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CMA Foundation · Fundamentals of Business Laws and Business Communication · Capacity of Parties, Free Consent

Mehta, a village money-lender, already lends to Kumar, who is in debt to him. Mehta gives Kumar a fresh loan on terms that appear, on the face of the transaction, to be unconscionable. Who bears the burden of proving whether undue influence was used?

Mehta bears the burden. Where the party in a position to dominate the other's will enters a transaction that appears unconscionable on its face or on the evidence, he must prove the contract was not induced by undue influence. The weaker party need not first prove it.

  1. AKumar, who must prove that undue influence was used
  2. BMehta, who must prove that the contract was not induced by undue influenceCorrect
  3. CNeither party, as the court presumes the contract is valid
  4. DBoth parties equally

Explanation

Section 16(3) says that where a person in a position to dominate the will of another enters into a transaction that appears unconscionable, the burden of proving it was not induced by undue influence lies on the dominating person. The money-lender illustration applies this to Mehta. Placing the burden on Kumar reverses the rule.

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