Chapter II - Of Contracts, Voidable Contracts and Void Agreements
Section 19A
Section 19A: Setting aside contracts for undue influence
Section 19A deals specifically with contracts induced by undue influence. The affected party has the option of avoidance, while a court may set the contract aside absolutely or on just terms where a benefit was received.
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Need advice on Section 19A?
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
When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just.
Illustrations
(a) A’s son has forged B’s name to a promissory note. B under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside.
(b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.
Rule and business relevance
Consent must have been caused by undue influence as assessed under Section 16. If the party entitled to avoid the contract received a benefit, the court can attach terms and conditions it considers just. The statutory loan illustration shows that setting aside an oppressive bond need not mean keeping the amount advanced without adjustment.
Limits and related provisions
Not every unequal bargain meets Section 16, and Section 19A does not promise an automatic windfall to either party. Identify the actual benefit, the causation of consent and the court's remedial discretion. It is a separate route from the coercion/fraud/misrepresentation wording in Section 19.
Hypothetical business example
Hypothetical: a vulnerable business owner receives a loan under a bond induced by undue influence. The review addresses both avoidance of the oppressive agreement and how the actual money received should be dealt with on terms the court considers just.
Practical decision flow
Establish the Section 16 undue-influence facts and their effect on consent.
Identify all benefits received and obligations already performed under the contract.
Seek advice on avoidance and appropriate court terms rather than assuming every received benefit may be retained.
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 Section 16 undue-influence facts and their effect on consent.
- Identify all benefits received and obligations already performed under the contract.
- Seek advice on avoidance and appropriate court terms rather than assuming every received benefit may be retained.
Avoid
- Not every unequal bargain meets Section 16, and Section 19A does not promise an automatic windfall to either party. Identify the actual benefit, the causation of consent and the court's remedial discretion. It is a separate route from the coercion/fraud/misrepresentation wording in Section 19.
Glossary
- Setting aside
- The court's cancellation of the contract on the basis and terms described here.
- Just terms
- Conditions the court considers fair where the entitled party has received a benefit.
Frequently asked questions
Can the court impose conditions when setting the contract aside?
Yes, where the party entitled to avoid it has received a benefit, on such terms as seem just.
Does an unfavourable price alone trigger this provision?
No. Consent caused by undue influence must be established under the relevant legal test.
Must the benefit always be ignored once undue influence is shown?
No. The section expressly makes received benefits relevant to the court's terms.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026