← The hardest concepts in Indian law
In one breath
Under the Indian Contract Act a contract made without free consent is voidable at the option of the party whose consent was not free, and consent is not free if it is caused by coercion, undue influence, fraud, misrepresentation or mistake. Undue influence arises where one party is in a position to dominate the will of the other and uses it to gain an unfair advantage.
The picture
The guided pen
A signature is meant to come from the signer’s own hand. If someone stands behind the signer and holds the wrist, the pen still moves and the name still appears, but the writing is not the signer’s own. A guide who steers the pen gently, by long habit of trust and not by force, has also controlled it, even though no one saw a hand.
The Act gives the signer the choice to keep the contract or to set it aside. Coercion is the crude grip: an act forbidden by the criminal law, or the unlawful holding of property, used to get the agreement. Undue influence is the gentle grip, found in a relationship such as parent and child, doctor and patient or lender and borrower, where the stronger party can dominate the weaker. Once the weaker party shows the relationship and that the bargain looks unfair, the burden shifts to the stronger party to prove that the consent was free (Subhas Chandra Das Mushib; Raghunath Prasad).
Where the picture stops working
In the picture the guided pen is plainly visible, but real cases are fought over facts: was the elderly donor really dominated, or did she simply love her nephew and give freely? The picture also suggests that the contract is void. It is voidable, so the weaker party must act, and may lose the right by affirming the contract or by acting too late. Third parties who bought in good faith may also be protected.
How it really works
- 1Find the contract and the party who says consent was not free, and identify the pressure alleged: a threat, a relationship, a false statement or a mistake.
- 2For coercion, ask whether the other side committed or threatened an act forbidden by the criminal law, or unlawfully detained property, to get the agreement.
- 3For undue influence, ask whether the parties stood in a relationship in which one could dominate the will of the other, and whether the stronger party used that position.
- 4If the bargain is unconscionable or the weaker party is in a weak position, the burden shifts to the stronger party to prove the consent was free.
- 5If consent was not free, the contract is voidable at the option of the weaker party, who may rescind it, and the court can require the return of any benefit received.
Why people get it wrong
- Calling the contract void. A contract made without free consent is voidable, so it stands until the weaker party sets it aside.
- Thinking undue influence needs a threat. It needs only a position of dominance and an unfair use of it.
- Forgetting the burden of proof. Once dominance and an unconscionable bargain are shown, the stronger party must prove that the consent was free.
- Treating ordinary commercial pressure as coercion or undue influence. Hard bargaining between equals is lawful.
A worked example
The facts are invented
Mr Rao is eighty and depends on his nurse, Lata, for daily care and for advice on money. Lata tells him that his family will not look after him, and persuades him to sell his house to her husband for a small fraction of its value. Mr Rao signs.
Mr Rao’s son challenges the sale. The Court asks whether Lata was in a position to dominate Mr Rao’s will, which is likely given his age, his dependence and her role. It then asks whether the price shows an unfair advantage. Both answers are yes, so the burden passes to Lata and her husband to show that Mr Rao’s consent was free and informed. If they cannot, the sale is voidable at Mr Rao’s option and the Court can set it aside, with the parties restored as far as possible.
Try it
A contract is made by a person who was subject to undue influence. What is its status under the Contract Act?
Landmark authorities
Read the sources themselves; this list is a starting point.
- Derry v Peek, (1889) 14 App Cas 337
- Raghunath Prasad v Sarju Prasad, AIR 1924 PC 60
- Subhas Chandra Das Mushib v Ganga Prasad Das Mushib, AIR 1967 SC 878
- Central Inland Water Transport Corporation v Brojo Nath Ganguly, (1986) 3 SCC 156
Where to go next
Courses
Case briefs
Dictionary
More hard concepts in India law
- Damages and penalty under section 74 (Contract law)
- Essential religious practices under Articles 25 and 26 (Constitutional law)
This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. India has a written Constitution, central and State legislation, and a unified court system under the Supreme Court. Each page states the usual formulation of the rule and names landmark decisions, with the citations as they are usually given in the Supreme Court Cases and All India Reporter series. The criminal codes and the law of evidence were replaced by new statutes, so the pages on criminal law state the doctrine and the decisions and mostly leave out section numbers; check the current text of any statute you rely on. Personal laws differ by community. This is a study aid, not legal advice, and an Indian advocate should check anything you need to rely on.