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

Under the Indian Contract Act, 1872, a contract is said to be induced by undue influence when the relations between the parties are such that one party is in a position to dominate the other's will and:

Undue influence exists when one party can dominate the other's will and uses that position to gain an unfair advantage. Both the dominating position and its misuse are required. Threats of forbidden acts are coercion and honest false statements are misrepresentation.

  1. Auses that position to obtain an unfair advantage over the otherCorrect
  2. Bthreatens to commit an act forbidden by the Indian Penal Code
  3. Cmakes a false statement believing it to be true
  4. Dfails to disclose a fact that the other party could have discovered easily

Explanation

Section 16(1) defines undue influence as a position to dominate the will of another combined with using that position to obtain an unfair advantage. Threatening a forbidden act describes coercion, a false but honestly believed statement describes misrepresentation, and mere silence is not undue influence.

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