Undue influence
Under Section 16 of the Contract Act, where one party is in a position to dominate the will of the other and uses that position to obtain an unfair advantage. The contract is voidable.
Explained
Section 16(1) of the Indian Contract Act, 1872 provides that a contract is induced by undue influence where the relations between the parties are such that one is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. Two elements must both be present: a position of domination, and its use to gain an unfair advantage.
Section 16(2) deems a person to be in a position to dominate the will of another where he holds real or apparent authority over the other, where he stands in a fiduciary relation to the other, or where he contracts with a person whose mental capacity is temporarily or permanently affected by age, illness, or mental or bodily distress. Section 16(3) shifts the burden: where a person in a position to dominate enters into a contract with the other and the transaction appears unconscionable on its face or on the evidence, he must prove that it was not induced by undue influence.
Under Section 19A, an agreement caused by undue influence is a contract voidable at the option of the party whose consent was so caused. The Court may set it aside absolutely or, if that party has received a benefit, on such terms and conditions as are just. Undue influence differs from coercion under Section 15, which involves committing or threatening an act forbidden by the penal law or unlawfully detaining property; coercion operates by pressure, while undue influence operates through the abuse of a relationship.
In Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib (1966), the Supreme Court held that the court must ask, in stages, whether the relationship put one party in a position to dominate, whether he used it to obtain an unfair advantage, and only then whether the burden shifts, and that close relationship or old age alone raises no presumption. Examiners test the deemed relationships, the burden under Section 16(3) and the remedy under Section 19A.
What the law says
[(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 lie upon the person in a position to dominate the will of the other.
Defines undue influence, deemed domination and burden of proof
[When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option 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.
Illustrations
Contract induced by undue influence is voidable
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
Free consent excludes undue influence
“Coercion” is the committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860)or the unlawful 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.
Explanation.—It is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force in the place where the coercion is employed.
Illustration
Coercion, the contrasting vitiating factor
Example
Illustration (b) to Section 19A: A, a money-lender, advances Rs. 100 to B, an agriculturist, and by undue influence induces B to execute a bond for Rs. 200 with interest at 6 per cent per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.
For the exam
- Two elements: a position to dominate the will, and its use to obtain an unfair advantage.
- Deemed domination: authority, fiduciary relation, or impaired mental capacity (Section 16(2)).
- Section 16(3): burden shifts only if the transaction appears unconscionable.
- Section 19A: voidable; may be set aside on just terms where a benefit was received.
- Close relationship alone raises no presumption (Subhas Chandra Das Mushib, 1966).
108 questions in the Law Maker question bank use this term. Practise Contract Law questions
Judgments
Related terms
- CoercionCommitting or threatening any act forbidden by the penal code, or unlawfully detaining or threatening to detain property, to anyone's prejudice, with intent to make a person enter into an agreement (Section 15, Contract Act).
- FraudUnder Section 17 of the Contract Act, specified acts by a party to a contract, or with his connivance, or by his agent, done to deceive the other party or induce him to contract.
- MisrepresentationAn untrue statement or a breach of duty that misleads a party into a contract without intent to deceive. It makes the contract voidable (Sections 18 and 19 of the Indian Contract Act).
- Voidable contractAn agreement enforceable by law at the option of one or more of the parties but not at the option of the other or others. Section 2(i) of the Indian Contract Act, 1872.
- ContractUnder Section 2(h) of the Contract Act, an agreement enforceable by law. Section 10 lists what makes an agreement a contract.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.