Chapter II - Of Contracts, Voidable Contracts and Void Agreements
Section 16
Section 16: Undue influence
Section 16 defines undue influence through domination of another person's will and use of that position for an unfair advantage. It also specifies circumstances in which the burden of disproving undue influence shifts.
On this page
Need advice on Section 16?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) A contract is said to be induced by “undue influence” 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 other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another—
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872).
Illustrations
(a) A having advanced money to his son, B, during his minority, upon B’s coming of age obtains, by misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the advance. A employs undue influence.
(b) A, a man enfeebled by disease or age, is induced, by B’s influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services. B employs undue influence.
(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence.
(d) A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced by undue influence.
Rule and business relevance
Real or apparent authority, a fiduciary relationship or the described impairment by age, illness or distress can establish a position to dominate. Where that position exists and the transaction appears unconscionable on its face or evidence, subsection (3) puts the burden on the dominant party to show that the contract was not induced by undue influence.
Limits and related provisions
An expensive bargain or ordinary market scarcity alone does not prove undue influence; the statutory illustration distinguishes a high-rate bank loan in ordinary business. The domination and unfair-advantage conditions matter, and the burden shift is not triggered by every unequal transaction. Section 19A concerns setting the contract aside.
Hypothetical business example
Hypothetical: a trusted adviser uses a client's serious illness and dependence to obtain a grossly one-sided business transfer. The review examines the relationship, capacity, benefit and circumstances, rather than relying only on the low price.
Practical decision flow
Establish the relationship and the facts said to place one party in a position to dominate the other.
Examine use of that position, unfair advantage and whether the transaction appears unconscionable.
Assess the evidential burden and possible Section 19A relief, including the effect of benefits received.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Establish the relationship and the facts said to place one party in a position to dominate the other.
- Examine use of that position, unfair advantage and whether the transaction appears unconscionable.
- Assess the evidential burden and possible Section 19A relief, including the effect of benefits received.
Avoid
- An expensive bargain or ordinary market scarcity alone does not prove undue influence; the statutory illustration distinguishes a high-rate bank loan in ordinary business. The domination and unfair-advantage conditions matter, and the burden shift is not triggered by every unequal transaction. Section 19A concerns setting the contract aside.
Glossary
- Fiduciary relation
- A relationship of trust relevant to the statutory domination inquiry.
- Unconscionable transaction
- A transaction appearing sufficiently unfair in the statutory context to engage the specified burden inquiry.
Frequently asked questions
Does a high price alone establish undue influence?
No. Read the relationship, domination and unfair-advantage requirements together.
When does the stated burden shift?
Where the person is in a position to dominate the other's will and the transaction appears unconscionable on its face or evidence.
Is the remedy governed by Section 19A?
Section 19A specifically addresses setting aside a contract induced by undue influence.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026