Instances where influence is undue

Section 14 of the Indian Contracts Act states that consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation and mistake subject to the provisions of the respective sections. Consent is said to be so caused when it would not have been given for the existence of such coercion, undue influence, fraud, misrepresentation or mistake. Where consent to an agreement occurs due to coercion, undue influence, fraud or misrepresentation, the agreement is voidable at the option of the party whose consent was so caused [1] .

Influence is said to be “undue" when a person, who is in the dominant position, uses that position to attain unfair benefit for himself at the cost of the person relying upon his authority or assistance. Section 16(1) of the Contracts Act defines undue influence – A contract is said to be induced by “undue influence" where the relations subsisting between the parties is 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. This definition states that when one of the parties of the contract is dominated over by the other, and does a particular thing under their influence, that influence is said to be undue influence. (2) In particular and without prejudice to the generality of the force going principle, a person is deemed to be in a position to dominate the will of another – (a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or (b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress. (3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.

The phrase “undue influence" cannot be used properly unless a) confidence is exposed on the person charged, as where the latter is a solicitor, trustee, guardian etc. or b) unless the influence of a person A is such that B stands in some sort of respect, awe or fear of him such as a child towards his parents or a pupil towards a spiritual preceptor and so on, so that the idea of displeasing A by a refusal to submit to his wishes puts B in a fear of prospective to his individual secular or spiritual welfare and happiness. Undue influence means the domination of a weak mind by a stronger mind to an extent which causes the behaviour of the weaker person to assume an unnatural character.

The doctrine of undue influence under the common law was evolved by the Courts in England for granting protection against transactions procured by the exercise of insidious forms of influence spiritual or temporal. The doctrine applies to acts of boundary as well as to other transactions in which one party by exercising his position of dominance obtains an unfair advantage over another. The Indian enactment is founded substantially on the rule of English common law. Section 16(1) lays down the general principles. By section 16(2) a presumption arises that a person shall be deemed to be in a position to dominate the will of another if the conditions set out therein are fulfilled. Sub-section (3) lays down the condition for raising a rebuttal presumption that a transaction is procured by the exercise of undue influence. The reason for the rule in sub-section (3) is that the person, who has obtained an advantage over another by dominating his will, may also remain in a position to suppress the requisite evidence in support of the plea of undue influence.

A transaction is voidable as against a third party, if it is the result of undue influence and that party took the benefit either as a volunteer or with the knowledge of will of the executants. A person may be forced by circumstances to enter into a contract which he would rather not have entered into. If the circumstances are explained to him and it is pointed out that he ought to enter into the transaction either because his honour requires it, or he would have peace of mind and be saved from future worries, that would be pressure, but need not be undue influence or coercion so as to vitiate the transaction.

Undue Influence may be inferred when the benefit is such as the take had no right to demand and the granter had no rational motive to give. The fact that a person accepted the terms of a compromise as he had no other option, cannot be the test to determine whether compromise is liable to be attacked as vitiated by undue influence. The entirety of the transaction must be taken into consideration and the necessity for the sale, are all factors which should necessarily be borne in mind before a transaction could be set aside on the ground that the price paid therefore is so low that it could be said to have been polluted by undue influence.

In Anson’s law of contract [2] it is stated “If it can be shown that one party exercised such dominance over the mind and will of the other that the latter’s independence of decision was substantially undermined, and this domination brought about the transaction, the victim will be entitled to relive on the ground of undue influence."

In order to reach conclusions of whether there had been undue influence it must be proved that the influence was such as to deprive the person affected of the free exercise of his will. It must amount to imposing a restraint on the will of another whereby he is prevented from doing what he wishes to do or is forced to do which he does not wish to do. Any and every persuasion by one party to the other to contract cannot lead to interference or conclusion that such party has influenced the other party. One may, by his act and conduct, convince and persuade the other party to do a particular act and if the other party does such an act freely and of own volition may be to his or her prejudice or to his or her disadvantage or even to his or her peril, it cannot be said that such an act was influenced by the other. Also, a wife does not fall under the class of ‘protected persons’ as in certain relationships there is a presumption of undue influence.

In the case Manali Singhal v. Ravi Singhal [3] , a settlement was arrived at between the husband and the wife for payment of maintenance to the wife, which was arrived at in the presence of equal number of persons from both sides. Later on, the husband raised the plea of coercion and undue influence by the wife. There being no proof that persons on husband’s side was physically and economically unable to pay and the signatures of the husband’s entire side were on the agreement in as much as the amount was written in words as well as figures, it was held that the husband had arrived at a settlement of his own free will and without any pressure.

Transactions affected by undue influence are voidable, but not void, and so third parties who acquire some interest in the subject matter of the contract in good faith and for a value cannot be displaced by the person seeking rescission. However,