Section 16 The Indian Contract Act, 1872
Here is the explanation of:
Section 16 – The Indian Contract Act, 1872
Title:
Section 16 – Undue Influence Defined
Bare Text:
(1) 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.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another—
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Explanation:
This section protects parties from being exploited in a contract due to undue influence.
A contract involves “undue influence” when:
One party is in a position of power or authority over the other,
That power is used to get an unfair advantage,
The transaction seems unfair or unconscionable.
Key Examples of Undue Influence:
A doctor asking a very high fee from a seriously ill patient.
A guardian forcing a minor or elderly to sign property documents.
A spiritual guru pressuring a disciple to transfer assets.
Burden of Proof:
If the contract looks one-sided or unfair, and if a relationship of dominance exists, the dominant party must prove that no undue influence was used.
Important Case Law:
🔹 Rani Annpurna v. Swaminath (1910):
A gift deed executed by an illiterate widow in favor of a person managing her affairs was held voidable due to undue influence.
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