Multiple choice

A Hindu widow borrowed money from a lender for the purpose of filling a suit for maintenance. The lender advanced money at 100 percent rate of interest. The act of the money lender is induced by

  1. coercion

  2. undue influence

  3. fraud

  4. misrepresentation

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Undue influence (Section 16 of Indian Contract Act) occurs when one party dominates the will of another through a relationship of trust and confidence. A money lender lending at 100% interest to a vulnerable widow for a basic need (maintenance suit) exploits this fiduciary relationship. The unconscionable interest rate and the widow's disadvantaged position clearly show the lender abused their position of influence over her.