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CA Foundation · Business Laws · The Indian Contract Act, 1872

Mrs. Lata, aged 80 and almost wholly dependent on her nephew Kunal for daily care and medical decisions, sells him her house worth Rs 80 lakh for Rs 20 lakh on his persuasion. She did not receive any independent advice. Which is the best description of the legal position?

The contract is voidable for undue influence. Kunal holds a position of dominance over the elderly, dependent Lata, and the very low price shows an unfair advantage. The burden of proving that no undue influence was exercised therefore rests on Kunal, not Lata.

  1. AKunal is in a position to dominate her will, so the contract is voidable for undue influence and the burden of proving no undue influence lies on KunalCorrect
  2. BThe contract is void because the price is inadequate
  3. CThe contract is valid because inadequacy of consideration never matters
  4. DThe contract is voidable only if Lata proves Kunal made a threat

Explanation

Where a person is in a position to dominate another's will and obtains an unfair advantage, undue influence is presumed once the transaction appears unconscionable. The burden of proving that no undue influence was used shifts to the dominant party, Kunal. Inadequate price alone does not make a contract void, but here it is evidence of the unfair advantage. No threat is required for undue influence.

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