Indian Contract Act, 1872

1. UNDUE INFLUENCE
BUSINESS LAW
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

2. UNDUE INFLUENCE - DEFINITION
Sec. 16 of the Indian Contract Act, 1872 provides that a contract is
said to be induced by undue influence when 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.
Undue influence is basically a moral coercion as opposed to physical
coercion.
It includes coercion, compulsion, menace or persuasion.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

3. ESSENTIALS OF UNDUE
INFLUENCE
1) The relation subsisting between the parties should be such
that one of the parties is in a position to dominate the will of
the other
2) The object must be to take undue advantage.
3) The dominant party uses his dominant position to obtain that
unfair advantage.
A PERSON IS IN A POSITION TO
DOMINATE THE WILL OF ANOTHER
1) Where he holds a real or apparent authority over the other.
2) Where he stands in a fiduciary relationship to the other
3) Where he makes a contract with a person who’s mental
capacity is temporarily or permanently affected by reason of
age, illness, mental or bodily distress.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

4. FIDUCIARY RELATIONSHIPS
Domination (undue influence) is presumed in the
following relationships.
1. Parent and child
2. Trustee and beneficiary
3. Guardian and ward
4. Spiritual master and disciple
5. Lawyer and client
6. Doctor and patient
Undue Influence has to be proved in the following
relationships.
1. Husband and wife
2. Landlord and tenant
3. Creditor and debtor
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

5. DIFFERENCES BETWEEN
COERCION AND UNDUE INFLUENCE
Sl. No. Coercion Undue Influence
1. Use of physical force Use of moral pressure
2. Coercion need not proceed from
the promise nor need it be
directed against the promisor.
There must be a certain relationship
between the parties where one party
may dominate the other.
3. Contract may become voidable Contract may either become voidable
or the court may set it aside.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

6. EFFECT OF UNDUE INFLUENCE
Contract may either become voidable or the court may
set it aside.
SUSPECTED IN THE FOLLOWING
CASES
Inadequate consideration
Inequality between the parties regarding age,
intelligence, social status, etc.
Fiduciary relationship between the parties
Pardanashin women
Unconscionable bargains
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

7. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM