Section 16 - Undue influence defined : Indian Contract Act
What is Undue influence? Section 16 of Indian Contract Act
Section 16 of Indian Contract Act 1872 : "Undue influence
16. (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;
(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 (1 of 1872).
(a) A having advanced money to his son, B, during his minority,
upon B's coming of age obtains, by misuse of parental influence,
a bond from B for a greater amount than the sum due in respect
of the advance. A employs undue influence.
(b) A, a man enfeebled by disease or age, is
induced, by B's influence over him as his medical
attendant, to agree to pay B an unreasonable sum for
his professional services. B employs undue
(c) A, being in debt to B, the moneylender of his village,
contracts a fresh loan on terms which appear to be
unconscionable. It lies on B to prove that the contract was not
induced by undue influence.
(d) A applies to a banker for a loan at a time when there is
stringency in the money market. The banker declines to make the
loan except at an unusually high rate of interest. A accepts the
loan on these terms. This is a transaction in the ordinary
course of business, and the contract is not induced by undue