The Supreme Court of India in 1963 has observed "The doctrine (of undue influence) applies to acts of bounty as well as to other transactions in which one party by exercising his position of dominance obtains an unfair advantage over another. The Indian enactment is founded substantially on the rules of English Common Law.
The first sub-section of Section 16 lays down the principle in general terms By sub-section (2) a presumption arises that a person shall be deemed to be in a position to dominate the will of another if the conditions set out therein are fulfilled.
Sub-section (3) lays down the conditions for raising a rebuttable presumption that transaction is procured by the exercise of undue influence. The reason for the rule in the third sub-section is that a person, who has obtained an advantage over another by dominating his will, may also remain in a position to suppress the requisite evidence in support of the plea of undue influence."
iii) Fraud
Section 17 of the Indian Contract Act states "Fraud means and includes any of the following acts done with intent to deceive or to induce a person to enter into a contract-
the suggestion that a fact is true when it is not true and the person making the suggestion does not believe it to be true;
active concealment of a fact by person who has knowledge or belief of the fact;
promise made without any intention of performing it;
any other act fitted to deceive;
any such act or omission as the law specially declares to be fraudulent.
The essential elements to constitute fraud are:-
there must be a representation which must be false
such representation must refer to a material fact
the representation must be made before the conclusion of the contract
it must be made with a knowledge of it being false or even without any knowledge of whether it is true or false
the aggrieved party must have relied upon the representation and thereby have been deceived and as a consequence have suffered some loss.
The general rule is that mere silence does not amount to fraud unless the silence in itself is equivalent to speech.
Remedies for fraud: Any party who has been deceived to enter into an agreement by fraud, can avoid the performance of such contract and can also insist that the contract be performed by putting him in a position in which he would have actually been had the representation be true.
