Preface
Undue influence is a legal term that affects the nature of a contract and makes it voidable at the option of the aggrieved party.
Relevant Provisions
Section 16 of the Contract Act 1872 deals with undue influence.
Definition of Undue Influence
Section 16 defines undue influence as follows
A contract is said to be influenced by undue influence where the relation subsisting between the parties is of such a nature that one of the parties is in the position to dominate the will of another party and uses that position to obtain an unfair advantage.
When can a Person Dominate the Will of others?
Following are some situations where a person is deemed to be in a position to dominate the will of another.
1. Real or Apparent authority
Where a person holds a real or apparent authority over the other person.
2. Fiduciary Relationship
Where a person holds a fiduciary relation to the other.
3. Due to Mental Capacity
Where a person makes a contract with a person whose mental capacity is temporarily or permanently affected by reasons of age illness or mental or bodily distress.
Essentials for Undue Influence
Following are some essentials that must be fulfilled for making sure that the contract is caused by undue influence.
I) Subsisting Relationship
a) Person in Authority
A person in authority is definitely able to dominate the will of the person over whom that authority is held.
Real Authority: Real authority includes the authority that a police officer has over the accused or it would be a real authority, e.g. employer and employee, master and servant, doctor and patient, etc.
Apparent Authority: Where a person has no real authority but still can approach that other in an authoritative manner e.g. cases of priests of church etc.
b) Fiduciary Relationship
There are several kinds of fiduciary relationships. Some of them are as follows:
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- Every relationship of trust and confidence is a Fiduciary relationship.
- A fiduciary relationship arises when one party trusts the other.
- It does not necessarily mean a blood relationship, ie, father and son; it could also be between a student and a teacher, a doctor and patient, lawyer and client, etc.
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c) Mental Incapacity or Distress
The consent of a person suffering from mental incapacity is not accepted. It can be temporary or permanent. It may be caused by illness, old age, or mental or bodily distress.
II) Position to Dominate
To cause undue influence, it has to be proved that one of the parties was in a position to dominate the other. This position of domination arises out of the trust and confidence that exists between the parties.
It must be remembered that mere trust or confidence alone cannot constitute undue influence An abuse or exploitation of that trust is necessary.
III) Will of the Other
Through undue influence, the will of the weaker party can be obtained. However, if the consent is not genuine, it must be proved that the weaker party had never consented to it if he was not influenced by the dominant party.
IV) Misuse of that Position
An important ingredient/element of undue influence is that the dominant party should misuse the position of superiority. Undue influence is caused when the trust of the other is misused or exploited for one’s own profit or benefit.
V) Unfair Advantage
Unfair advantage means an advantage obtained by unrighteous means. An unfair advantage can be obtained by misusing the trust or confidence of the other party.
Legal Effects of Undue Influence
The legal effects of undue influence are the following.
1. Voidable Contracts
When consent to an agreement is caused through undue influence, the contract is voidable at the option of the aggrieved party.
2. Question of Presumption
In some situations, the court itself raises the presumption of undue influence being caused to the contracts.
For Example Unconscionable contracts or Contracts with Pardanashin Ladies
Onus of Proof
General Rule
The rule regarding the onus of proof is that it lies on the party who alleges it ie: the party who makes a complaint.
Exception
In undue influence, there is an exception to the general rule where the party in the dominant position has to prove that there was no undue influence. If the evidence adduced or the transaction on the face of it seems to be based on undue influence, the dominant party will have to prove that it was not so.
Cases of no Presumption
Following are some relationships where there is no presumption of undue influence.
- Landlord and Tenant
- Creditor and Debtor
- Husband and Wife
Final Note
It is concluded that undue influence occurs when a party enters into a contract under any influence, mental persuasion, or pressure, which prevents him from exercising a free and independent judgment. Undue influence makes the contract voidable by the party influenced or whose consent was not accessible.
REFERENCES
- The Contract Act, 1872
- N-Series by M.A. Chaudhary
- Law of Contract by Avtar Singh
