This article has been written by Varsha Thapa of 2nd year B.B.A. L.L.B. studying at Army Law College,pune.
Coercion
The Indian contract act 1872 under section 15 defines coercion as a act which is forbidden and prohibited by IPC. It includes act of threatening or causing actual harm for forcing someone to enter into a contract.
Coercion constitute of acts which constitute unlawful detention or threat to detain any property prejudice of a person in order to induce that person to enter into an agreement. If one party was coerced into the contract then the contract is meant to be not valid.
Intimidation tactics, threats, actual, physical or psychological harm used to obtain the contain the consent.
For example, “Mr X” owner of a property was put to sign a contract which says that his property has been sold to “Mr Y” by pointing the gun on the head of “Mr X”. Then this is an coercion.
Effect of coercion on contract
Coercion makes the contract voidable.
Landmark judgement of cases related to coercion
- Askari Mirza vs Bibi Jai Kishori
In the case of askari Mirza vs Bibi Jai Kishori, a minor mortgaged two properties and borrowed money from the money lender. But a contract with minor is voidable. The money lender threatened the minor that he would prosecute him for misrepresenting his age if he didn’t make a compromise to which minor agreed. The compromise was done under the threat of criminal prosecution.
- Chikkam Amiraju vs Chikkam Seshamma
In the case of Chikkam Amiraju vs Chikkam Seshamma, a person threatened his wife and son to commit suicide, if they did not implement a release deed in favour of his brother. Both wife and son released the deed by coming under the threat of suicide.
The court gave the judgement that the consent taken was forceful and involuntary that it was under coercion and the contract will be voidable.
UNDUE INFLUENCE
Under section 16 of Indian contract act 1876, undue influence is stated as when two parties have entered into a contract and both parties have a relation.
For example, Party A and Party B are in same relation with other. Also, one party is in a position to dominate will of other then this is known as Undue Influence.
Dominance is used to obtain an unfair advantage over other. Where there is no unfair/undue advantage then there is no Undue Influence.
Example: “A” met with an accident and need urgent medical assistance but the doctor who is treating “A” creates dominance by saying sell his house to him at amount of 5 Lakh. Therefore we can observe that there is Undue Influence and the contract is not valid due to the reason being that consent was not free.
According to section 16, a person a person is deemed to be in a position will of others when:
- When person has a real/apparent authority.
Ex: Police officer has authority over accused.
- When person has fiduciary relation(Relation of respect)
Ex: Doctor & Patient.
- When a person makes a contract with a person who is mentally affected
Effect of undue influence
- It makes the contract voidable to the party which face undue influence.
- Any money received or property or goods received by undue influence must be repaid or returned.
- Party may cancel or revoke the contract.
Landmark Judgement on cases of undue influence
- Ganesh Narayan Nagarkar vs Vishnu Ramchandra Saraf
In this case, the court mentioned that unfair advantage is advantage or dominance which is obtained via unjust means. It comes to presence when one party become superior to other party and also creates a dominance over the will of other party.
- Inder Singh vs Dayal Singh
In the case of Inder Singh vs Dayal Singh, the court stated that the undue influence comes into existence when one party takes the advantages of other party’s mental condition perform a contract.
Difference between Coercion & Undue Influence
| BASIS | COERCION | UNDUE INFLUENCE |
| Meaning | Coercion can be defined as a force or threat to a person to make him/her unwillingly entered into contract. | Undue influence cane be defined as when one party become dominant to other party and make other party enter into contract. |
| Definition | Defined under section 15 of Indian Contract Act 1872. | Defined under section 16 of Indian Contract Act 1872. |
| Nature of difference | Coercion is considered as criminal offence. | Undue Influence is not regarded as a criminal offence. |
| Relationship of parties | There is no relationship between contracting parties. | There is a relationship already existing between contracting parties. |
| Motive | Coercion is used to force a party to enter into a contract for self benefit. | Undue Influence is used to take advantages of other party while entering into contract. |
| Use of | Physical force or psychological pressure. | Mental pressure or Moral pressure. |
Conclusion
Coercion and Undue Influence both are used to make parties forcefully enter into the contract for self benefit of the party who forced. Coercion uses force whether physical or psychological pressure where as undue influence focuses on mental or moral dilemma. Such contract are voidable by parties which were forced into contract where there is no free consent.
References