FREE CONSENT

ARSALAN AHMAD

1ST SEMESTER

SELF FINANCE

B.A.LL.B

CONTRACT ASSIGNMENT

ROLL NUMBER – 7

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Contracts are usually described as valid, void and voidable. Valid Contract is an agreement
enforceable at the law courts. Those agreements which are not enforceable at the law courts, i.e.,
for the enforcement of which legal recourse cannot be taken, are known as Void Contracts. In
between the valid and the void contracts are the voidable contracts. Such contracts are the
outcomes of Flaw in Consent. The genuineness of the consent implies that the parties to the
contract must mean the something in the same sense and not only that but they should mutually
agree voluntarily. If their minds do not meet at the same thing in the same sense voluntarily, then
their consent shall not be called Free or Voluntary. 

According to Section 10 free consent is an essential requirement of a contract. Section 14 defines

“free consent”.

Consent is said to be free when it is not caused by:

1. Coercion (Section 15)

2. Undue Influence (Section 16)
3. Fraud (Section 17)
4. Misrepresentation (Section 18)
5. Mistake (Section 20, 21 and 22)

Consent is said to be so caused when it would not have been given but for the existence of such
coercion, undue influence, fraud, misrepresentation and mistake.

COERCION
Coercion is committing, or threatening to commit, any act forbidden by the Indian Penal Code
(XLV of 1860), or the unlawful detaining or threatening to detain, any property to the prejudice
of any person whatever, with the intention of causing any person to enter into an agreement.

TECHNIQUES OF CAUSING COERCION

Consent is said to be caused by coercion when it is obtained by pressure exerted by either of the

following techniques:

1 . Committing or threatening to commit any act forbidden by the Indian Penal Code.

2 . Unlawfully detaining or threatening to detain any property.

A prominent question was raised in the Madras High Court in this regard in the case of
CHIKKAM AMIRAJU  vs.  CHIKKAM SEESHAMMA. In this case, by threat of suicide, a

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Hindu induced his wife and son to execute a release in favor of his brother regarding a certain
property. It was held by a majority that the threat of suicide amounting to coercion under Section
15 and the release deed was hence voidable.

According to Section 15, if a person commits or threatens to commit any Act forbidden by the
IPC with a view to obtaining the consent of the other person to an agreement, the consent in
such a case is deemed to have been obtained by coercion.

UNLAWFUL DETENTION OF PROPERTY

According to Section 15 coercion could also be caused for the unlawful detaining of any
property to the prejudice of any person with the intention of causing any person to enter into an
agreement.

In the case of MOTHIAH vs. MUTHUKARUPAN CHETTI,  an agent appointed by a person
to maintain books of accounts refuses to hand down the books of the principal until the principal
agrees to release him from all his past liabilities. The principal gave such release. It was held
that the release was obtained by coercion and hence not binding.

UNDUE INFLUENCE
(1) A contract is said to be induced by “undue influence” where the relations subsisting between
the parties are such that one of the parties is in a position to dominate the will of the other and
uses that position to obtain an unfair advantage over the other.
(2)   In particular and without prejudice to the generality of the foregoing principle, a person is
deemed to be in a position to dominate the will of another.
(a)   Where he holds a real or apparent authority over the other, or where he stands in a fiduciary
relation to the other.
(b)   When he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
(3)   Where a person who is in a position to dominate the will of another, enters into a contract
with him, and the transaction appears, on the fact of it or on the evidence adduced, to be
unconscionable, he burden of proving that such contract was not induced by undue influence
shall lie upon the person in a position to dominate the will of the other.
Nothing in this sub-section shall affect the provision of section III of the Indian Evidence Act
1872.

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ESSENTIALS OF UNDUE INFLUENCE
(1)   One of the two parties to the contract is in a position to dominate the will and mind of the
other party. This is presumed when the parties to the contract have a real or apparent authority
over the other or one of the parties has got a fiduciary relationship which puts him in a position
to win over the mind of the other party. Such position or relationship exists in the cases of minor
and guardian; trustee and beneficiary; son and father, wife and husband or vice-versa.
The position is also presumed where the party is disabled or infirm and has to depend upon the
other party to the contract. Mentally deficient and physically disabled people can take the plea of
undue influence in avoiding the contract.
(2)   The dominating party should have obtained an unfair advantage from the weaker party: and
(3)   The transaction between the contracting parties is unconscionable. The bargain is called
unconscionable where the two parties are not on equal footing and one of them is making an
exorbitant profit of the other’s distress.
Unless all the three above stated conditions exist, the contract cannot be avoided on the pretext
of Undue Influence. In the words of Sir Samuel Romilly undue influences is presumed in all the
variety of relations in which dominion may be exercised by one person over another.BUI

BURDEN OF PROOF
The weaker party has a right to avoid the transaction on the plea of Undue Influence. It is the
other party who is to prove that he has not exercised any undue influence in getting the consent
of the weaker party. If the other party is unable to prove it, the court shall set aside the
transaction.

(a)   Parties suffering with physical or mental distress e.g. a patient suffering with actue pain
entering into a contract with a doctor.
(b)   Parties having confidential relations. Confidential relationship is presumed in between
parent and child; guardian and ward; solicitor and client; managing clerk of an attorney and his
client; trustee and cetstui que trust; doctor and patient Chela (disciple) and a Guru (spiritual
advise; fiance and fiancee. There is no undue influence in the relationship of mother and
daughter; husband and wife; grandfather and grandson and landlord and tenant; creditor and
debtor.

FRAUD
Fraud means and includes any of the following acts committed by a party to contract or with his
connivance, or by his agent, with intent to deceive another party thereto of his agent, or to induce
him to enter into the contract:

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(1)   The suggestion, as to fact, of that which is not true, by one who does not to believe it to be
true.
(2)   The active concealment of a fact by one having knowledge or belief of the fact.
(3)   A promise made without any intention of performing it.
(4)   Any other act fitted to deceive.
(5)  Any such act or commission as the law specially declares to be fraudulent.

MERE SILENCE IS NO FRAUD

Explanation to S.17, states in clear terms that mere silence is not fraud. Where silence amounts
to active concealment, it shall amount to fraud. Thus generally silence does not amount to fraud.
However where a party chooses to speak, he must do so clearly and fully. He should not make
partial and fragmentary statements of fact, so that the other party is misled. The court has
decided in Bimla Bai vs Shankarlal (AIR 1959 M.P. 8) that a partial statement verbally
accurate may be as false a statement as if it has been misstated fully. A father called his
illegitimate son, a ‘son’ at the time of fixing his marriage. It was held that the statement was false
and thereby fraudulent.

EFFECTS OF FRAUD
Fraud gives the following rights to the aggrieved party.
(1)   He can avoid the contract and file a suit on the other party for damages
(2)   He can revoke the contract
(3)   He can refuse to fulfill his part of the promise and defend the suit filed by the other party for
the breach of contract for damages or specific performance
(4)   He can treat the contract as a valid one and ask for the specific performance, or for damages
in addition to the substitution of the original contract.

MISREPRESENTATION
Misrepresentation has been defined by the Act as follows: “Misrepresentation” means and
includes:-
(a)   the positive assertion, in a manner not warranted by the information of the person making it,
of that which is not true though he believes it to be true;

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(b)   any breach of duty which without an intent to deceive, gains an advantage to the person
committing it, or any one claiming under him, by misleading another to his prejudice or to the
prejudice of anyone claiming under him.
(c)   causing, however innocently, a party to an agreement to make a mistake as to the substance
of the thing which is the subject of the agreement.

WHEN THE AGGRIEVED PARTY LOSES HIS RIGHT

The aggrieved party shall not be able to exercise any of the above rights in the following cases:-
(a)   If he comes to know of miss-representation and even then takes the benefit of the contract
or approves the contract; or
(b)   If the parties cannot be brought back to their original position. Such situation arises where
the subject matter of the contract has already been consumed or destroyed.
(c)   If the contract cannot be rescinded in full, then it cannot be rescinded at all. Such decision
has already been given in Sheffield Nickel Co. vs Dawin (1872, 2 Q.B.D. 215).
(d)   If the aggrieved party has transferred the rights under the contract ot the third party and the
has acquired these rights in good faith and for consideration. (Phillips Vs Brroks, 1919, K.B.
243)

MISTAKE

One of the essential elements of formation of a valid contract is that offer and acceptance should
correspond exactly. Both the parties should agree to the same thing in the same sense – that
is consensus ad idem.
 Sometimes, one or both parties may be working under some misunderstanding or misconception
of some fact relating to the agreement and may even enter into a contract on that basis. Such
contracts are said to be caused by mistake. When consent of the parties are caused by mistake it
is not free consent.

Mistake may generally be defined as an erroneous belief about something. Broadly speaking,
mistake may be classified as follows –

 Mistake of fact
 Mistake of law

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MISTAKE OF FACT

 The validity of contract is not affected by mistake of law. Where there is a mistake of law, the
contract is binding because everybody is supposed to know the law of the land. The maxim
which applies in such a case is – IGNORANTIA JURIS NON EXCOSAT – which means
ignorance of law is not excusable.

MISTAKE OF LAW

This can be further classified as follows –

                   i.Bilateral mistake – Section 20

                   ii.Unilateral mistake – Section 21

BILATERAL MISTAKE

Section 20 of ICA deals with mistake as to matter of fact essential to the agreement. According
to this Section, where both the parties to an agreement are under the mistake as to matter of fact
essential to the agreement – the agreement is void.

UNILATERAL MISTAKE
In contract to bilateral mistake as envisaged under Section 20 there may also be a unilateral
mistake. Mistake by one of the parties to a contract does not normally affect the validity of the
contract. The provision in this case is envisaged in Section 22 of the ICA. Section 22 provides
that a contract is not voidable merely because it was caused by one of the parties to the contract
being under a mistake as to a matter of fact.

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