Difference between Coercion and Undue Influence

Coercion and Undue Influence are two different legal concepts under contract law that deal with situations where the consent of one party to agree may be compromised. Coercion and Undue Influence both are significant in protecting the integrity of contracts and ensuring that agreements are made voluntarily and in a fair manner. The following article discusses the difference between Coercion and Undue Influence.

What is Coercion?

Coercion means committing, or threatening someone to commit, any such act which is strictly prohibited by the Indian Penal Code, or any kind of unlawful detention or threat to detain any property of any person, with the main intention of causing harm or threat to a person so that it could influence him or her to agree.

According to Section 15 of the Indian Contract Act, 1872, “Coercion is the committing or threatening to commit, any act forbidden by the Indian Penal Code, 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.”

The burden of proof in cases of coercion lies on the party taking the defense of the coercion. The burden of proof on him is heavier, as mere probability or suspicion doesn’t amount to coercion under the eyes of the law. To establish that the consent was affected by coercion, the party must prove that there was a threat that was forbidden by law and that it caused and influenced him/her to enter the contract against his/her will, and he wouldn’t have contracted otherwise. The Indian Contract Act, 1872 has established that the effect of coercion is that the contract will be considered voidable. This means that the party whose consent was not free and whose consent was effected by coercion may choose to rescind the contract at his choice, and the aggravated party of the contract will decide whether he or she wants to perform the contract with the other party or wants to rescind the contract and nullify the contract.

What is Undue Influence?

Undue Influence is when the relations between the two parties are of the nature that one party is in a position to dominate the decision-making of the other party and the party in the dominant position uses his influence to obtain an unfair and unjust advantage over the other party, such influence is called Undue Influence. It is to be noted that in any case where consent is affected by influence and there is any reposition or betrayal of confidence, the principle of equity shall be applied.

Section 16(1) of the Indian Contract Act 1872 defines the term ‘Undue Influence’ as follows: “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) he uses the position to obtain an unfair advantage over the other.”

A person is deemed to be in a position to dominate the will of another in cases where:

• One party holds real or apparent authority over the other.
• One party stands in a fiduciary relationship with the other.
• One party makes a contract with a person whose mental ability for decision-making is temporarily or permanently affected because of his age, illness, or mental or physical distress. For example, an old illiterate person.

Under undue influence, the dominant party must have the objective of taking advantage of the other party. If influence is wielded for the benefit of the other party, it will not be undue influence. But if the consent is not free due to undue influence, the contract will be voidable at the option of the aggrieved party. In such a case, the burden of proof will be on the dominant party to prove the absence of influence.

Section 19A of the Indian Contract Act, 1872 has established that an agreement induced by undue influence or where the aggrieved party has entered the contract by getting affected by undue influence is voidable at the option of that party whose consent was taken by influencing him. The act has also established that the performance of such agreements may be avoided either absolutely or by prescribing certain terms and conditions.

Difference between Coercion and Undue Influence

Basis of Difference	Coercion	Undue Influence
Meaning	Coercion means committing, or threatening someone to commit, any such act which is strictly prohibited by the Indian Penal Code.	Undue Influence is when the relations between the two parties are of the nature that one party is in a position to dominate the decision-making of the other party and the party in the dominant position uses his influence to obtain an unfair and unjust advantage of the other party.
Governing Section	Provisions of coercion are governed by Section 15 of the Indian Contract Act, 1872.	Provisions of Undue Influence are governed by Section 16 of the Indian Contract Act, 1872.
Use of	Under coercion there is the use of psychological pressure or physical force.	Under Undue Influence there is a use of mental pressure or moral force by the dominant party.
Purpose	The purpose of coercion is to compel one person in such a way that he enters into a contract with the other party against his own free will.	The purpose of undue influence is to take unfair advantage of his position as a dominant party on an aggrieved party.
Criminal Nature	Yes, coercion may be of criminal nature.	No, undue influence does not have a criminal nature.
Relationship between Parties	No existing relation is necessary to exist between the parties.	Undue influence is presumed to exist when a relationship like Teacher-student, Guardian ward, etc. exists.
Burden of Proof	The burden of proof lies with the aggrieved party to demonstrate that force or threats were used to obtain their consent to enter the contract without the will.	The burden of proof rests with the party who holds a dominating position in the relationship, they will be required to show that their influence was not improper or unfair and that they have not exerted any influence.
Example	Ross owns a car. Rachel approached Ross along with two strangers and, at gunpoint, asked Ross to give him possession of his car. In this case, the consent of Ross is obtained by coercion, and as the consent is not free, the contract shall be void, and it will have no legal effect.	Sophia is a psychologist for Jay. Jay was consulting with Sophia to treat his mental health. Sophia was aware that Jay had a flat in Pune, which was worth ₹ 5 crore. However, Sophia, using her place of power, convinced Jay that the house he possessed wasn’t according to the Vastu and he should sell it. Sophia purchased the flat from Jay for a mere ₹ 10 lakh. Jay is under the influence of Sophia in this case.

Conclusion

Consent is considered to be the most fundamental component of any contract. Every valid contract works on the principle of consensus ad idem, which refers to the meeting of minds. Two or more people will be considered to have given consent for a contract when they agree upon the same thing in the same sense. The consent of any party to the contract can be affected by different things; they can be either coercion, fraud, misrepresentation, or undue influence. Coercion means compelling a person to enter into a contract against his will, either by force or threat. Coercion is considered as one of the major factors that influence the decision of the party or individual to enter a contract by forcibly compelling him or her to enter the contract, which otherwise he or she wouldn’t have entered. Undue influence means 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 others.