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Y, being in debt to Z, the moneylender of his village, contracts a fresh loan on terms which appear to…

Z bears the burden of proving that undue influence did not induce the contract. Under section 16(3) of the Indian Contract Act, 1872, where a person who can dominate the…

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Y, being in debt to Z, the moneylender of his village, contracts a fresh loan on terms which appear to be unconscionable. Which of the following is correct?

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Correct answer D

Z bears the burden of proving that undue influence did not induce the contract. Under section 16(3) of the Indian Contract Act, 1872, where a person who can dominate the other party’s will makes an apparently unconscionable contract, the burden falls on the party in the dominant position. Illustration (c) applies this rule to a village moneylender who makes a fresh loan on such terms to an existing debtor.

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