Under influence defined-Section 16
Under section 16(1) undue influence means:
“Undue influence exists where 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 unfair advantage over the other.”
Undue influence occurs where a party makes a contract under any kind of influence, mental pressure or persuasion, a free and independent judgment. The principle of undue influence applies to every case where the influence is acquired or abused, where confidence is reposed and betrayed. Undue influence is, in fact, a mental coercion and destroys the agency, and has its origin in coercion and fraud.
Presumptions of undue influence-Section 16(2)
Presumptions of undue influence are:
1. Position to dominate
2. Unfair advantage
3. Real and apparent authority
4. Fiduciary relation
5. Mental distress
1. Position to dominate:
Undue influence is presumed to exist where the relations subsisting between the parties are such that one of them is in a position to dominate the will of the other. The person in superior position may influence the other party for obtaining his consent to the agreement.
2. Unfair advantage:
To establish exeTcise of undue influence it is net sufficient to prove that one party was simply related to the other and that the other party was of a weak position. What is essential is that the dominating party sctually used that position to obtain an unfair advantage over the other.
3. Real and apparent authority:
A person is deemed to be in a position to dominate the will of another and exercises undue influence where he holds a real and apparent authority over the other e.g. master and servant, doctor and patient, income tax officer and assessee, police officer and accused, etc.
4. Fiduciary relation:
A person can dominate the wfil of another where he stands in fiduciary relation (a relation of mutual trust and confidence) to the other. Such a relation is supposed to exist between, father and son, guardian and wards, lawyer ad client, trustee and beneficiary, promoter and company.
5. Mental distress:
Undue influence is presumed to exist where a person makes a contract with e person whose mantal capacity is temporarily or permanently affected by reason of age, illness, mental orbodily distress.
Presumption or otherwise of undue influence
(a) Presumption: The following relationships between the contracting parties raise a presumption of undue influence:
(a) master and servant
(b) doctor and patient
(c) father and son
(d) parent and child
(e) lawyer and client
(f) trustee and beneficiary
(g) promoter and company
(h) fiancer and fiancee
(i) guardian and wards
(b) No presumption:
In the following relationship there is no presumption of undue influence:
a. landlord and tenant
b. creditor and debtor
c. husband and wife.
Effect of undue influence-Section 19A
The effect on a contract caused by undue influence is:
a. contract is voidable at the option of the party whose consent was obtained by undue influence.
b. any such consent may be set aside absolutely.
c. if the party who was entitled to avoid it has received any benefit there~mder the contract may be set aside on such terms and conditions es the court may deem fit.
Burden of proof
The plaintiff, in order to avoid a contract on the ground of undue influence, has to establish that:
a. the ether party was in a position to dominate his will.
b. the other party actually used his influence to obtain piaintiff’s consent,
c. the transaction is unreasonabte.
Coercion arid undue influence distinguished
Incoercion, consent is obtained by threat of an offence and the person is forced to give his consent.
In under influence, consent is obtained by dominating the will of the giver, and the consent is freely given.
Coercion is mainly of physical character involving mostly use of physical or violent force.
Undue influence is of a moro! character involving moral force or menta! character.
3. Intention and influence
In coercion, the intention is to induce any person to make a contract.
In undue influence, one party uses his position to obtain unfair advantage over the other party.
Coercion involves criminal act. Undue influence does not involve any criminal act.
5. Exercised against
Coercion may be exercised against a contracting party and also against a third party.
Undue influence must be exercised against the contracting party.
For exercising coemien no specific relationship between the parties is needed.
For exercising ,undue influence there must be specific relationship between parties.
7. Benefit obtained
In coercion, the aggrieved party must return the benefit received.
In undue influence, codrt has discretion to order refund of benefit.