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Unit 5: Free Consent

Party on whom lies the burden of proving that the contract (i) was or (ii) was not induced Notes
by undue infl uence [s.16(3)]. The burden of proving that the contract is not induced by undue

influence lies on the party who is in a position to dominate the will of the other. Thus, in cases

(above given) where undue influence is presumed the onus of proof lies on parent, guardian,
doctor, spiritual guru, lawyer, trustee. On the other hand, in relationships where undue infl uence

is not presumed the party alleging undue influence must prove that it existed.

Consequences of undue infl uence (S.19A). An agreement caused by undue influence is voidable
at the option of the party whose consent was obtained by undue influence. However, any such

contract may be set aside either absolutely or if the party who was entitled to avoid it has received

any benefit there under then upon such terms and condition as the court deems fi t.
Example: A, a money lender, advanced ` 1,000 to B, a household lady, and by undue
influence induced B to execute a bond with interest at 8 percent per month then the court may set

the bond aside ordering B to repay ` 1,000 with such interest as the court may deem just.
Extra precautions to be taken while entering into contract with a pardanashin woman.
A pardanashin woman is one, who according to the custom of her community, observes complete
seclusion. The courts in India regard such women as being especially open to undue infl uence.
When therefore an illiterate pardanashin woman is alleged to have dealt with her property and to

have executed a deed, the burden of proving that there was no undue influence was on the party
setting up the deed. The law demands that the person who deals with a pardanashin lady must
show affirmatively and conclusively that the deed was not only executed by, but was explained

to and was really understood by the lady.
Money lending transactions. In money lending transactions, the rate of interest being high, or
that the borrower is in urgent need of money is not an evidence of undue influence. These two

facts do not by themselves show that there is undue influence. However, if the rate of interest is
so high that the court considers it unconscionable, then the burden of proving that there was no

undue influence lies on the creditor.
Example: A, being in debt to B, the money lender, contracts for a fresh loan at compound
interest of 25 per cent the transaction may be held to be unconscionable and a reduced rate of
simple interest may be awarded.

5.1.3 Meaning of Fraud [Ss.17 and 19]

Fraud means and includes any of the following acts committed by a party to a contract with
an intent to deceive the other party thereto or to induce him to enter into a contract: (i) the
suggestion as a fact of that which is not true by one who does not believe it to be true; (ii) active
concealment of a fact by one having knowledge or belief of the fact; (iii) promise made without
any intention of performing it; (iv) any other act fitted to deceive; (v) any such act or omission as

the law specifically declares to be fraudulent.

Essential elements or conditions for a fraud to exist. For a fraud to exist the following are the
essential elements:
1. There must be a representation or assertion and it must be false. To constitute fraud there
must be an assertion of something false within the knowledge of the party asserting it.
Mere silence as to facts likely to affect the willingness of a person to enter into a contract is
not fraud. To constitute fraud ordinarily there must be active misstatement of fact as the
withholding of that which is not stated makes that is stated absolutely false.
2. The representation or assertion alleged to be false must be of a fact. A mere expression of
opinion, puffery or flourishing description does not constitute fraud.

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