In the previous chapter we examined the instances in which a contract for the sale of land may he voidable or void at law on account of the legal incapacity of some party thereto to hind himself or herself by such a contract as was purported to he made. It is now proposed to treat of the cases where a sale of land may be voidable in equity because one of the parties stands, either towards the other or towards the beneficial owners of the land or the purchase money, in some relation imposing on him either a conditional or an absolute disability to take under the contract. This kind of relative disability is of a different nature from personal incapacity, strictly so called: but it may be conveniently considered, as a ground for impeaching the validity of the contract, in connexion therewith.

Relative disability in equity.

The cases in which this kind of disability may arise may be grouped into three classes: - First, where there is such a confidential relation between the parties to the sale that the presumption of undue influence arises in respect of all contractual dealings between them. Here the person occupying the position of influence is under a conditional disability to take advantage of the sale. Secondly, where one of the parties stands in a fiduciary relation to the other party to the sale as regards the particular property dealt with. Here also the disability is only conditional. And thirdly, where one of the parties stands, not towards the other party to the sale, but towards the beneficial owners of the land or money dealt with, in the relation of agent executing an authority to sell or purchase; in which case he is under an absolute disability to take under the contract, either directly or indirectly, in the opposite capacity of purchaser or vendor.

Three classes of relative disability.

1. Where there is a confidential relation raising the presumption of undue influence.

2. Where there is a fiduciary relation between the parties as regards the property dealt with. 3. Where one of the parties is acting under an authority to sell or purchase.

The first of these classes has been already examined under the head of Undue Influence (a). The reader will remember that a sale of land may be voidable in equity on the ground that one of the parties thereto exercised undue influence over the other; and that undue influence may be alleged either independently or not of the existence of a confidential relation between the parties, which invested the one with a peculiar authority over the other or imposed on him a special duty of advising the other. In the former case the plaintiff claiming to avoid the transaction must give positive proof of the undue influence alleged. In the latter he need only prove the existence of the confidential relation, and it will then be presumed, until the contrary be shown, that the defendant took advantage of his situation; and the onus lies on him of proving that the other was not unduly influenced, and gave a perfectly free consent to the contract. In these cases, however, the contract is not avoided unless the alleged undue influence be established, either by positive proof, or by proof of the existence of a confidential relation and failure to rebut the ensuing presumption. And the obligations arising out of the confidential relation do not impose on the party affected thereby an absolute incapacity in equity of contracting with the other. On the contrary, he may so contract; though, if he do, he is saddled with the burthen of showing that he did not use his influence to the other's disadvantage. His position is in fact analogous to that of a party to a contract uberrima fidei(b). The agreement is not impeachable for want of contractual capacity, strictly so called, on the part of the person charged to refrain from undue influence, but it is voidable in case of his failure to prove that he discharged the duties incident to his position; and these include the obligation of making full disclosure of all circumstances, within his knowledge, which affect the value of the property bought or sold (e). At the same time, although confidential relations, which give rise to the presumption of undue influence, do not involve the absolute incapacity of the person occupying the position of influence to contract with the other, they affect not only all contractual dealings between the parties with respect to any property of either of them, but also all gifts made between them whilst living in favour of such person (d). It seems, therefore, correct to say that he is subject in equity to a kind of general disability as regards the other party; though this disability is not absolute, but only conditional, and is removed on performance of the condition. This class of disability is exemplified in the case of solicitor and client, guardian and ward, parent and child: but the reader will not forget that it is not confined to any particular set of relations, but will arise whenever it is proved that one person stands toward another in any relation, of which the natural consequence would be that the other would come under his influence (e). We need not further discuss this class of disability, which has been fully dealt with above (f).

Confidential relation raising the presumption of undue influence.

(a) Above, p, 756 sq.

14 (2)

Solicitor and client; guardian and ward; parent and child.

The second class of cases above referred to (g), which is in effect limited to the purchase by a trustee of his cestui-que-trust's interest in the trust property, has been already mentioned incidentally in connexion with the subject of undue influence (h): but it does not depend on the same principles exactly as are applicable in the case of undue influence itself. The mere fact that one man is trustee of some property for another does not of itself alone raise the presumption that he exercised undue influence in all his contractual dealings with the other, or affect the validity of their contracts relating to other property (i). It is true that, owing to incidental circumstances, a trustee may stand towards his cestui-que-trust in such a confidential relation as to raise the presumption of his undue influence in all dealings between them; thus a man may be trustee acting as guardian for an infant (k), or trustee acting as business manager or adviser for a young man or a woman or a man unversed in business affairs. In such cases a confidential relation is no doubt established, and the trustee is subject in equity to the consequent general disability (l); but this consequence follows, not merely because the one is trustee for the other, but because the incidental circumstances attending the particular case cause the position of trustee to be a position of influence over the other (m). It appears, indeed, that gifts made by a cestui-que-trust to his trustee by way of bounty or remuneration for the trustee's services, which he is bound to render without deriving any profit for himself, stand on the same footing as gifts to a solicitor from his client or to a guardian from his ward (n); and to this extent the trustee seems to labour under a general disability not confined to his acceptance of a present of part of the trust property. But, notwithstanding this result of the fiduciary relation, it does not appear to impose on the trustee any general disability as regards contractual dealings with his cestui-que-trust; and there seems to be no reason to suppose that, where they enter into a contract relating to some matter entirely independent of the trust estate, the trustee is under the obligation of proving the fairness of the transaction and the other's free consent, unless the cestui-que-trust can establish that, in the circumstances of the case, the trusteeship placed the trustee in a position of influence over him (o). With respect to matters of contract as opposed to gift, the relation of trustee and cestui-que-trust appears to subject the trustee to no more than a particular conditional disability affecting only their contracts dealing with the cestui-que-trusfs interest in the trust property.