COERCION AND UNDUE INFLUENCE

COERCION AND UNDUE INFLUENCE

Indian Contract Law LAW EXPLAINED
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INTRODUCTION

According to Section 2(h) of the Indian Contract Act, 1872, a contract is an agreement which is enforceable by law. When a party makes an offer and the other party assents to the offer, an agreement arises and which can be enforceable by law. To make an agreement enforceable by law, some essentials have been provided under Section 10 of the Indian Contract Act, 1872. Section 10 states that the agreements which are made by free consent are contracts.

Consent is when two or more persons agree upon the same thing in the same sense i.e. consensus ad idem. Free Consent is an important requirement for a valid contract. When the party accepts the offer, the consent must be free. Section 14 of the Indian Contract Act, 1872 states that the consent is said to be free when it is not caused by Coercion, Undue Influence, Fraud, Misrepresentation and Mistake. This article explores about Coercion, Undue Influence and the difference between Coercion and Undue Influence.

COERCION

Coercion refers to forcing someone to enter into activity by the use of force or threat. The term ‘Coercion’ has been defined under Section 15 of the Indian Contract Act, 1872.

According to Section 15 of the Indian Contract Act, 1872, “Coercion is the committing or threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, to cause any person to agree.”

Explanation- It is immaterial whether the Indian Penal Code is or is not in force in the place where the coercion is employed.1

Essentials of Coercion

The essentials of coercion are as follows:

  • Commit or threaten to commit any act forbidden by Indian Penal Code

If the consent has been obtained by committing or threatening to commit any act which has been forbidden by the Indian Penal Code, 1860, it is said that consent has been obtained from Coercion. The explanation of the Section makes it clear that even if the Indian Penal Code is not in force on the place where coercion has taken place, Section 15 can be enforced.

In the case of Chikkan Ammiraju v. Chikkam Seshamma2, A, by the threat of suicide, induced his wife and son to execute a release deed of certain properties in his favour. The court held that a threat to suicide is an act forbidden by the Indian Penal Code and comes under Section 15 of the Indian Contract Act. The release deed was voidable.

There is a need for the amendment of Section 15 because there are laws other than Indian Penal Code and hence, the Section 15 needs to include ‘committing or threatening to commit any act forbidden by Indian Penal Code and other laws’.

  • Unlawful detain or threatening to detain any property

Coercion can also be caused by unlawful detaining or threatening to detain any property to make the other party agree to the contract. The detention of the property has to be unlawful.

  • To the prejudice of a person

It refers that the act of coercion can be directed against the contracting party or any other person. For example, if P unlawfully detains the daughter of Q, to coerce Q, so that Q enters into the agreement, such a case can be covered under Section 15 of the Indian Contract Act, 1872.

Hence, these are the essentials of Coercion. When the consent is caused by coercion, the agreement is voidable at the option of the party whose consent was so caused under Section 19 of Indian Contract Act, 1872.

UNDUE INFLUENCE

The term ‘Undue Influence’ has been defined under Section 16 of the Indian Contract Act, 1872.

According to Section 16 of the Indian Contract Act, 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. 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—

  • Where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
  • Where he makes a contract with a person whose mental capacity is temporarily or permanently affected because of age, illness, or mental or bodily distress.

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 the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall be upon the person in a position to dominate the will of the other.

Nothing in the sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872).” 3

Essentials of Undue Influence

The essentials of undue influence are as follows:

  • The person in the dominant position

A person who is in a dominant position in relation to the other party can hold authority over the other and make the other party agree. Such consent is said to be obtained from Undue Influence.

Section 16(2) describes when a person can obtain the consent from another person and take undue advantage of the person:

  • Real or Apparent Authority

For example, an employer or manager may have any authority over his employees or subordinates. In such a situation, the undue advantage can be taken by the person holding authority.

  • Fiduciary Relationship

A relationship based on trust is known as a fiduciary relationship. The principle of undue influence applies when confidence is reposed or betrayed. Some of the examples of fiduciary relationship are parent and child, husband and wife, master and servant, etc.

In the case of Smith v. Kay4, the court held that the principle of undue influence applies to every case, where influence is acquired and abused, where confidence is reposed and betrayed.

  • The person in mental or bodily distress

The law has protected those persons who are in mental and physical distress due to illness, age, etc. Illustration (b) of Section 16 states that if a man who is sick is induced by a medical attendant to pay an unreasonable amount for his services, then the medical attendant has exercised undue influence.

Hence, these are the essentials of Undue Influence.

Where it appears that a party is suffering from a disadvantage and no prudent person will enter into such a delusion, it refers to unconscionable bargain. Where there is an unconscionable bargain between parties, the law presumes undue influence. But, if the person taking advantage in the transaction is not in a dominant position over the other and the transaction appears to unconscionable, the law does not presume undue influence.

An agreement is voidable at the option of the party whose consent has been obtained from undue influence under Section 19 A of the Indian Contract Act, 1872.

DIFFERENCE BETWEEN COERCION AND UNDUE INFLUENCE

The table represents the difference between coercion and undue influence:

S.No. COERCION UNDUE INFLUENCE
1. It is an act of committing or threatening to commit any act forbidden by the Indian Penal Code. It is an act done by improper use of authority by one party to another.
2. It is defined under Section 15 of the Indian Contract Act, 1872. It is defined under Section 16 of the Indian Contract Act, 1872.
3. The parties to a contract may or may not be related to each other. The parties to contract are related to each other.
4. The purpose is to compel a person to enter into a contract. The purpose is to take unfair advantage from the other person due to his position.
5. It is a criminal act. It is not a criminal act.

 

CONCLUSION

The consent should be free from any coercion or undue influence so that contract could be enforceable by law. Coercion, as well as undue influence, is obstacles in obtaining free consent.

SOURCE:

1 The Indian Contract Act, 1872 Bare Act, Universal Law Publishing, 2017

2 I.L.R (1918) 41 Mad. 33.

3 The Indian Contract Act, 1872 Bare Act, Universal Law Publishing, 2017

4 (1859) 7 H.L.C 750

Law of Contract- I by R.K. Bangia, Allahabad Law Agency, Seventh Edition, 2017

This blog is written by Jyotsna Singh, Banasthali Vidyapith

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