Question

Legal Principle: The act of using influence on another and taking undue advantage of that person is called undue influence.

Factual Situation: A borrowed Rs.50,000 at 12 percent per annum interest from B repayable on demand. B made the demand and on failure of A to pay, he was about to sue A to get back his money. A requested B to take interest at the rate of 18 per cent per annum. On refusal to pay interest at 18 percent, by A,B filed a suit.

Issue: Whether B will succeed in his suit?

• A. No, he will not succeed because he himself offered to pay 18 per cent interest per annum.
• B. He will succeed.
• C. It is a voidable contract so B will not succeed.
• D. None of these.

Answer 1

Answer: (B)

He will succeed.

• A contract is an agreement enforceable by law. Such agreement must contain an offer, its acceptance, consideration of such agreement as well as free consent of the parties. Also, there must be intention to enter legal relationship to give rise to a contract. There can be perversion of the free consent form of misrepresentation or undue influence or a fraud.
  
• Undue influence in contract law is the inappropriate pressure applied by a trusted, more powerful party on a trusting, less powerful party to enter into a legally binding agreement against their will.
  
• In the present case, A tried to take advantage of B by raising the interest rate but later refused to pay the same as well. In this case, contract still holds good as A requested B to change the rate and did not use undue influence as per its definition, and hence, does not invalidate the contract and there is a breach of contract by A and hence, can be liable. Hence, B's suit will succeed.