Coercion and Undue Influence

Coercion

Coercion is define in section 15 of the Contract Act, 1872 as follows —

Section 15: Coercion” is the committing, or threating to commit, any act forbidden by the Penal Code, 1860 or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

So, Coercion is an act or omission with the intention of causing any person to enter into an agreement by –

1. the committing any act forbidden by the Penal Code, 1860; or
2. the threatening to commit any act forbidden by the Penal Code, 1860; or
3. the unlawful detaining of any property to the prejudice of any person whatsoever; or
4. the unlawful threatening to detain any property to the prejudice of any person.

Example: A Hindu widow is forced to adopt X under a threat that her husband’s corpse would not be allowed to be removed unless she adopt X. The adoption held to be voidable as done under coercion.

Effects of Coercion: A contract caused by Coercion is voidable at the option of the party whose consent was so caused. It is immaterial whether the Penal Code is in force in that particular area where the coercion is done.

Undue Influence

Undue Influence is defined in section 16 of the Contract Act, 1872 as follows—

Section 16        

• A contract is said to be induced by “under 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. 

• In particular and without prejudice to the generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another –

• where he hold a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or

• 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.

• 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 be upon the person in a position to dominate the will of the other.

Nothing in the sub-section shall affect the provisions of section 111 of the Evidence Act, 1872.

             Examples:              

1. Where he holds a real or apparent authority over the other. { Father and Pon }

• Where he stands in a fiduciary relation to the other. Ex – { Doctor and Patient }

• Where he makes a contract with a person whose mental capacity is affected by reason of age, illness; or mental / bodily distress.  { Promise in death sickness }

Effects of Undue Influence: When consent of an contract is caused by undue influence, the contract is  viodable at the option of the party whose consent was so caused.

Coercion and Undue Influence Similarities & Distinguish

Similarities:

There are some similarities between Coercion and Undue influence-

1. In case of both Coercion and Undue Influence, the agreement is viodable at the option of the party whose consent was so caused.

• In both cases, the party avoiding it is bound to restore to the other party any benefit which he may have received under the contract.

Distinguish:

             There are clear distinguish between Coercion and Undue influence-

1. In Coercion, the consent is obtained by the threat of an offence and the person is forced to give his consent. While in case of Undue Influence, consent is obtained by dominating the will of the giver.

• Coercion is mainly of physical character, while Undue influence is of a moral character.

• Coercion is generally of violent character; on the other hand, undue influence is less violent or intangible but still equally effective.