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Jamia Hamdard

Undue Influence

Indian Contract Act 1872, Section 16

Bushra Mohammad
12-7-2020
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Table of Contents
Introduction 1
Equitable Doctrine 2
Types of undue influence 3
Relationships 4
Fiduciary Relationships 5
Presumptions of Undue Influence 6
Natural Justice 7

Conclusion 8

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Introduction
If one were to search up the word “Undue Influence” in the oxford dictionary the literal
meaning of the word would be “influence by which a person is induced to act otherwise
than by their own free will or without adequate attention to the consequences.” iIn legal
philosophy undue influence comes under doctrine of equity. The involvement of two
parties in which one of the dominating parties takes advantage of the other party. This
inequality in power between the parties involved can impair one party’s consent as they are
not able to freely exercise their individual and independent will. In contract Law, one can
say that it is recognized that the plaintiff was persuaded to enter into a contract or
transaction under the undue influence of the defendant, the contract under that case
becomes a voidable contract. If undue influence is proved in a contract, the plaintiff is
entitled to set aside the contract the contract against the defendant, and the remedy is
rescission. Recission is an equitable remedy which allows parties in contract to cancel the
contract. Under recission unwinding of the contract takes place to bring the parties, as far
as possible, back to the position in which they were before they entered a contract.

The concept arises from the existence of consent, once someone does not have free
consent due to the influence of a party it is said to be undue influence. Under The Indian
Contract Act (ICA), Section 13, consent is defined as the meeting of minds ii(consensus ad
idem; when the parties in agreement on the same thing in the same sense). When there is
no free consent then the contract is said to be Void Ab Initio. Section 14 further qualifies
consent to be free and if the parties enter a contract with free will, that mean with no
pressure or caused by:

1. Coercion (Section 15)

2. Undue Influence (Section 16)
3. Fraud (Section 17)
4. Misrepresentation (Section 18)
5. Mistake (Section 20- 22)iii

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i
Oxford Dictionary.

ii
Section 13, Indian Contract Act 1872.
iii

Section 14, Indian Contract Act 1872.

Doctrine of Equity

The Doctrine of Equity was established by English Court of King’s Bench, the
Exchequer and the Court of Common Pleas talks about unjust enrichment and is
applicable in every case where there is the misuse of influence and abuse of it as
well and there is betrayal of confidence. Hence, every contract which involves
undue influence comes under the preserve of principle of equity.

Definition of Undue Influence

Undue influence is specified in accordance with Section 16 of the Indian Contract
Act. If one party is in a position to control the will of another and actually misuses
power, it is a case of undue influence and the contract becomes viodable. When all
three of the following criteria are satisfied, only the situation is considered to really
be undue influence:

1. One person is in a position to control the will of others.

2. He's exploiting his power.
3. He has an unfair advantage.

The word undue means unwanted, unnecessary, or more than what was
expected. Influence involves persuading the mind of a counter party by changing his
mind or altering one's will, but this influence must be undue, i.e. it is not necessary.
Undue influence refers to a relationship that may be a blood relationship or some
other kind of relationship, i.e. a fiduciary relationship or relationship founded on
trust. This implies the wrongful use of one's dominant status to gain the approval of
an individual in a vulnerable position.

Types of Undue Influence

The judgment in Allcard v. Skinner classified cases of undue influence in two parts-
those where there is a charge against a debtor or where there is a misuse of the
prospects which a person has acquired through his duty.
In the above-mentioned case the court further expanded on the ratio of the
judgment and declared that “in the former case the remedy is given on the principle
that no one should be allowed to retain any benefit that he gets through his
fraudulent or illegal activities and in later cases it is based on the grounds of public
policy so that it can prevent the abuse of influence between the parties by
preventing relation between them”.

There are two requirements which need to be defined by the individual claiming
damages:

1. The relationship between the parties is such that one is in a position to

control
the decision and the will of the other party
2. The defendant has abused his position in order to enrich himself.

Hence, a shared discussion of all the situations would be possible and would
eliminate uncertainty in interpreting them. Mainly, all instances of undue influence
fall into the above sections

Relationship
In the event that the parties fall into this group, it is not necessary for them to be
linked to each other through blood relation, marriage or by adoption, but what is
inherently required is that one party should be in a higher role and be able to
dominate the will of the other. It does not limit itself to strict fiduciary relationships,
but extends to all sorts of relationships. However, it is just the presence of such
relationships that cannot indicate undue influence, but there must be an exercise of
dominance

Dominating Position
In this category of undue influence , the conditions in which the arrangement was
made are taken into account in accordance with their partnership. The presence of a
superior position, along with its use is mandatory to evoke an operation. If once
dominance has been established, until any opposite entity occurs, it is assumed that
there has been an usage in the particular case.

Unfair Advantage
In Ganesh Narayan Nagarkar v. Vishnu Ramchandra Saraf, it was stated by the
court that, “unfair advantage is the advantage or enrichment which is obtained
through unrighteous or unjust means”. It comes into existence when the bargain
favors a person who enjoys influence and proves to be unfair to others.

Real and Apparent Authority

In this type of influence, There is a real authority, such as a police officer or an
employer, that uses its dominance to enrich it. The apparent authority, without its
existence, pretends to be real authority.

Fiduciary Relationship
This form of partnership is based entirely on the nature of reciprocal trust between
the parties. It is so that one of the parties automatically rests its trust in the other
and eventually, by increasing the confidence, one party begins to control the other.
This form of partnership typically occurs between doctor and patient, lawyer and
customer, parent and child, teacher and pupil, and trust receiver. (cestui que trust)
etc. An example of such type of case was in Mannu Singh v. Umadat Pande where a
guru influenced his disciple to take his property in gift by promising to secure
benefits to him in the next world. The court set the gift aside as it was not formed
with free consent.

Parent and Child

As a parent fulfills all of their children's wishes and wants them to act under their
supervision, there has been an implicit impact on children since infancy, and this is
visible in their lives. Therefore, where some gain is transferred to the parent or to
some other party at the detriment of the child, the courts of equity treat it as
jealousy on the part of the parent. In any case, however the age of children is often
taken into account in order to assess the degree of parental control. In Lancashire
Loans Ltd v. Black when a girl just before her marriage entered in a money lending
transaction as surety for her mother, it was held to be entered under undue
influence.

Affecting Mental Capacity

It is an established law from Inder Singh v. Dayal Singh that, “undue influence arises
when one party taking the advantage of the temporary or permanent advantage of
another’s mental condition executes a contract. But, a mere distressed state of mind
cannot amount to undue influence until the defendant has used this opportunity to
his advantage. Similarly, the inciting of a person to enter into a contract that has just
passed its majority amounts to undue influence under this category due to lack of
experience with the plaintiff.

Burden of proof
Generally, the party making the argument has the duty of proving the validity of the
evidence on which it depends. The burden of proof is on the claimant to prove that
the stronger party exercised excessive control over the weaker party, and the latter
did not exercise a free choice before entering into the arrangement. However this
burden may be shifted to the defendant in an undue influence case if the plaintiff
can demonstrate that a confidential relationship existed between the plaintiff and
the defendant, and that suspicious circumstance surrounded the preparation and
execution of the will. When this happens, the burden shifts entirely on the
defendant to prove that there was no undue influence. When an individual is found
to be in a position to control the will of the other party or a contract tends to be
compromised by domination, the burden of evidence that no excessive power has
been exerted in the transaction falls on the party that is in a position to dominate
the will of others.

In the case of Diala Ram Vs Sarga, the defendant was already indebted to the
plaintiff, who was village moneylender. He again took a fresh loan from a plaintiff
and then executed a bond, wherein he agreed to pay some interest. The court held
that the contract was unconscionable and therefore, the burden of proof was on the
plaintiff to show that there was no undue influence in this case. The burden of
proving that the contract was not induced by undue influence is to lie upon the
person who was in the position to dominate the will of others if the transaction
appears to be unconscionable.

Presumption of undue influence

There are some cases in which the Honourable Courts of India presume the
existence of undue influence between the parties:

1. Where one of the parties to a contract is in a position to dominate the will of

the other and contract is prima facie unconscionable i.e unfair, the court presumes
the existence of undue influence in such cases.
2. Where one of the parties to a contract is a Pardanashin Woman, the
contract is presumed to be induced by undue influence. In relation to Pardanashin
Woman, Bombay High Court made an opinion that a woman becomes Pardanashin
because she is totally exempted from ordinary social intercourse not because she
is the seclusion of some degree.

A Contract With A Pardanashin Woman

When a Woman can be viewed from the screen or is placed behind the screen i.e
veiled is called Pardanashin Woman. The protection of those women is rooted in the
principle of good conscience and equity. Special laws are made for these women
because they are subjected to ignorance, infirmity, illiteracy, etc are thus easily
influenced. The burden of proof should be provided against the person who is
transacting with a Pardanashin woman. He has to prove that the transaction had
taken place with the consent of the women and her decision was taken by her
without any coercion or enforcement and she was made well aware of the provision
mentioned in the document of the transaction by the other party with whom she
has made the contract.

In the case of Tara Kumari vs Chandra Mauleshwar Prasad Singh, it was

delivered by the court that the essential thing to establish the burden of proof is
that the party executing them should be a free agent and the women should be
informed about the terms and conditions of a contract.

In the case of Kuna Dei vs Md Abdul Latif, it was delivered by the court that
showing of the document to the pardanashin women won’t be enough to establish
the burden of proof. Thus, he has to show that the women were explained clearly
the facts in the document of the transaction.

This principle also applies to men also, as in the case of Daya Shanker Vs Bachi,
who by their physical or mental capacity is prone to easy influence and after
inducement tends to enter into a contract or transaction relating to purchase and
sale of the property. The principle on which the protection by law is made for a
pardanashin women is based on equity and good conscience of women.

Natural justice
Undue influence affects natural justice when the provision of a will are unjust,
unreasonable and unnatural doing violence to the natural instincts of a heart, to
the dictates of parental affection, to natural justice, to solemn promise, and to
moral duty. Such unexplained inequality amounts to undue influence.

Effects of Undue Influence

Defined in Section 19A of the Contract Act, an arrangement caused by undue
influence is voidable at the discretion of the person whose approval has been gained
by manipulating the party. The execution of certain arrangements can be prevented
altogether or subjected to the requirement of such terms and conditions.

Conclusion
While concluding, it can be claimed that excessive control is one of the ways in
which there is insufficient consent as described in Section 13 of the Act. In addition,
the forming of a contract by abuse of one's authority is contradictory to the
principle of equity. Therefore it must be decided in fiduciary and other relationships
where one person enjoys actual obvious authority or power that the arrangement
he/she has made is free of any external manifestation. Such contracts are however,
voidable at the discretion of a person whose permission has been given in
compliance with Section 19A and cannot be imposed by the Court of Law.
 References
 Indian Contract Act 1872
 https://en.wikipedia.org/wiki/Undue_influence#In_contract_law
 https://indiankanoon.org/doc/568692/?
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uhyInPYPyHW4wo2FoapJQl7Vmw9hDrR4prlcd81yvyQB2kYnyZK8-
fYI8SaaBuWZmPB__BZ2dSAgj7uWxmgGxje8cyvt44IzFqV1MJNlqroCoC3WMm6KP8LGudGxlvHwwk2
VaYEP2Qtew5UCIZNV3z4bFxU4YUx3k-LW-
QhIeB1Janmf9spMceGQZ5EAS2CSyBfhqdyXaCODoEUoHubCG-
hWsYwK67eNqwH8Te_o5ttSKv72DbJlDNXvauMxBUgtazcx08OypM5mL7crmX5QCtCS5V9H7kGni1V
wv7LBdeB3bkFCPaQ
 https://www.latestlaws.com/bare-acts/central-acts-rules/section-16-undue-influence-defined/