COERCION

&
UNDUE INFLUENCE
A PRESENTATION
BY
VEDANT

FORMATION OF CONTRACT
FREE CONSENT

Free Consent is one amongst several essential

requirements in the formation of a contract.

As per S 14 of the Indian Contract Act, 1872,

Consent is said to be free when it is not caused by:
(1) coercion [as defined in S 15], or
(2) undue influence [as defined in S 16] or
(3) fraud [as defined in S 17], or
(4) misrepresentation [as defined in S 18], or
(5) mistake [subject to the provisions of Ss 20,
21 and 22].

COERCION

Consent is said to be so caused when it would

not have been given but for the existence of
such
coercion,
undue
influence,
fraud,
misrepresentation or mistake.

Dictionary meaning of word coercion is:

compelling someone by force, intimidation or
authority, especially without regard for the
individuals desire or volition.

COERCION

Consent is said to be caused by coercion when it is obtained

by pressure exerted by committing or threatening to commit
any act forbidden by IPC; or unlawfully detaining or
threatening to detain any property, to the prejudice of any
person whatever, with the intention of causing any person to
enter into an agreement.

It is immaterial whether the IPC, is or is not in force in the

place where the coercion is employed.

Coercion may be caused by any person, not necessarily a

party to the contract.

Coercion need not to be directed against the contracting

party, or his parent, wife or child.

COERCION

An agreement, the consent to which is caused by

coercion is voidable at the option of the party whose
consent was so caused.

Section 19 of the Indian Contract Act, 1872 declares that

when consent to an agreement is caused by coercion,
or, the
agreement is a contract voidable at the
option of the party whose consent was so caused.

A contract is voidable if the consent of a person was

obtained by the use of coercion.

CHIKKAM AMIRAJU v. CHIKKAM SHESHAMMA

In this case, by threat of suicide, a Hindu, induced

his wife and son to execute a release in favour of his
brother in respect of certain properties which they
claimed as their own.

It was held by the majority that the threat of suicide

amounted to coercion within Section 15 and the
release deed was therefore voidable.

The difference of opinion related to whether suicide

is an act forbidden by the IPC. An attempt to commit
suicide is punishable under the code, but there is no
punishment provided for suicide.

CHIKKAM AMIRAJU v. CHIKKAM SHESHAMMA

The majority opinion said that if a man commits suicide, he goes

unpunished, that is not because the act is not forbidden, but
because there is nobody left to punish.
The term forbidden by the Indian Penal Code is much wider
than the term punishable by the Penal Code. If someone
escapes punishment does not mean that the act is not forbidden.
The court also gave the analogy of a child or a lunatic who are
not punished for an act, but that does not mean that the act is
not forbidden. The court says that since the abetment and
attempt to commit suicide are both made punishable by the
Penal Code, it was prepared to hold that the act itself is
forbidden. It also held that, the possibility of the husband dying
and leaving the wife and the child uncared for, was enough to
furnish the ground of prejudice.
Because of this case threats to commit suicide amount to
coercion under Section 15

COERCION - DETENTION OF PROPERTY

The concept of detention of property can be

explained by following example:
Suppose, a person pledges a necklace for
Rs.50. But, when he/she goes to redeem it, the
pledgee insists that an extra Rs.20 was owed
to him as interest and the pledger has to pay
it to redeem it, then the pledger can sue the
pledgee to recover the extra amount back,
since the pledgee extracted from him an extra
amount by refusing to deliver it.

DIFFERENCE BETWEEN INDIAN AND

ENGLISH LAWS

Under English Law Coercion is called as Duress or

Menace and is more a rule of equity than of common
law, but has a overriding or prevailing effect in case of
any conflict between the two.

Duress is said to consist in actual or threatened violence

or imprisonment of the contracting party or his wife,
parent or child, by the other party or by anyone acting
with his knowledge and for his advantage.

But, coercion as defined in Section 15 in Indian Contracts

Act is much wider and includes the unlawful detention of
property also.

COERCION
DIFFERENCE BETWEEN INDIAN AND ENGLISH
LAWS

Secondly, coercion can be committed by any person

and not necessarily a party to the contract.

Thirdly, coercion need not be directed towards the

contracting party, or his parent, wife or child, it may
be directed towards any person, even if he is
stranger.

Another difference is that while in English law,

duress must be such that will cause immediate
violence and also unnerve a person of ordinary
firmness of mind, these requisites are not necessary
in Indian law

UNDUE INFLUENCE
Undue influence means an influence by a person
who is in a position of power and has taken unfair
advantage of that power over another person.

Undue influence is defined in Section 16 of the

Indian Contracts Act , 1872 as under:
(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

UNDUE INFLUENCE
(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

UNDUE INFLUENCE

Section 19A of the Indian Contracts Act also talks

about undue influence in a contract.
It says that when consent to an agreement is
caused by undue influence, the agreement is a
contract voidable at the opinion of the party whose
consent was so caused.
Any such contract may be set aside either absolutely
or, if the party who was entitled to avoid it has
received any benefit thereunder, upon such terms
and conditions as to the Court may seem just.
Exception- a contract made under statutory
compulsion cannot be regarded as one made under
influence.

ACTUAL UNDUE INFLUENCE

Sometimes the relation between the parties is

such that one of them is able to dominate the
will of the other. The one with the superior
position may use it unfairly to obtain the others
consent to an agreement, to which he otherwise
would not have consented.
It can be said that one party is able to dominate
the will of the other when there is active trust
and confidence between the parties or when the
parties are not on equal footing.
Burden of Proof- if someone wants to avoid a
contract on the ground of undue influence, then
he must be able to prove that, the other party
was in a position to dominate his will and that
he actually used this influence to obtain the

WILLIAMS v. BAYLEY

In this case, the plaintiff, Mr. Bayleys son, forged his

signatures on many promissory notes and paid them into his
banking account. When the truth came to light, the manager
of the bank, Mr. Williams, threatened criminal prosecution of
the son. To avoid this, Mr. Bayley agreed to give an equitable
mortgage to the bank on his property, in return of the
promissory notes. Subsequently, Mr. Bailey, sought to have
this agreement cancelled on the ground of undue influence.
The House of Lords held that the agreement was voidable. It
said that because of the threat given by the bank manager,
the plaintiff acting under this fear, agreed to give an
equitable mortgage.
There was an inequality between the parties and one of them
took unfair advantage of the situation of the other and used
undue influence to force an agreement from him.

PRESUMPTION OF UNDUE INFLUENCE

In certain cases undue influence is presumed.

The effect of this presumption is that once it is shown that
the defendant was in a position to dominate the will of the
plaintiff it will be presumed he must have used his
position to obtain an unfair advantage.
The only difference between actual and presumed undue
influence is that the Burden of Proof will shift to the
defendant to prove that even though he was in a position
of dominance, he did not use that position to influence the
plaintiff and the plaintiff consented freely. In the absence
of discharge of the burden of proof, the presumption will
apply.
The presumption is raised at least in the following cases:(1)Inequality of bargaining power;
(2)Relationship of blood, marriage or adoption

LLOYDS BANK LTD v. BUNDY

Brief facts of the case are that a contractor borrowed

money from a bank. But he could not pay back in time, so
the banker pressed for payment or for security. He
suggested that the contractors father could mortgage the
familys only residential house. The bank officer visited
the father and got his signatures on readymade papers.
When the contractor still could not pay, the banker sought
to enforce the mortgage. Accordingly Mr. Bundy relied
upon the unfair character of the mortgage.
In this case, the court presumed undue influence, due to
the inequality in bargaining power between the parties.
It said that the bank exploited the vulnerability of the
father. It also said that, asking for the house as security
for a very short delay in the paying of the loan, was a very
unfair and inadequate consideration.
The court allowed Bundy to set aside the mortgage.

INFLUENCE DISTINGUISHED FROM

PERSUATION

Influence has to be distinguished from

Persuasion.
The distinguishing factor is of the
relationship of superior position capable of
being prevailed upon the other to obtain his
consent by exerting the influence.
In Persuasion the relationship of superior
position capable of being prevailed upon the
other to obtain his consent by exerting the
influence, remains absent while it is present
in the case of Influence.

COERCION
&
UNDUE INFLUENCE

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