Contracts Act · s 20

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s 20Power to set aside contract induced by undue influence

When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the court may seem just.

Illustrations

(a)

A’s son has forged B’s name to a promissory note. B, under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the court may set the bond aside.

(b)

A, a moneylender, advances $100 to B, an agriculturist and, by undue influence, induces B to execute a bond for $200 with interest at 6 per cent per month. The court may set the bond aside, ordering B to repay the $100 with such interest as may seem just.