Section 14: Voidable Contracts

Estimated reading: 3 minutes 10 views

1) The following contracts may be made void by the aggrieved party:

(a) A contract concluded through coercion:

Explanation: A person shall be deemed to have indulged in coercion if he/she, with the objective of compelling any person to accept any contract against his/her will, withholds or threatens to withhold property belonging to him/her, or threatens to defame him/her, or takes or threatens to take any other action in contravention of prevailing law.

(b) A contract concluded through undue influence:

Explanation:

(1) Undue influence means influence exercised by a person upon another person who is under his/her influence and is amenable to his/her personal benefit or interest.

(2) Without prejudice to the generality of Clause (1), the following persons shall be deemed to be under the influence of any person and amenable to his/her wishes:

(i) A person living under his/her guardianship, protection or custody.

(ii) A person who cannot take care of their interest temporarily or permanently by reason of old age, sickness or physical or mental weakness.

(iii) A person who can be subjected to under one’s economic or ranking influences.

(c) A contract concluded through fraud:

Explanation: A party to the contract or his/her agent shall be deemed to have committed fraud if he/she leads the other party or his/her agent to believe or takes any action to believe the
the particular matter is true, although he/she knows that it is false, suppresses any information in his/her possession, or indulges in any other fraudulent act punishable under prevailing law, with the intention of deceiving the opposite party or his/her agent.

(d) A contract concluded through deceit:

Explanation:

(1) Any of the following acts shall be taken as deceit:

(i) Submission of false particulars on any matter without a reasonable basis for doing so;

(ii) Misleading any party so as to aggrieve him/her;

(iii) Causing any wrong deliberately on the matter of contract;

(2) In the case of a voidable contract under this section, the following matters shall be dealt with as prescribed below:

(i) The party caused to enter into a contract may, instead of making the contract void, demand his/her position to remain the same as it was prior to the conclusion of the contract.

(ii) Burden of proof of innocence of undue influence shall rest in the party who claims that such contract is not concluded under an undue influence in case a contract is concluded with the person who is under one’s influence and amenable to his/her wishes.

Share this Law

Section 14: Voidable Contracts

Or copy link

Discover Nepal's laws effortlessly. Our user-friendly platform simplifies legal understanding and accessibility, serving individuals throughout the country.