NOTES


CA-Foundation > Business Laws > The Indian Contract Act, 1872 - Free Consent (Old & New)

What do you understand by “coercion” and “undue influence” under the provisions of the Indian Contract Act, 1872 ? What are the differences between them ?



Ans.

Coercion: According to Sec. 15 of the Indian Contract Act, 1872, Coercion is the committing, or threatening to commit any act forbidden by the Indian Penal Code 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.


Undue Influence: According to Sec. 16, of the Indian Contract Act 1872, 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. A person is deemed to be in a position to dominate the will of the other, when he holds authority, real or apparent over the other, or when he stands in a fiduciary relation to other (Sec. 16.) Validity: When the acceptance from the offeree is obtained under coercion or under undue influence, the validity of the contract is stated in Sec.19 of the Act:

1. An agreement whose consent is obtained by coercion and under influence is voidable at the option of the party whose consent is so obtained.

2. A person to whom the money has been paid or anything delivered under coercion and undue influence must repay or return it (Sec. 72).


Distinction between Coercion and Undue Influence

SI. No.

Basis

Coercion

Undue Influence

1.

Definition

Coercion involves threat to use physical force to obtain the consent of the other party.

In undue influence, mental or moral pressure is used to get the consent of the other party.

2.

Parties

Coercion may be committed by any person against any person. Even a strange act may amount to coercion.

Undue influence must be made by a party to the contract.

3.

Relationship

In coercion, the parties to the contract do not have any definite relationship with each other.

In undue influence, the parties are under fiduciary relationship.

4.

Intention

In coercion, the parties or party causing coercion has an intention to enter into an agreement.

In undue influence, the influencing party uses its position to obtain an unfair advantage over the other party.

5.

Penalty

An act of coercion may be punishable under the Indian Penal Code.

The act of undue influence may not be punishable.

6.

Force

The force used is physical in nature.

The force used is moral in nature.

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Notes of The Indian Contract Act, 1872 - Free Consent (Old & New)



  1. What do you understand by “coercion” and “undue influence” under the provisions of the Indian Contract Act, 1872 ? What are the differences between them ?
    see in detail

  2. "Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud". Comment.
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  3. ‘Aadi’ applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. Aadi accepts the loan on these terms. Whether the contract is induced by undue influence? Decide.
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  4. Aabhas threatens to shoot Eashan if he does not sell his car to him for ₹ 20,000. Eashan signs the necessary documents for sale of car. Later on, Eashan wants to avoid the contract. Will he succeed? If so, why?
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  5. Aadit and Eehaan were sailing in a ship which was on its way from London to Bombay. While the ship was passing through the Suez Canal, Aadit threatened Eehaan to throw him into the sea unless he agreed to sell his watch for ₹ 100. Eehaan agreed to sell the same. After reaching Bombay, Eehaan changed his mind. Can Aadit file a suit against Eehaan to get the watch?
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