Section 15 and Section 16 of Indian Contract Act 1872 deals with Coercion and Undue influence respectively.

      In coercion consent is obtained by threatening to commit an act which unlawful / punishable under the Indian Penal Code 1860.   Whereas Undue influence is “ an improper use of any power over the party to make him enter into an agreement.


Distinction between Coercion and Undue Influence:

No
Coercion
Undue influence
1.
Section 15 of The Indian Contract Act, 1872 defines coercion.
Section 16 of the Indian Contract Act 1872 deals with undue influence.
2.
Meaning: Coercion is a process, by which consent is obtained by threatening to commit an act punishable under the Indian Penal Code, 1860.

Meaning : Undue influence is “ an improper use of any power over the party to make him enter into an agreement.  
3.
Definition : Section 15 of Indian Contract Act  defines coercion as “the committing or threatening to commit, any act forbidden by the IPC or the unlawful detaining, or threatening to obtain, any property to the prejudice of any person whatever with the intention of causing any person to enter into an agreement”
Definition : Section 16 of the Indian Contract Act Defines ‘undue influence’ as “ an influence exercised by one party over the other party, where the relationship between them is such that one party is in a position to dominate the will of the other for an unfair advantage.”   
4
Example : ‘ X’ Threatens ‘Y’ with a Gun to enter into an agreement with ‘C’
Example : If an officer induces his subordinate to give his consent to an agreement against his will, the officer is said to have employed undue influence over his subordinate.   
5.
Some relationship may or may not exist between the parties to the contract.
In undue influence, there must exist some relationship between the parties to the Contract.  
6.
In Coercion consent is obtained under the influence of threat to commit an act forbidden by law. i.e. Indian Penal Code.  
Consent is obtained under moral influence, taking  the advantage of the weaker position of the other party
7.
There exists use of physical force
There exists the use of moral force or mental pressure.  
8.
Effect of Coercion : An agreement entered into under coercion is voidable at the option of one party
Effect of Undue Influence : If the contract is entered into by obtaining consent through undue influence, the contract is voidable.

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