Undue Influence

Indian Contract Act, 1872

1. Undue influence BUSINESS LAW S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

2. UNDUE INFLUENCE - DEFINITION Sec. 16 of the Indian Contract Act, 1872 provides that a contract is said to be induced by undue influence when the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other, and uses that position to obtain an unfair advantage over the other. Undue influence is basically a moral coercion as opposed to physical coercion. It includes coercion, compulsion, menace or persuasion. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

3. Essentials of undue influence The relation subsisting between the parties should be such that one of the parties is in a position to dominate the will of the other The object must be to take undue advantage. The dominant party uses his dominant position to obtain that unfair advantage. A person is in a position to dominate the will of another Where he holds a real or apparent authority over the other. Where he stands in a fiduciary relationship to the other Where he makes a contract with a person who’s mental capacity is temporarily or permanently affected by reason of age, illness, mental or bodily distress . S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

4. Fiduciary relationships Domination (undue influence) is presumed in the following relationships. Parent and child Trustee and beneficiary Guardian and ward Spiritual master and disciple Lawyer and client Doctor and patient Undue Influence has to be proved in the following relationships. Husband and wife Landlord and tenant Creditor and debtor S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

5. Differences between coercion and undue influence Sl. No. Coercion Undue Influence 1. Use of physical force Use of moral pressure 2. Coercion need not proceed from the promise nor need it be directed against the promisor. There must be a certain relationship between the parties where one party may dominate the other. 3. Contract may become voidable Contract may either become voidable or the court may set it aside . S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

6. Effect of undue influence Contract may either become voidable or the court may set it aside . Suspected in the following cases Inadequate consideration Inequality between the parties regarding age, intelligence, social status, etc. Fiduciary relationship between the parties Pardanashin women Unconscionable bargains S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

7. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM