CONSENT; FREE CONSENT &
FACTORS VITIATING FREE CONSENT
Section 13 – Section 22
INDIAN CONTRACT ACT, 1872
Section
13 Consent
14 Free consent
15 Coercion
16 Undue influence
17 Fraud
18 Misrepresentation
19 Voidability of agreements without free consent
19-A Power to set aside contract induced by undue influence
20 Agreement void where both parties are under mistake as to matter of fact
21 Effect of mistakes as to law
22 Contract caused by mistake of one party as to matter of fact
CAUSE OF CONTRACT EFFECT OF CONTRACT
COERCION Voidable
UNDUE INFLUENCE Voidable
FRAUD Voidable
MISREPRESENTATION Voidable
MISTAKE
▪ Mistake of Fact
• Unilateral Mistake Not voidable (Valid)
• Bilateral Mistake Void
▪ Mistake of Law
• Mistake of Indian Law Not Voidable (Valid)
• Mistake of Foreign Law Mistake of Fact
SECTION 13
CONSENT
Two or more persons are said to consent when they agree
upon the same thing in the same sense.
SECTION 14
FREE CONSENT
Consent is said to be free when it is not caused by —
(1) Coercion, as defined in Section 15, or
(2) Undue Influence, as defined in Section 16, or
(3) Fraud, as defined in Section 17, or
(4) Misrepresentation, as defined in Section 18, or
(5) Mistake, subject to the provisions of Sections 20, 21 and 22.
ELEMENTS OF FREE CONSENT
Consent is considered to be free consent when the following factors are satisfied:
▪ It should be free from coercion.
▪ The contract should not be done under the pressure of undue influence.
▪ The contract should be done without fraud.
▪ The contract should not be made through misrepresentation.
▪ The contract should not be made by mistake.
FACTORS VITIATING FREE CONSENT
• COERCION
• UNDUE INFLUENCE
• FRAUD
• MISREPRESENTATION
• MISTAKE
FACTORS VITIATING FREE CONSENT
• Coercion (Section 15)
• Undue Influence (Section 16)
• Fraud (Section 17)
• Misrepresentation (Section 18)
• Mistake (Section 20, 21, 22)
COERCION
When a person commits or threatens to commit an act which is
forbidden under the Indian Penal Code, or detains an object
unlawfully or threatens to do so with the intention to force a
person to enter into a contract, then it is said to be coercion.
When a person
• Commits an Act which is forbidden under the Indian Penal Code
• Threatens to commit an Act which is forbidden under the Indian Penal Code
• Detains an object unlawfully
• Threatens to detain an object unlawfully
With the intention to force a person to enter into a contract
Then it is said to be coercion.
Case: Chikkam Ammiraju And Ors. v. Chikkam Seshamma And Anr. (1917)
Facts: In this case, the husband held out a threat of committing suicide to his wife
and son if they did not execute a release deed in favor of his brother. The wife
and son executed the release deed under the threat.
Judgment: The transaction was set aside on the ground of coercion. The High
Court of Madras held that, though a threat to commit suicide is not punishable
under the Indian Penal Code, it is deemed to be forbidden by that code.
UNDUE INFLUENCE
When a contract is made between two parties and one of
them is in the position to dominate the will of the other party
and takes unfair advantage of the position, then the contract is said
to be made out of undue influence.
When a contract is made between two parties and
▪ One of them is in the position to dominate the will of the other party
and
▪ Takes unfair advantage of the position
Then the contract is said to be made out of undue influence.
Case: RANEE ANNAPURNI NACHIAR v. SWAMINATHA CHETTIAR (1910)
In this case, a poor Hindu widow was in great need of money to
establish her right to maintenance. She took a loan of Rs. 1,500/-
bearing a rate of interest of 100% p.a. The High Court of Madras held
it to be an unconscionable transaction due to undue influence and
modified the interest rate to 24% p.a.
Parties that can be affected by undue influence
▪ Real and apparent authority
▪ Fiduciary relationship
▪ Lawyer and client
▪ Doctor and patient
▪ Trustee and beneficiary
▪ Creditor and debtor
▪ Landlord and tenant
▪ A person whose mental capacity is low
▪ A person who is of Old age
▪ A person who is of Tender age
FRAUD
Fraud means an action that includes the false assertion of facts, concealment of
facts and any promise with the intention to deceive a person. According to
Section 17 of the Indian Contract Act, 1872 when a party contracts with the
other party with the intention to deceive amounts to fraud.
Does silence amount to fraud?
Mere silence does not amount to fraud. But when there is a duty to speak and silence is
equivalent to speech then it amounts to fraud. When two parties make an agreement, the
parties are not compelled to disclose every fact to the other party. It is the duty of the
other party to enquire about things rather than expecting the party to come and disclose
the fact. When a person keeps silencing on the facts which would deceive the other
person, then the person can be convicted of fraud.
Case: Jaswant Rai v. Abnash Kaur (1973)
In this case, it was found that the vendor concealed the fact that the material to be sold
was defective. The Hon’ble High Court of Delhi held that the non disclosure of the facts
amounted to fraudulent activity of the vendor
MISREPRESENTATION
Misrepresentation means a false representation of the fact. It is the stating
of deceiving information which results in the assertion of the other party into
entering into a contract and subsequently undergoing loss. The information,
however, presented by the guilty party is a result of genuine belief about
the matter.
There are three kinds of misrepresentation:
▪ Negligent Misrepresentation
▪ Innocent Misrepresentation
▪ Fraudulent Misrepresentation
MISTAKE
Mistake may be defined as the erroneous belief concerning something.
Whenever an agreement is made under a mistake, there is no consent,
and the agreement is void.
Mistake may be of two types:
(1) Mistake of Law and
(2) Mistake of Fact.
Agreement void where both parties are under mistake as to matter of fact
20
(Bilateral Mistake)
21 Effect of mistakes as to law
Contract caused by mistake of one party as to matter of fact
22
(Unilateral Mistake)
MISTAKE
• UNILATERAL
• BILATERAL
Mistake of Law can be further classified into:
(a) Mistake of Indian Law.
(b) Mistake of Foreign Law.
Mistake of Fact can be further classified into:
(a) Unilateral Mistake
(b) Bilateral Mistake
