Free Consent

By:
Ms. Deepika
Professor, Business Law
WHAT IS CONSENT…
• Section 13 defines …
“ Two or more persons are said to be in
consent when they agree upon the
same thing in the same sense”
i.e. Consensus Ad idem
FREE CONSENT
According to Section 14, consent is said to be free
when it is not caused by:
• Coercion (sec 15)
• Undue – influence ( sec 16 )
• Fraud ( sec 17 )
• Misrepresentation ( section 18 )
• Mistake ( sec 20,21,22 )
COERCION
*In simple words coercion means forcibly
compelling a person to enter into a contract.
Example: X threatens to kidnap Y’s son if he does not lend
Rs. 50,000 to Z. Y agrees to lend the amount to Z.
Though the coercion proceeds from X against Y’s son,
yet the agreement is entered under coercion.
COERCION… Definition

• Section 15 defines coercion as follows -

“ Coercion is committing or threatening to
commit any act forbidden by the Indian
penal code, 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 agreement”
CONSEQUENCES OR
EFFECT
OF COERCION
• The contract is voidable at the option of party whose
consent was obtained by coercion.
• Any benefit has to restored back.
• If the aggrieved party does not opt to set aside the
contract, it works as a valid contract.
• Does threat to commit suicide amount to
Coercion?
• Does Threat to file a suit amount to coercion?
UNDUE INFLUENCE
• The strong mind overpower the weak mind of a person &
induces him to do which he would not have done if left to
his own judgment. It is a kind of mental coercion.
• The presence of undue influence at the time of contract
has to be proved by the party alleging that undue
influence existed.
UNDUE INFLUENCE…
Definition
• Section 16
“ A contract is said to be induced by undue –
influence where :
(a) The relation subsisting between the parties are such that
one of the parties is in a position to dominate the will of
the other.
(b). He uses the position to obtain an unfair advantage over
the other.”
Person is deemed to be in
position to dominate the will of
another…
• 1. Where a person holds a real or apparent
authority over the other:-
(a) Master & servant
(b) Parents and children
(c) Doctor and Patient
(d Solicitor and Client
Where a person stands in a fiduciary relation to the other:
A relationship of trust & confidence.
Example :Father & son, Advocate & client, Doctor
& patient
Burden of Proof
• In case of presumption of Undue Influence – lie upon the
person who was in the position to obtain an unfair
advantage
• Otherwise – upon the aggrieved party
CONSEQUENCES OF UNDUE _
INFLUENCES
• The agreement becomes voidable at the
option of the aggrieved party.
• Aggrieved party has to restore the benefit.
• If the aggrieved party does not opt to set
aside the contract, it works as a valid
contract.
MIS-REPRESENTATION
• The word ‘representation’ means a
statement.
• A representation which is false or misleading is known as
misrepresentation.
• It may be innocent or intentional
Misrepresentation
• According to Section 18, “ 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
B) Any breach of duty which, without an intention to
deceive, gains an advantage to the person committing it,
or anyone claiming under him by misleading another
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.
ESSENTIALS OF
MIS - REPRESENTATION
• There should be a representation of facts not opinion
• Representation is untrue
• The representation induces the other party to enter into a
contract.
• The party making representation does not intend to
deceive the aggrieved party.
• The party who relied on the untrue statement suffer from
loss.
Consequences of
Misrepresentation
• A) Avoid or rescind the contract
• B) Accept the contract but insist that he shall be placed in
the position in which he would have been, if the
misrepresentation so made, had been true
FRAUD
• When any person makes to another a statement which he
does not himself believes to be true to induce the latter to
enter into the contract, he commits a fraud.
• INTENTIONAL MIS – REPRESENTATION
AMOUNTS TO FRAUD
Definition of fraud
• According to Section 17, “Fraud means and includes any of the
following acts committed by a party to a contract or by his agent
with intent to deceive or to induce other party to enter into the
contract”
• The representation that a fact is true when it is not true by one who
does not believe it to be true
• The active concealment of a fact by a person who has knowledge or
belief of the fact
• A promise made without any intention of performing it
• Any other act fitted to deceive
• Any such act or omission as the law specially declares to be
fraudulent
Can silence be fraudulent?
• As a rule mere silence is not fraud
• Silence is fraudulent, if the circumstances of the case are such that
‘it is the duty of the person keeping silence to speak’
• - Fiduciary relationship
• - Insurance
• - Marriage
• -Family settlement
• -Share allotment
• Silence is fraudulent where the circumstances are such that
‘silence in itself equivalent to speech’
Effect OF FRAUD
• Rescind the contract
• Accept the contract but insist that he shall be placed
in the position in which he would have been, if the
fraud so made, had been true
• Can also sue for damages
MISTAKE
When the parties do not agree on the same thing in the same
sense because of some misunderstanding, it is known as ”
MISTAKE”
• TYPES OF MISTAKES :
Mistake of law, Mistake of fact
 MISTAKE

Mistake Mistake of
of Law Fact
Every one is Bilateral
deemed to be
conversant with Unilateral
the law of his
country,
therefore, it is no
excuse and does
not give right to
the parties to
avoid contract
BILATERAL MISTAKE
• Where parties to an agreement misunderstood each other.
• Both the parties should be under a mistake
• Mistake must relate to some fact and not to judgement
• Fact must be essential to the agreement
• Bilateral mistake makes the contract void
UNILATERAL MISTAKE
• Where only one party is mistaken as to the matter of fact
• Contract will be valid
• Agreement is void- ab- initio in the following cases-
A) Mistake as to the identity of person contracted
B) Mistake as to the nature and character of a written
document.