'X', being in debt to 'Y', the moneylender of his village, contracts a fresh loan on terms which appear…
This reproduces section 16’s moneylender illustration. Where the lender is positioned to dominate the borrower’s will and the fresh transaction appears unconscionable,…
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'X', being in debt to 'Y', the moneylender of his village, contracts a fresh loan on terms which appear to be unconscionable. That the contract was not induced by undue influence is to be proved by:
Answer and explanation
Correct answer A
This reproduces section 16’s moneylender illustration. Where the lender is positioned to dominate the borrower’s will and the fresh transaction appears unconscionable, section 16(3) places the burden of proving absence of undue influence on Y. The statutory inference depends on both dominance and apparent unconscionability; a high interest rate alone does not universally reverse the burden.
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