Proof of good faith in transactions where one party is in relation of active confidence
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Summary
When a transaction's good faith is challenged and one party was in a position of active confidence toward the other, the party in that position must prove the transaction was in good faith. It applies where a confidential or fiduciary-type relationship exists and the other side disputes the deal. If the confident party cannot prove good faith, the transaction is viewed with suspicion.
Example
Rohan appoints Arjun as his attorney. Arjun sells Rohan's house and Rohan sues claiming the sale was not in his interest. Because Arjun stood in a position of active confidence, the burden is on Arjun to prove the sale was in good faith.
Bare Act
Enacted textWhere there is a question as to the good faith of a transaction between parties, one of whom stands to the other in a position of active confidence, the burden of proving the good faith of the transaction is on the party who is in a position of active confidence.
Illustrations
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(a) The good faith of a sale by a client to an attorney is in question in a suit brought by the client. The burden of proving the good faith of the transaction is on the attorney.
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(b) The good faith of a sale by a son just come of age to a father is in question in a suit brought by the son. The burden of proving the good faith of the transaction is on the father.
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