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UNDUE INFLUENCE UNDER INDIAN CONTRACT LAW AND COMPARISON WITH COERCION

Undue influnce & Coercion - Naman Priyadaeshni (1)

INTRODUCTION

When a person agrees to do something when offered by another person, then this is called Consent. This word claims importance in case of contract law, sexual harassment cases, and the corporate world because it can be used to sue or one can take decision when consent is given by the authority.  According to Merriam Webster, Consent is “compliance in or approval of what is done or proposed by another.”[1] There are a myriad number definitions of Consent. The Indian Contract act, 1872 defines consent in Section 13, “Two or more persons are said to consent when they agree upon the same thing in the same sense.”[2] This introduces the concept of “consensus-ad-idem” which means in the same sense. This concept is often used to describe a condition where both the parties involved can understand the contract they are undertaking and hence, plays a vital role as evidence in cases of breach of contract.

However, the Indian Contract Act, 1872 also defines Free Consent in section 14 as, “Consent is said to be caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.” [3] Undue Influence and Coercion are essential to obtain Free Consent or else the voidability of contract comes into the picture.

CONCEPT OF UNDUE INFLUENCE

Undue Influence “is a case of benefit or contractual advantage obtained from a person coming within certain defined relations such as parent-young child, lawyer, and client.”[4] It is a concept where both parties are in such a relationship where one party can dominate the will of the other and thus, influence him/her to enter into a contract. It is defined in Section 16 of the Indian Contract Act, 1872.

To establish Undue Influence, the party must satisfy two conditions. One is the ability to dominate the will of the other party and the second is taking unfair advantage of the party. This has been mentioned in Section 16(1) of the Indian Contract Act, 1872.

ESSENTIAL ELEMENTS OF UNDUE INFLUENCE

 Under undue influence, one party must have the ability to dominate or influence the will or decision of the other party. This can include relations such as Parent-ward, lawyers-clients, patient-doctor, husband-wife, debtor-creditor, etc. These are types of relations where one party can dominate or influence the other party. This could be further divided into two categories of authority as stated in Section 16(2) of the Indian contract act.

Real authority: where one party uses its authority for its enrichment like a policeman.

Apparent authority: where one party pretends an authority but does not have one.

Another essential condition of Undue Influence is that the other party must take unfair advantage of the weaker party. It can be in the sense of bending rules according to one or shifting huge amounts to one name. In the case of “Inche Noriah Binte Mohd Tahir v Sk Allie”[5], a considerable rent-producing property was owned by a woman. The woman was illiterate and did not understand the concept of contracts. The lady gifted all of her property to her nephew who was helping her in the works and development of the property. Though the deed of the property was prepared by a lawyer, this led to woman owning only 30 dollars income. This case came before the Privy Council which devoided the contract based on Undue Influence. According to Lord Chancellor, “The Lawyer certainly does not seem to have brought home to her mind the consequences to herself of what she was doing, or the fact that she could more prudently and equally effectively, have benefited the donee without undue risk to herself by retaining the property in her possession during her life and bestowing it upon him by her will.”[6] In this case, the court declared the contract voidable as an unfair advantage was taken by the nephew and the Lawyer played a vital role as an accomplice by not informing the old lady, the amount and life she would be born after the conclusion of the contract.

ELABORATING THE NOTION OF COERCION

Coercion “is committing, or threatening to commit, any act forbidden by the Indian Penal Code (Section 45 of 1860), or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, to cause any person to agree.[7]Coercion is similar in concept to that of Undue Influence. Coercion is defined in Section 15 of the Indian Contract Act, 1872.

In coercion, consent is obtained in a non-obvious way. There are two ways in which consent is obtained in such cases. One is by committing or threatening to commit an act that is forbidden by the Indian Penal Code. Another way is by detaining or threatening to detain someone’s property.

WHETHER SUICIDE THREAT IS COERCION?

The act of taking one’s own life is known as suicide. In the Indian Contract Act, 1872, the threat to commit suicide is termed as coercion. However, suicide itself is not punishable under the Indian Penal Code. In Madras, a couple approached the High court and raised a fascinating question of whether the suicide threat will be considered as coercion or not. This was the case of “Chikham Amiraju v Chikham Seshamma”[8]. Between the couple, the husband persuaded his wife and son to sign a release in his brother’s favor in exchange for certain assets/properties they claimed as their own. In this judgment, the court declared that “that the threat of suicide amounted to coercion within Section 15 and the release deed was, therefore, voidable.”[9]

DIFFERENCES BETWEEN UNDUE INFLUENCE AND COERCION

The terminology of Undue Influence and Coercion is alike in many ways. However, there are differences as well;

  • Undue Influence involves the ability to dominate the party and take unfair advantage. Whereas, in coercion, one party threatens to influence another party as per its own needs.
  • Undue influence needs an established relationship or a fiduciary relationship so that the party can influence the other. Whereas, such relation is not needed in coercion. Parties can be aliens to each other.
  • The party that is entertaining coercion is liable under the Indian Penal code. Hence, the nature of the offense is criminally liable. But, in Undue Influence, the party is not liable under the Indian Penal code and also not criminally liable.
  • Coercion is defined in Section 15 and involves physical contact. The case with undue influence is there is no physical contact but mental pressure as defined in Section 16 of the Indian Contract Act, 1872.

CONCLUSION

In any contract, free consent is one of the essentials. No contract can be concluded if it does not involves free consent. Undue Influence and Coercion are the bone of contention to obtain free consent. Both the terms affect the voidability of the contract i.e. the contract will be voidable and will depend on the choice of the breached party. Though both the concepts have different meanings and conditions to full fill the same, somehow they do appear replicas of each other.

Author(s) Name: Naman Priyadarshi (Symbiosis Law School, Hyderabad)

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References:

[1] Merriam-Webster. (n.d.). Consent. In Merriam-Webster.com dictionary. Retrieved April 10, 2021, from https://www.merriam-webster.com/dictionary/consent.

[2] Indian Contract Act, 1872, § 13.

[3] Indian Contract Act, 1972, § 14.

[4] Winder, W. (1939). Undue Influence and Coercion. The Modern Law Review, 3(2), 97-120. Retrieved April 10, 2021, from http://www.jstor.org/stable/1089336.

[5] Inche Noriah Binte Mohd Tahir v Sk Allie, AIR 1929 PC 3.

[6] Avtar Singh, Contracts and Special Relief, 325(1973).

[7] Harsh Mishra, A Critical Analysis on Coercion With respect To Indian Contract Act, Manupatra, (2019), (11 April 2021) http://docs.manupatra.in/newsline/articles/Upload/94FBB7C2-19A0-483D-AE76-9C9BC8A35E4C.pdf.

[8] Chikham Amiraju v Chikham Seshamma, ILR (1918) 41 Mad 33, 36.

[9] Avtar Singh, Contracts and Special Relief, 313(1973).

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