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Free consent

Free consent is an essential requirement of avalid contract. Two or more person are said tohave given their consent when they agree to the

same thing in the same sense.Consent is said to be free when it is not causedby coercion, undue influence, fraud,misrepresentation or mistake

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When the consent is obtained by coercion, undue influence, fraud ormisrepresentation, the contract is voidable at the option of the partywhose consent was so obtained

Eg : Where a person is induced by fraud to sign an agreement, hemay on discovering the truth, either uphold the contract or reject it.If he confirms it, the contract becomes binding and he confirms it,the contract becomes binding and if he rejects the contractbecomes void.

Where the consent is caused by mistake, the agreement isvoid is not enforceable at the option of either party.

Eg : A agree to buy form B a certain of horse it turns out that thehorse was dead at the time of the bargain. Neither party was awareof this fact. The agreement is void

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Coercion

Consent is said to be obtained by coercion if it isobtained by Committing or threatening to commit, an act

forbidden by the Indian Penal code or Unlawfully detaining or threatening to detain any

property ton the prejudice of the party whose consentis being so obtained.

Eg: A obtains a gift deed from B at the point of

a pistol. The contract is voidable since consentof B was obtained by coercion.

Thus coercion means committing or threateningto commit some act which is contrary to law.

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The acts mentioned in Sec 15 need not bedirected against a party to the contract the acts

may be directed against a third party with aview to obtain the consent of the party to thecontract.Eg : A is the father of B. C may threaten B to

get the consent of A to a contract. Where the consent of one of the parties isobtained by the coercion, the contract isvoidable at the instance of the party whoseconsent was so obtained.Eg : As consent to an agreement was obtainedby B by threatening to cause hurt to A if he didnot agree to it. The contract is voidable at theoption of A.

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Coercion is extra-territorial i.e it is not the placewhich determines whether coercion has been

employed or not but it is the act. Even when theact is committed outside India, it amounts tocoercion if such act is an offence under theIndian Penal Code.Eg: A and B who are Indians enter into acontract India. A does an act against B to causehim to enter into the contract, the act is not acrime under the law of Singapore but it is anoffence under Indian Penal code. Bs consent is

said to have been obtained by coercion becauseof it had been committed in India it wouldamount to an offence.

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Undue influence

Consent of a person is said to have been obtained by undueinfluence when- the parties to a contract are so related that one party is in aposition to dominate the will of the other and

- when such position is used by the formed party to obtain anunfair advantage ever the other partyEg: A doctor agrees to give treatment to a patient on condition thatthe patient should enter into an agreement to sell his house to thedoctor. This agreement is voidable since the patients consent wasobtained by undue influence

Undue influence is a subtle form of coercion. Coercion is directedagainst the body or property of a person. Undue influence isdirected against the mind of a person.

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A person is deemed to be in dominatingposition over the other in the followingcases.

1) Real or apparent authority A personwho hold a real or apparent authority over

the other, is definitely able to dominatethe will of that other person.

Eg: a Magistrate or police officer inrelation to an accused person is in aposition to exercise under influence out oftheir authorities.

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3) Mental incapacity -Where the mentalcapacity of a person is temporarily ofpermanently affected due to extreme old age, orillness of mental or bodily distress such a personcan be easily persuaded to give consent to a

contract which may be unfavorable to him.Where consent of such a person is obtained bytaking to be caused by undue influence.

When consent to an agreement isobtained by undue influence the contract isvoidable at the option of the party whoseconsent was so obtained.

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Fraud

Fraud is said to have been committed when any of the followingacts are done by a party to a contract with intention to deceive theother party or to induce him to enter into the contract.-Suggestion, as to a fact something which is not true by a person

who does not believe it to be true.-Actively concealing a fact by a person who has knowledge or beliefof the fact.-Any other act fitted to deceive.-Any such act or omission as the law specially declares to befraudulent

Eg: A purchases Bs car and gives him a fake cheque. Theagreement is voidable since A has committed fraudEg : P sells a washing machine to Q saying that it is a fullyautomatic one while P knows that it is not so. P is committing fraud.

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Activate concealment of material facts amounts to fraud. If a partytakes positive steps to prevent the information from reaching theother party it is active concealment and thus fraud. Mere silence ornon-disclosure except in certain cases does not amount to fraud.

Silence amount to fraud in the following 2 cases- Where it is the duty pf the person to speak but he keeps silent- Where silence is in itself equivalent to speech.

Duty to speak arises when one contracting party reposes trust and

confidence in the other. Duty to speak also arises where one of theparties has no means to discover the truth and depends on thegood sense of the other party.

Eg : In a contract of insurance, the insurance co depends on thedisclosures made by the assured it is therefore the duty of theassured to put the assures in possession of all material facts. It is

for this reason that a contract of insurance is called a contract ofalmost good faith.

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Misrepresentation

Misrepresentation is an untrue statementof a materialfact which induces the other party to enter intoagreement . Misrepresentation may be of followingtypes.

1. Unwarranted assertions - When a person positivelyasserts that a fact is true when his information does notwarrant it to be so, though he believes it to be true, itamounts to misrepresentation.

Eg: A tells B that C will be the director of a company hasobtained this information not from C direct but fromanother person X. this information process untrue. Asassertion amount to misrepresentation.

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2. Breach of duty- Any breach of duty whichbrings an advantage to the person committingit by misleading the other, amount tomisrepresentation.

Eg : While signing a deed, X gave an

impression to Y that it contained mattersalready settled between them. The deedhowever contained something i.e Y had placedconfidence in X but X had failed in his duty to

state the contents of the document. Thisbreach of duty amount to misrepresentation.

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Inducing mistake about subject matter Where aperson does something which induces the other party to

the agreement to mistake as to the subject mater of theagreement it amount to misrepresentation.

Eg : A negotiated a bill of exchange with B but delivereda bill different from what was expressly represented to B. This amount to misrepresentation.

Effect of misrepresentation Where the consent of aparty is caused by misrepresentation the contract isvoidable at the option of the party whose consent was

so caused or The party may insist on performance of the contract.

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Mistake

Where both parties to an agreement are under a mistakeas to a matter of fact essential to the agreement, theagreement is void.Eg : A agrees to buy from B a certain horse. It turns artthat the horse was dead at the time of the bargain.Neither party was aware of this fact. The agreement isvoid.

Mistake may be of 1) Law2) Fact

Mistake of law is not an excuse to set aside the contracti.e a contract is not voidable because it was caused by amistake as to any law in force in India.

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Further mistake may be unilateral or bilateral

unilateral mistake is a mistake by one partyonly. A contract is not voidable merely becauseit was caused by one of the parties to it beingunder a mistake as to a matter of factEg : A hired Bs taxi on 10-04-1999 i.e onUgadi. Actually Ugadi was on 11-04-1999 Asued B for rectification . The court held thatthere could be no rectification since the mistakewas made by A only so for as B is concerned

into contract for 10-04-1999Bilateral mistake is a mistake on both theparties. When the mistake is bilateral thecontract is void.

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Mistake of fact may be any of the followingnature.

1. Mistake as to identity There may be amistake identity of a person who is supposed tobe a party to it. Mistake as to identity occurswhere one of the parties represents himself to

be some person other than he really is.Case study : Cundy vs Lindsay

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2. Mistake as to subject matter When both theparties are mistaken about the subject matter, it

is a mistake of factEg : P agrees to sell 100 bags of wheat to Q. Itturns out that the said bags are lost in firebefore the contract, which was unknown to both

parties. This is a mistake as to subject matter.3. Mistake as to nature of transaction : If both the

parties are mistaken about the nature oftransaction, the contract is void

Eg : Where a gift deed is signed under animpression that it is only a power of attorney,the deed is inoperative