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CMA Intermediate · Business Laws and Ethics · Indian Contracts Act, 1872

Ravi, a village money-lender, lends Sunil, who owes him earlier dues, a fresh sum on terms that appear unconscionable. Sunil later challenges the loan. According to the Act, who bears the burden of proving that the contract was not induced by undue influence?

Ravi bears the burden. When a person in a position to dominate another's will enters a contract that looks unconscionable on its face or on the evidence, the law places on that dominant person the burden of proving the contract was not induced by undue influence.

  1. ASunil, because he is the one alleging undue influence
  2. BNeither party, because the court presumes freedom of consent
  3. CRavi, because he is in a position to dominate Sunil's will and the terms look unconscionableCorrect
  4. DBoth equally, since the burden is shared

Explanation

Where a person in a position to dominate the will of another contracts with him and the transaction appears unconscionable, the burden of proving no undue influence lies on the dominant person. Ravi, being the creditor, bears it.

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