Contract 16 to 18

  Section 16 to 20

Section 16

Undue influence defined -----

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 other 

And uses that position to obtain an unfair advantage over the other 

2.in particular and without prejudice to generality of the foregoing principle 

A person is deemed to be in position to Dominate the will 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 contracts with him 

And the transaction appears on the face of it or on the evidences adduced to be unconscion

The burden of proving that such contract was not induced by undue influence shall be upon the person in a position to Dominate the will of the other.

Landmark decision 1

Moodi versus Cox 

In this case a lawyer had sold his property to his client at very high rate .the client had found that price of property is very high .the lawyer had taken advantage of his relationship .so this contract was voidable under section 16 .

Landmark decision no.2

Mohamad tahir versus shake ali 

In this case there was a widow in Malaya who was illiterate completely .she had got excessive property after his husband 's death .she called a boy  from Arab to look after this property .the boy had prepared a gift deed with help of a lawyer.all the property had been gifted to that boy except for 30 dollar .that lady had become helpless .

The court had decided that this gift deed was  absolutely voidable due to undue influence of that boy .

Landmark decision 3

1.loyads bank versus Bandi 

A contractor had taken money from a bank but he could not repay that debt .the bank demanded some mortgaged .he persuaded his old father for this mortgage .the bank manager went to his father house with ready papers and got his signature . Now bank wanted to auction this house. Bundi  wanted to stop this auction on the basis of undue influence .

Decision ----the court decided that  the old man consent had been taken under undue influence .so this contract was voidable at the option of that old man .

Landmark decision no.4

Contract with pardanashin woman .....

Pardanashin woman are those woman who live completely alone in society.

Example ----a woman who  had presented before registrar office for sign and went for court for testimony .she used to determine rent of her houses.then such lady  cannot be called pardanashin woman .

Landmark decision 

Munshi Bazloo Rahim versus shamnunisha begum .

A widow women had remarried and given valuable securities to her new husband .she had proved that she was a pardanashin woman .she had given these securities for interest only .on the contrary her husband had proved that he had given proper consideration for these securities .

Decision ----that the woman was pardanashin .so this contract was voidable at the option of that pardanashin woman 

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 greater amount than sum due in respect of the advance.A employs undue influence.

b .A a man enfeebled by disease of age induced by B 's influence over him as his medical attendant to agree to pay B an unreasonable sum for his professional service B employs undue influence .

C.A being in debt to B the money lender of his village 

Contacts a fresh loan on terms which appears 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 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 .

17.Fraud defined -----Fraud means and induces any of the following acts committed by a party to a contract 

Or with his connivance 

Or by his agent 

With intent to deceive 

Another party there to or his agent or to induce him to enter into  the contract .

1.the suggestion as a fact of that which is not true by one who does not believe it to be true .

2.the active concealment of a fact by one having knowledge or belief of the fact.

3.a promise made without any intention of performing it .

4.any other act fitted to deceive 

5.any such act or omission as the law specially declares to be fraudulent.

Explanation ---mere  silence as to facts likely affect the willingness of a person to enter into a contract is not fraud 

Landmark case 

The definition of fraud had been givenin

 Deri versus Peek 

Facts-----it was said in the prospectus of a company that power had been given by special act of parliament to run steam tram .this was true but the permission of board of Trade is essential .but nothing was mentioned in prospectus .board had not given permission.the company had been dissolved.the plaintiff had bought some dividends on basis of prospects .the board did not give their permission.the company had dissolved.

Plaintiff had purchased some dividends and his money had lost .he filed a case against the director for fraud .

Decision ----they were not guilty of fraud 

Because they had worked in Bonafide intention.deliberately misrepresentation can become fraud .

Landmark judgement 2

Hazi Ahemd versus Abdul Gani Khan 

Here a girl who suffered from epilepsy .her engagement had been done a  plaintiff.but after some time engagement had been broken.the plaintiff had wanted all the expenditure of engagement .

Decision ---the plaintiff did not get any compensation.it is not the duty of a person that he will advertise drawbacks of his family.so this is a voidable contract under  misrepresentation but plaintiff cannot get any compensation.

Landmark decision no 3

Raj gopal Ayer versus south indian rubber works 

It is reported in a company prospectus that those person are mentioned in prospectus they  will director of company. This was true at that time.but those person had denied to become director of that company before allocation of shares .this fact had not been discloses before proposes.

Decision ----this silence is amounting to fraud .because this is the duty of company to disclose this fact 

Unless the circumstances of the case are such that regard being had to them it is the duty of the person keeping silence to speak or unless his silence is in itself equivalent to speech.

Illustrations 

A.A sells by auction to B a  horse which A knows to be unsound .A says nothing to B about the horse 's unsoundness this is not fraud in A .

b.B is A 's daughter and has just come of age .here the relation between the parties would make it A 's duty to tell B if the horse unsound.

C.B says to A ----if you do not deny it ,I shall assume that the horse is sound .A says nothing here .A 's silence is equivalent to speech.

D.A and B being traders enter upon a contract .A has private information of a change in prices which would affect B's willingness to proceed with the contract.A is not bound to inform B.

Section 18.

Misrepresentation defined -------

Misrepresentation means and includes----

1.the positive assertion in a manner not warranted by the information of the person making it if that which is not true  though he believes it to be true .

2.any breach of duty which without an intent to deceive gains an advantage to the person  committing it or any one claiming under him .by misleading Another to his prejudice or to  the prejudice of any one claiming under him 

3.causing however innocently apartly to an agreement to make a mistake as to the substance of the thing which is the subject of agreement.

Landmark decision (unwarranted statement)

Ocenaci steam navigation company versus sunderdas dhramday 

Respondent had hired a ship from a plaintiff.plaintiff had disclosed that this ship has capacity of 2800 ton.the plaintiff had used to relied on it.but actual capacity is 3000 ton .at the option of respondant party this contract may be voidable.

2.breach of duty 

Land mark case 

Oriental banking corporation versus jhon flaming 

The plaintiff had not time to read the documents.he had signed the document without reading the document . because respondent had assured him about the document.according document there is a condition which gives exemption respondent from a liability .so plaintiff had done this work on the assurance of respondent .so this contract is voidable at the option of plaintiff.

Landmark judgement of misrepresentation...

Widh versus offlagan 

In this case a doctor had wanted to sell his medical practice .he had told the plaintiff that he used to earn 2000 pond every year from this practice .but he fell ill for some times  . The conversation continued to run for five months .so number of patients  had decreased .but he didn't tell this fact to plaintiff .so this case contract had been rescinded under misrepresentation .

Landmark judgement 

Esso petrolium company ltd.versus modern 

In this case petrolium company had purchased land to establish petrol pump ⛽.there was estimate that 2000  lakh galon petrol will be sold within three years .but this petrol pump had been established at rear side of that land .from where megh high way  was at distance .but company had not disclosed this fact  to the petrol pump lessee .he has faced loss .the company had been held liable under this section of misrepresentation .