Undue Influence

Section 16 of the Indian Contract Act defines Undue influence as-

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 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).

A party to a transaction, though consenting to it, may not have given his free consent. This is
because he is exposed to such influence by virtue of which he is unable to exercise his free use of
judgment. In such a case, the transaction will be set aside, If property has passed, equity will
order restitution, and, if necessary, follow the property into the hands of third parties. 1

The principle of Undue Influence is said to be a subtle species of fraud. It is a constraint

undermining free agency overcoming the powers of resistance, bringing about submission to an
overmastering and unfair persuasion to the detriment of another.2

Defendant

In the present matter, Mr. Steve Rovers did not use his position to dominate Mr. Tony Snark's to
his advantage or to the latter's detriment. It was Mr. Snark himself who, owing to the efficiency
and productivity of the machine, planned to buy a few more machines in order to broaden his
market reach and to magnify his profit to unprecedented figure. Therefore there was no
domination of mr. snark's free consent by virture of Section 16 (1) of the Indian contract Act.

1
1 POLLOCK & MULLA, THE INDIAN CONTRACT ACT AND SPECIFIC RELIEF ACTS 337 (14th ed. 2016).
2
Mahboob Khan v. Hakim Abdul Rahim, A.I.R. 1964 Raj. 250.
further, to substantiate this argument, the case of Amir Chand Tota Ram v. Suchita Kriplani can
be cited- " The person influenced is constrained to do against his will that, whcih but for the
influence, he would have refused to do it if left to exercise his own judgment."

Moreover, mere near relationship between the parties cannot lead to the presumption of undue
influence.3

The position of a person to dominate the will of the other may also arise as a resukt of the
circumstances in which the contract was entered into4. Here, this fact is of relevance because
there were no such circumstances where one could have seen that Mr steve was in a position to
dominate the will of Mr stark. He was asked to do a survey regarding the machine, he was
careless and did not do it, There is not incident which indicates to the circumstances leading to
undue influence.

Fiduciary Relationship Counter- here, it was Mr. Snarks unhindered volition and a judgment
without influence which lead him to enter into an agreement which was not based on any sort of
fiduciary relationship, rather, as the statement of facts lay down, the efficiency and productivity
of the machine. These were the machines which lead to increment in the production of the
Lobanza Capsules at a higher rate than before. He did his own market research and found out
that these machines would slash the costs by 1/3rd and increase the productivity roughly 10
times. He used his own skill and judgment to further purchase the other said machine and this
judgment was based on the results which he himself witnessed.

Section 16 (1) requires the following to be established by the person seeking to avoid the
transaction-ladi

1) are the relations between the donor and the donee such that the donee is in a position to
dominate the will of the donor, and

2) has the donee used that position to obtain an unfair advantage over the donor.5

As stated earlier, the relationship which they shared was that of childhood friends and this
relationship had nothing to do with the agreement. Mr steve neither used this relationship to
obtain and unfair advantage over Mr snark nor was he in a position to dominate his will. Mere
relationship is not sufficient for a court to assume that one relation was in a position to dominate
the will of other.6 The law states that (a) not only must the defendant have a dominant position,
but (b) he must use it.7

plaintiff-

3
M Rangasamy v. Rengammal, A.I.I. 2003 SC 3120.
4
Ranee Annapurni v. Swaminatha Chettiar, (1910) 34 Mad. 7 at 10.
5
Afsar Sheikh. v. Saleman Bibi, A.I.R. 1976 S.C. 163.
6
P. Saraswathy Ammal v. Lakshmi Ammal, A.I.R. 1978 Mad. 361.
7
Amjadennesa Bibi v. Rahim Buksh Shikdar, (1914) 42 Cal. 74.
the position of a person to dominate may also arise as a result of the circumstances in which the
contract was entered into.8 When once it has been established that one party to the contract
possessed a general influence and dominance over the will of another, it need not be shown how
in the particular instance it was used, and it will be presumed to have been used unless contrary
is shown.9

A vague or general plea can never serve this purpose: the party pleading must therefore be
required to plead the precise nature of the influence exercised, the manner of use of the
influence, and the unfair advantage obtained by the other.

The burden of proof lies on the defendant.

The expression unfair advantage is used as meaning an advantage obtained by unrighteous

means. It would exist where the bargain is in favour of the influencer and unfair to the other.10

8
Ranee Annapurnee Nachiar v. Swaminatha Chettiar (1910) 34 Mad. at 10.
9
Karnal Distillery Co. Ltd. v. Ladli Prasad Jaiswal, A.I.R. 1958 Punj. 190.
10
Poosathurai v. kannappa Chettiar, (1919)