Distinguish between "Coercion and Undue Influence".

Question: Distinguish between “Coercion and Undue Influence”. [RJS 1974]

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Answer

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake. It must be established that the effect is the direct outcome of that particular cause.

Coercion is the committing of or threatening to commit any act forbidden by the Indian Penal Code 1860, or the unlawful detaining or threat to detain any property with the intention of compelling any person to enter into a contract. An act or threat forbidden by the Indian Penal Code 1860 would amount to coercion even if it is done in an area where the Code is not in force.

Coercion and Duress: At common law, a contract induced by duress may be set aside. A distinction has been made at common law between duress of person and duress of property, called economic duress, and between legitimate and illegitimate pressure. A contract is invalid only if the pressure is illegitimate. Economic duress is recognized in English law as a factor vitiating the contract. The commercial pressure alleged to constitute duress must be such that the victim entered into the contract against his will and must have had no alternative course open to him and must have been confronted with coercive acts.

A contract is said to be induced by undue influence where:

(i) 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

(ii) Such position is used to obtain an unfair advantage over the other. Undue influence means the domination of a weak mind by a stronger mind to an extent which causes the behavior of the weaker person to assume an unnatural character.

The requirement of the Indian Contract Act, 1872 is the obtaining of an unfair advantage by the party in a position to dominate. Influence is the ascendancy acquired by one person over another; it may be used wisely, judiciously, and helpfully.

Undue influence is improper use by the ascendant person, of such ascendancy, for the benefit of himself or someone else so that the acts of the person influenced are not his free, voluntary acts. It is any influence brought to bear upon a person making an agreement, which having regard to the age and capacity of the party, the nature of the transaction, and all the circumstances of the case appear to have been such as to preclude the exercise of free and deliberate judgment.

Since one of the relevant factors of undue influence is the circumstances in which the transaction is entered into. Undue influence may thus arise where one party makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of mental distress.

The following statement bears out the distinction between coercion and undue influence as given under Saxon v. Saxon[(1976)4 W.W.R. 300]:

“The law draws a distinction between duress and undue influence. Duress (coercion) in the execution of a contract or deed occurs when there is a physical compulsion of the person, which must be very rare, or when there is a threat to the person’s life or limb, or threat of a physical beating or of imprisonment. It may also take into account threats of wrongful imprisonment or prosecution of the person and possibly of the person’s near relative.

In contrast to duress, undue influence may exist without violence or threats of violence against the victim. It depends upon the existence of a relationship between two parties which, while it continues, causes one to place a confidence in the other which produces a natural influence over the one which that other abuses to his own advantage.”

Following are the essential features that provide the distinction between “Coercion and Undue influence”:

1. Through coercion, by committing an offense or threatening to commit an offense punishable under IPC, consent is gained. Under undue influence, consent is gained by suppressing the will of the other party.
2. Coercion made is usually physical in nature as it requires a physical force of violent nature. For example, the execution of a deed by a wife and her son may be set aside for coercion because the husband threatened to commit suicide. However, undue influence is immoral in nature, using mental pressure to gain consent.
3. Coercion includes a criminal act and is made punishable under the IPC by a person who commits it but undue influence requires unlawful act and is not punishable under the IPC by a person who has applied it.
4. Coercion does not involve any relationship to be present between the parties but undue influence can only be exerted if there is an existing relationship between the parties. For example, a confidential agent is in a position to dominate; but this does not apply to an ordinary agent or an ordinary servant.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

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