LAW OF CONTRACT

ASSIGNMENT -2

TOPIC: A STUDY ON THE EFFECT

OF CONSENT OBTAINED
UNDER UNDUE INFLUENCE

NAME: Prakruthi Vanamali

ROLL: 2283119
CLASS: BA LLB, SEC: B
YEAR: Semester 1

Ms. Shreya Chattarjee

Assistant Professor
KIIT School Of Law

SUBMISSION DATE: 24th October 2022

 A STUDY ON THE EFFECT OF CONSENT OBTAINED UNDER
UNDUE INFLUENCE

ABSTRACT:
This Assignment examines the effect of consent obtained by undue influence. It defines
numerous aspects of consent and explains how undue influence invalidates free consent in a
contract. This paper also explains how one person in a position can dominate the will of
others, this also explains different types of undue influences and relations that can be affected
by undue influence. It also tells us the importance of the burden of proof. In conclusion, this
paper tells us how consent obtained by undue influence can be voidable.

KEYWORDS: Consent, Contract, Undue influence, Burden of proof, Voidable

INTRODUCTION:

In present liberal democracies, individual freedom is treasured as a holy value. I was born in
a different culture when respect for authoritative figures such as parents, teachers, and elders
was widely accepted. Any disobedience was not only irresponsible and certain to result in
tears, but it was also morally wrong and deserved harsh punishment. Freedom worthy of the
name cannot be unconstrained. The subject of my lecture is the constraint on our freedom of
transaction which goes by the name of undue influence.

In some circumstances, the law acknowledges that a person's free will may be so
compromised by another that agreements they signed should be invalidated. This notion of
"undue influence" has as its basic philosophical foundation respect for human autonomy and
the requirement that people have made their own free decisions before the law may compel
them to follow that decision. The idea of undue influence used to only apply in cases where
there was a transfer of property (such as gifts, wills, or purchases). The theory, however, is
also applicable to consent to medical care, most frequently in situations when a patient
declines care due to pressure from family members. This assignment's goal is to give a broad
overview of the legal notion of undue influence.

CONTENT :

WHAT IS CONSENT?
According to section thirteen of the Indian contract act, two or more persons are said to
consent when they agree upon the same thing in the same sense. The principle of consensus
ad idem in contract law means there has been a meeting of minds of all parties involved and
everyone involved has accepted the offered contractual obligations of each party.

WHAT IS UNDUE INFLUENCE?

Undue influence happens when someone has the power to sway another’s judgment because
of the interpersonal connection between two parties. Because of a higher rank, greater
knowledge, strong knowledge, or strong emotional attachment, one of the parties is
frequently in a position of control over the other. The stronger person utilizes this advantage
to pressure the weaker person into making choices that might not be in their best interests in
the long run.

The equitable principle of undue influence prohibits one person from abusing their influence
over another. The inability of one party to express their independent will freely due to the
imbalance of power between the parties might invalidate their consent. The one who is
influencing might frequently take advantage of the weaker party by using excessive
influence. According to contract law, a party alleging that they were the target of undue
influence may be entitled to have the terms of the agreement voided.

KEY POINTS:

 The most frequent instance of undue influence is when a stronger party uses its
influence to sway a weaker party to get what it wants.
 Some contracts may be voidable in law depending on the degree of influence and the
presence of any unrelated considerations.
 Sizes of undue influence can range significantly, from little favors to multibillion-
dollar deals.

RELATIONSHIPS OF UNDUE INFLUENCE:

A court may traditionally determine that a transaction has been compromised by one party's
undue influence over another in one of three ways.   Under certain sorts of interactions, undue
influence is automatically assumed, and the burden of proof is placed squarely on the
shoulders of the party who is thought to be stronger to demonstrate that they did not take
advantage of their position. Examples of these kinds of connections are those between
lawyers and their clients, religious leaders and followers, and parents and children.

These categories have been determined to have two characteristics:

(a) obvious power imbalances simply by the nature of the relationship itself; and

(b) the rarity with which the weaker party would voluntarily grant a benefit to the stronger
party through a gift or contract. Due to this classification, even if a reciprocal benefit is
transferred, any transaction in which a benefit flows from the patient to a person involved in
their medical care (in addition to the standard payment for medical services) is automatically
assumed to have been secured through improper pressure.

In other cases, the weaker party must first demonstrate that he or she was in a relationship
that was strongly influential in order for a presumption to arise—but, once the court is
satisfied that the parties were in such a relationship, the onus is again upon the stronger party
to rebut the presumption that the influence was undue.

Finally, there are situations in which the relationship is just insufficient to support a
presumption, and the weaker party must present evidence that an agreement was influenced
unfairly.

It should be highlighted that these scenarios are separate from those demanding competence.
The concept of undue influence does not call into doubt a person's capacity to comprehend
the decision they made. Instead, it examines the question of whether the choice, to the extent
that it reflects the exercise of the person's autonomy, was made voluntarily.

TYPES OF UNDUE INFLUENCE

There are three types of undue influence as recognized in most common law countries:  

1. Actual undue influence

2. Presumed undue influence where the presumption is rebuttable

3. Presumed undue influence where the presumption is irrebuttable.

ACTUAL UNDUE INFLUENCE:

Actual undue influence is used to describe situations where the impact was clear and simple
to demonstrate. The alleged influencer must meet the following requirements: 

1. The victim could be influenced by the influencer 

2. The victim was influenced by the influencer, and the impact was "undue." 

3. In fact, the influence caused the purchase.

For example Father and Son.

PRESUMED UNDUE INFLUENCE PRESUMPTION IS REBUTTABLE:

where there is a rebuttable suspicion of undue influence A victim may be able to create a
presumption of undue influence if the requirements for real undue influence cannot be
established. In contrast to actual undue influence, this category only requires the victim to
establish the existence of a specific set of conditions from which excessive influence might
be inferred. A claimed victim in this category must demonstrate the existence of the
following conditions:

1. The alleged victim gave the other person her trust and confidence. 

2. The entered transaction necessitates an explanation.

For example Husband and Wife, bank and Customer, Cohabitees, commanding officer and
Soldier in the army.

PRESUMED UNDUE INFLUENCE WITH AN IRREBUTTABLE PRESUMPTION:

Law recognizes some relationships as being "special." These connections are unique in that it
is normal and expected for one individual in these connections to exert influence over
another. As a result, unlike the second category, it is assumed that a connection of trust and
confidence exists once a specific kind of relationship is discovered to exist. The alleged
victim only needs to provide evidence that the influence was excessive or warrants an
explanation.

Examples of the types of relationships that qualify for this presumption of influence include
the following:  

1. Parent/child

2. Trustee/beneficiary

3. Solicitor/client

4. Medical adviser/patient.

 RELATIONSHIP: Although it is not necessary for the parties in a case to be related to

one another by blood, marriage, or adoption for it to fall into this category, one of
them must be in a stronger position and able to control the other party’s will. It
applies to all types of relations not only limited to strictly fiduciary relationships.
However, the presence of such relationships alone cannot establish undue influence;
instead’ dominance must be displayed.

 DOMINANT: When determining whether there was undue influence, it is important to

consider both the parties’ connection and the circumstances in which the contract was
negotiated. It is necessary for invoking an action that a dominant position exists and
be used. Once dominance has been established, it is assumed that there was a use in
that specific situation unless a contrary object turns up.

 UNFAIR ADVANTAGE: According to the court’s ruling in the case of Ganesh

Narayan vs Vishnu Ramachandra Saraf, “unfair advantage is the advantage or
enrichment which is achieved through unrighteous or unjust means.” When a deal
favors a person with influence while being unfair to others, it is referred to as an
unfair advantage.

 REAL AND APPARENT AUTHORITY: In this sort of influence, there is a real

authority figure, such as a police officer or an employer, who makes use of his
 position of power to benefit himself. It is possible to pretend to have real authority
without actually having it.

 FIDUCIARY RELATIONSHIP: This kind of relationship is founded purely on the

parties’ mutual trust in one another. The situation is such that one of the parties
automatically places its trust in the other, and as that trust grows over time, one party
progressively begins to influence the other. The typical examples of this kind of
relationship include between a doctor and a patient, a lawyer and a client, a parent and
a kid, a teacher and a student, and the beneficiary of a trust, among others. An
illustration of this kind of situation can be seen in the Mannu Singh vs Umadat Pande
case, in which a guru persuaded his pupil to accept his property as a gift by promising
to guarantee advantages for him in the hereafter. The court set the gift aside as it was
not formed with free consent.

 PARENT AND CHILD: As parents provide for all of their children's needs and expect
them to behave under their supervision, there is an intrinsic impact on children that
lasts throughout their entire lives. Therefore, the courts of equity regard it to be
parental jealousy when any benefit is given to the parent or any third party at the
expense of the kid. As a result, the age of the children is always taken into
consideration when estimating the level of parental influence. In Lancashire Loans
Ltd v. Black, it was determined that a girl's agreement to act as her mother's guarantee
in a loan transaction immediately before her marriage was made under undue
influence.

 AFFECTING MENTAL CAPACITY: Inder Singh v. Dayal Singh established the law
that "undue influence emerges when one party makes use of the short or long-term
advantage of another's mental condition in the execution of a contract. But until the
defendant takes advantage of this chance, a simple state of distress does not qualify as
undue influence. Due to the plaintiff's lack of experience, encouraging a person who
has just reached the majority to enter into a contract constitutes undue influence under
this category.
Illustration- A entered a contract with B, who is a minor and is unable to understand the
complex terms of the contract. Unless A proves that the contract was entered in good faith
and with adequate consideration, it will amount to undue influence

BURDEN OF PROOF: Two things need to be considered if the plaintiff wishes to file a
lawsuit to void a contract that was signed under duress. The Indian Evidence Act of 1872 and
the Indian Contract Act of 1872 include the law's provisions. According to the law, two
things must be proven in order for a plaintiff to establish that he was subject to undue
influence. The defendant must not only have a dominant position but also exercise it.

It claims that merely demonstrating the prospect of undue influence on the part of the
dominant party is insufficient for the plaintiff to succeed. There must be proof that someone
influenced the plaintiff by using their power. The possibility of the same is not enough for the
plaintiff to avoid a contract.

EFFECTS OF UNDUE INFLUENCE:

A contract that was induced by undue influence is voidable at the option of the party whose
consent was obtained by coercion under Section 19A of the Contract Act. Such agreements
may be avoided completely or subject to the stipulation of specific terms and conditions.

CONCLUSION:

The contract may be voidable at the choice of the party whose consent was coerced if that
party's assent was obtained by undue influence. When permission to an agreement is obtained
through undue influence, in accordance with section 19A, the agreement is a contract that
may be voidable at the discretion of the person whose consent was obtained in this way. Any
such agreement may be annulled in its whole or, if the party with the right to avoid it has
benefited in any way from it, on the terms and conditions that the court deems appropriate.

When a contract is avoided due to undue influence, the court has the option to order the party
who received the benefit to repay it in full or in part or to nullify the contract without giving
the party who received it any instructions to do so.
An agreement must have free consent in order to be legally binding. Free consent is crucial,
and this cannot be highlighted enough. The Party must freely and gladly consent. It is
essential that you agree to the contract voluntarily and without being under any compulsion.
The freedom of the parties' consent is crucial since it could jeopardize the contract's legality.
The aggrieved party has the right to void the agreement if the consent was gained or caused
by coercion, undue influence, fraud, misrepresentation, or error.

REFERENCE:

1. Contract and specific relief, Avtar Singh, Twelfth Edition.

2. Pollock & Mulla The Indian Contract Act, 15th edition.
3. http://lawtimesjournal.in/coercion-undue-influence-difference-between-coercion-
and-undue-influence/
4. https://www.legalbites.in/effect-of-coercion-undue-influence/
5. Ganesh Narayan vs Vishnu Ramachandra Saraf (1907) ILR Bom 439.
6. Mannu Sing vs Umadat Pande (1890) ILR 12 All 523.
7. Lancashire Loans vs Black [1933] All ER Rep 201.
8. Inder Singh vs Dayal Singh AIR 1924 Lah 601.