difference between coercion and undue influence in contract law

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Difference between coercion and undue influence in contract law:

Coercion and undue influence represent separate legal concepts within contract law, addressing instances where one party’s consent to an agreement might be compromised.

Both play crucial roles in upholding the credibility of contracts and guaranteeing that agreements are established freely and equitably. The distinctions between coercion and undue influence are elucidated in the ensuing article.

Coercion

In the realm of contract law, refers to a situation where agreement consent is obtained through the use of threats, force, or intimidation against the opposing party. Essentially, it involves pressuring someone into a contract under the influence of fear or duress. In such cases, one party applies pressure on another, typically by threatening to commit an unlawful act or cause harm to the other party or their property unless they consent to the contract. This threat could encompass physical harm, unlawful confinement, or any other action considered illegal or punishable by law.

Coercion undermines the voluntary essence of free consent essential for the validity of contracts. Contracts established under coercion are generally deemed voidable, giving the coerced party the option to either uphold or reject the contract. Should the coerced party choose to nullify the contract, it can seek release from its obligations due to the involuntary nature of its consent.

Undue influence

Undue influence is a legal concept within contract law that arises when one party manipulates another’s decision-making by leveraging a position of power or trust, leading to an unjust or inequitable agreement. Unlike coercion, which involves threats or force, undue influence hinges on the abuse of a dominant position to steer the other party’s consent.

In instances of undue influence, the party exerting control may not necessarily resort to physical force or explicit threats. Instead, they might capitalize on a special relationship, such as a fiduciary connection or a relationship based on trust and confidence, to apply psychological or emotional pressure on the other party. This influence significantly impairs the weaker party’s capacity to make autonomous and well-informed decisions. For instance, scenarios, where a doctor persuades a vulnerable patient to sign a contract in the doctor’s favor or an attorney, takes advantage of their client’s trust to secure an unfair advantage in an agreement exemplify instances of undue influence.

Distinguishing Coercion from Undue Influence

Definition

Coercion entails the application of force or threats to compel an unwilling party to enter into a contract. In contrast, undue influence refers to the manipulation of a person’s will by another party, typically through psychological pressure or the exploitation of an existing relationship.

The character of Misconduct

Coercion is deemed a criminal offense because it involves the use of force or physical violence to extract consent for a contract. Conversely, undue influence is not inherently classified as a criminal offense but rather as a legal notion that renders the contract voidable if proven.

Legal Provisions

Coercion is governed by Section 15 of the Indian Contract Act 1872. On the other hand, undue influence is addressed in Section 16 of the Indian Contract Act 1872.

Relationship of Contracting Parties

Regarding coercion, there is no pre-existing relationship established between the contracting parties. The coercion is typically imposed externally by an individual who has no prior association with the coerced party. In contrast, undue influence requires an already established relationship between the contracting parties, such as a fiduciary connection or a relationship founded on trust and confidence.

Actions

Coercion entails actions such as threats, physical violence, or the application of force to secure consent. Conversely, undue influence revolves around psychological pressure or subjecting an individual to social predicaments, leveraging their emotional vulnerability or dependency on the influencing party.

Objective

The objective of coercion is to compel an individual into a contract, typically for the benefit of the party employing coercion. In contrast, undue influence is employed when one party seeks to exploit the other party’s position of weakness or vulnerability.

Burden of Proof

Regarding coercion, the burden of proof rests with the affected party to demonstrate that force or threats were utilized to obtain their consent. For undue influence, the burden of proof lies with the party possessing a dominant position in the relationship, as they must establish that their influence was not improper or unfair.

Illustrative Examples

An instance of coercion would be if party “A” threatens to harm party “B” if party “C” does not sell their property to “A.” Here, “A” is resorting to coercion to compel “C” into the contract.

Conversely, an example of undue influence would involve a teacher instructing their student to sell them their car at an unreasonably low price in exchange for a promise of full marks in the final examination.

conclusion

Coercion entails the use of force or threats to obtain consent, whereas undue influence involves the improper exploitation of power or trust to manipulate someone into an agreement. Coercion is classified as a criminal offense, while undue influence is not. Both concepts aim to uphold the integrity of contracts and ensure that parties enter into agreements voluntarily and fairly. Understanding the distinctions between coercion and undue influence helps protect the rights of parties engaged in contractual relationships and fosters equity in contractual transactions.

Frequently asked questions

What is the primary difference between coercion and undue influence in contract law?

Coercion involves using threats or force to obtain consent, while undue influence involves manipulating someone into an agreement by abusing power or trust.

How are coercion and undue influence defined under contract law, and what actions do they encompass?

Coercion involves using threats, physical violence, or force. Undue influence involves psychological pressure or taking advantage of a position of power or trust.

What legal provisions govern coercion and undue influence in contract law?

Coercion is governed by Section 15, while undue influence is addressed under Section 16 of the Indian Contract Act 1872.

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