Section 16(3) treats certain transactions as 'unconscionable' and shifts the burden of proof regarding undue influence. Which is the BEST statement of the rule?
AIf a party in a position to dominate the will of another enters a transaction that appears unconscionable, the burden lies on him to prove the contract was NOT induced by undue influence
BThe burden shifts only when fraud is also pleaded
CThe burden lies on the dominant party only in contracts of insurance
DThe burden is always on the party alleging undue influence
Answer & Solution
Correct answer: A. If a party in a position to dominate the will of another enters a transaction that appears unconscionable, the burden lies on him to prove the contract was NOT induced by undue influence
Section 16(3) raises a presumption: once dominance + unconscionable transaction is shown, the dominant party must rebut undue influence. The rule reflects the equitable principle in Allcard v Skinner (1887).
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