1|Page

Rabia Sabir

Section B

Semester: 3rd

Roll No FA21 -LL.B- 046

Subject: Law of Contract

Submitted to: Mam Fozia

Topic: Undue Influence and it's affects the Contract

DEPARTMENT OF LAW
2|Page

Definition
The term undue influence means the unfair use of one's superior power in order to
obtain the consent of person who is in a weaker position.it is described under section
16 (1&2) as follows:

Section 16(1)

it defines undue influence as,A contract is said to be induced by undue influence

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 an unfair
advantage over the other.it is further explained as follows:

Dominating Position
In this category of undue influence, the circumstance under which the contract was
made is taken in the account along with their relationships. The existence of
dominating position along with its use is mandatory to invoke an action. If once
dominance is established, unless any contrary object appears, it is presumed that there
was a use in the particular instance.

Example
U, a spiritual adviser induced his follower M,to gift him his property to secure
benefits in the world.it was held that gift was obtained by undue influence as U was in
a position to dominate.(Mannu Singh vs.Umadat Pandey)

Unfair Advantage
In Ganesh Narayan Nagarkar v. Vishnu Ramchandra Saraf[4], 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
favours the person who enjoys influence and which proves unfair to others.

Example

A, having advanced money to his son B,obtains a bond for an amount greater than
the sum advanced by misuse of parental influence.A obtains unfair advantage.

Section 16 (2)
A person is deemed to be in a position to dominate the will of another as Fellow:
3|Page

 Where he holds a real or apparent authority over the other.

 Where he stands in a fiduciary relation to the other.
 where he makes a contract with a person whose mental capacity is
temporary or permanently affected by reason of age,illness,mental or bodily
distress,etc
 it is further explained as under:

Real and Apparent Authority

In this type of influence, there is a real authority like a police officer or an employer
who uses his dominance for his enrichment. Apparent authority is pretending real
authority without its existence.

Example

A police officer bought a property worth Rs.1Lac for Rs.5000 from B, an accused
under his custody. later ,B sued to cancel the contract. A is in a position to dominate
the will of B.

Fiduciary Relationship
This type of relationship is solely based on the existence of trust between the parties
for each other. It is such that one of the parties naturally reposes its confidence in the
other one and with an increase in that confidence gradually, one party starts
influencing the other. This type of relationship usually exists between doctor and
patient, lawyer and client, parent and child, teacher and student and beneficiary of a
trust (cestui que trust) etc. An example of such type of case was in Mannu Singh v.
Umadat Pande[5] 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.

Example

An illiterate elderly woman made a deed of gift of her whole property to her
nephew who managed her estate .The deed was cancelled on the ground of undue
influence .(I Gariah vs.Shaikh Allie Bin Omar)

Parent and Child

As parent fulfil every need of their children and want them to act on their
supervision, there is an inherent influence on children from their childhood and that
follows throughout their life. Thus, when any benefit is transferred to the parent or
any third-party on the expense of the child, it is considered as jealousy on the part of a
4|Page

parent by the courts of equity. Thus in every case, children’s age is always taken into
account to determine the extent of parental influence. In Lancashire Loans Ltd v.
Black[6], 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[7] 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, instigating a person to enter into a contract who has just attained
his majority amounts to undue influence under this category due to lack of plaintiff’s
experience.

Contract with a pardanashin women

‘Pardanashin’ means hidden behind the veil or a screen. It refers to a woman who
practices seclusion. The ground on which this doctrine is established is that “such
women are less conscious and can be easily influenced with very little external
manifestation. This rule is not limited to an only veiled woman but is also extended to
those women who are not technically pardanashin but are illiterate, old or sick. But,
this principle also applies to men as in Daya Shanker v. Bachi[11], who by their
physical or mental capacity are prone to easy influence and after inducement tends to
enter into contract or transactions relating to purchasing and sale of the property. The
principle on which the protection by law is accorded to a pardanashin women is based
on equity and good conscience.[12]

Presumptions of undue influence

It is presumed that the dominating person has exercised undue influence in these
cases:
father and son, guardian and minor , doctor and patient, advocate and client, trustee
and beneficiary, spiritual adviser and follower, teacher and student,master and
servant.

Burden to proof:
 The fact were fully disclosed.
 The price was enough.
 The dominated party gave his free consent .
5|Page

No presumptions of undue influence

It is not presumed that the dominating person has used undue influence in these
cases:
Husband and wife, landlord and tenant,creditor and debtors, principal and agent,
mother and daughter.

Burden to proof
In these cases,the weaker party will prove that undue influence has been exercised
over him.

Effects of undue influence

Under Section 19A of the Contract Act, an agreement induced by undue influence
is voidable at the option of that party whose consent was taken by influencing
him/her. Performance of such agreements may be avoided absolutely or on
prescribing certain terms and conditions.

Conclusion
While concluding, it may be said that undue influence is one of the ways under
which there is inadequate consent as defined under Section 13 of the Act. In addition,
the formation of a contract by misusing one’s influence violates the principle of
equity. Thus, in fiduciary and other relationships where one party enjoys real of
apparent authority or influence, one must ascertain that the contract he/she has made
is free from any external manifestation. However, such contracts are voidable at the
option of the party whose consent was so taken under Section 19A and cannot be
enforced in Court of law.

References
Google
Book Law of Contract