another’s decisions](https://www.investopedia.com/ask/answers/08/rainmaker.asp). Often, one person has more power because of a [higher status](https://www.investopedia.com/terms/s/status-symbol.asp), education, or emotional ties. The powerful individual uses this advantage to pressure the other into making unwise long-term decisions.  

A common relationship where undue influence may be prevalent is between a therapist and a client. This power imbalance can undermine one party's consent, preventing them from making independent decisions. An understanding of undue influence is important for informed decision-making.  

Undue influence has particular significance in legal and business settings, where power dynamics may lead to compromised decisions. For example, some [agreements can be legally voided](https://www.investopedia.com/terms/v/void-contract.asp) depending on the level of influence and other factors.

### Key Takeaways

*   Undue influence occurs when one party uses its power to coerce another into making decisions.
*   A powerful individual often exploits this advantage for personal gain, to the detriment of the weaker party.
*   In contract law, agreements influenced by undue influence can be legally voided.
*   Relationships like those between doctors and patients or parents and children are prone to undue influence.
*   Having mediators present during financial deals can reduce the risk of undue influence.

## How Undue Influence Impacts Relationships and Decisions

Undue influence happens when someone uses an advantage to pressure another into making decisions. This pressure often harms the weaker party and benefits the more powerful one. Some relationships, such as one between a patient and a doctor or a parent and a child, are considered to run the risk of undue influence and are legally outlined.

The person with influence must prove they didn't use their position to exploit the other party. In other situations, one party, based on previous interactions, can be accused of using the trust of the other party to their advantage.

## Real-World Example of Undue Influence

For example, Bert is Ernie's therapist. Bert is also involved in a couple of [real estate](https://www.investopedia.com/terms/r/realestate.asp) development deals around town. Ernie starts talking to Bert about how he has heard about units for sale in the complex that Bert is investing in developing. Ernie isn't interested and doesn't feel it's appropriate for him to purchase a home at that time, but feels left behind by his friends, who are all purchasing units or making other investments in the project.

Bert uses his place of power over Ernie to convince him that it's a good step forward in his life, also to make an investment in the project. This is to Ernie's financial detriment, but it increases the value of Bert's investment. Bert has used undue influence.

## Recognizing and Preventing Undue Influence in Financial Markets

There is a pandemic of undue influence in the financial markets of the world. It can be as simple as leveraging information someone has on someone else in order to induce a sale or purchase, or it can be as complicated as forcing board members to vote a certain way. Having third-party counsel or a mediator present when deals or large trades are occurring can help to mitigate instances of undue influence.

> **Article Sources**
>
> 1.  Cornell Law School, Legal Information Institute. "[Undue Influence](https://www.law.cornell.edu/wex/undue_influence)."
>     
> 2.  Fraser, Ian W. "[Ware v. Ware and the Presumption of Undue Influence in Confidential Relationships](https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1612&context=alr)." _Alaska Law Review_, vol. 38, no. 2, pp. 342-343.