Undue Influence

In one line

Undue influence is what happens when one person's hold over another is strong enough that the weaker one's agreement is really the stronger one's decision.

In the words a student can write in an exam: section 16(1) of the Indian Contract Act 1872 provides that a contract is 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." Section 16(2) lists when a person is deemed to be in such a position, and section 16(3) shifts the burden of proof onto the dominant party where the transaction appears unconscionable.

Why the law has this at all

Coercion under section 15 needs an act forbidden by the criminal law. That leaves untouched the case where nobody threatens anything, and yet the agreement is plainly not the product of a free mind: the frail patient and the doctor, the elderly parent and the son who manages everything, the disciple and the spiritual adviser.

In those relationships pressure does not need to be applied. It is already there, built into the relationship itself, and the weaker party may agree without any sense of being forced at all. Section 15 cannot reach that, because nothing forbidden by the penal law has been done.

Section 16 reaches it by asking a different question. Not "what was done to this person?" but "what was the relationship, and was it used?" That is why the section is drafted around a position to dominate the will rather than around any act of the dominant party.

The provision itself

"(1) 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.

(2) In particular and without prejudice to the generality of the foregoing 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.

Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872."