41
A' is in dire need of Rs. 100000/- but was unable to get any loan from banks as he had no security to offer. 'A' approached his friend 'B' who knowing the helpless position of 'A' lent money at a very high rate of interest, saying that he had himself borrowed money from 'C'
The contract between 'A' and 'B' was:
The contract between 'A' and 'B' was:
Answer & Solution
Answer: Option
D
Solution:
Undue influence under the Indian Contract Act, 1872 occurs when one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage
In this case, although 'A' was in a helpless financial condition, the mere fact that 'B' was a friend and lent money at a high rate of interest does not automatically prove the use of undue influence
There must be clear evidence that 'B' dominated 'A's will or exploited the friendship in a coercive manner, which is not established in this scenario
Also, charging high interest alone does not render the contract void or unconscionable, unless proven to be oppressive to the extent that it shocks the conscience of the court
The statement that 'B' borrowed from 'C' does not directly mislead 'A' in a way that invalidates the contract
Therefore, the contract is valid, and the correct answer is Option D: Valid as a friend could not be supposed to have wielded undue influence only because the money lent carried a higher rate of interest
In this case, although 'A' was in a helpless financial condition, the mere fact that 'B' was a friend and lent money at a high rate of interest does not automatically prove the use of undue influence
There must be clear evidence that 'B' dominated 'A's will or exploited the friendship in a coercive manner, which is not established in this scenario
Also, charging high interest alone does not render the contract void or unconscionable, unless proven to be oppressive to the extent that it shocks the conscience of the court
The statement that 'B' borrowed from 'C' does not directly mislead 'A' in a way that invalidates the contract
Therefore, the contract is valid, and the correct answer is Option D: Valid as a friend could not be supposed to have wielded undue influence only because the money lent carried a higher rate of interest