Free Consent

Free Consent
Meaning of “Consent” [Sec.13]
Consent means acquiescence or an act of assenting to an
offer.

“Two or more persons are said to consent when they agree

upon the same thing in the same sense”.
What is Free Consent ?
• Meaning of “Free Consent”[Sec.14]
• A consent is said to be free when it is not caused
by-
1.Coercion as defined in Sec15, or
2.Undue Influence in Sec.16 or
3.Fraud as defined in Sec.17,or
4.Misrepresentation as defined n Sec.18 or
5.Mistake, subject to the provisions of Sec.20,21
or Sec.22].
Coercion [Sec.15]
• When a person is compelled to enter in to a contract by
the use of force by the other party or under a threat,
“coercion”is said to be employed.

• Coercion is the committing or threatening to commit, any

act forbidden by the Indian Penal Code,1860 or unlawful
detaining, or threatening to detain, any property, to the
prejudice of any person whatever, with the intention of
any person to enter in to an agreement.
(Sec.15).Examples are…….
Examples ofCoercion
1. A threatens to shoot B if he (B)
does not release him (A) from a
debt which A owes to B.
B releases A under the threat.
The release has been brought
about by Coercion.
…Examples of Coercion
2 .A threatens to kill B if he does not lend Rs.10,000 to C.
B agrees to lend the amount to C. The agreement
entered in to under coercion. Consent is said to be
caused by coercion when it is obtained by:

(a) Committing or threatening to commit any act forbidden

by the Indian Penal Code,1860. Example…
A threatens to shoot B if he (B) does not lend
Rs 500.B lends the amount.The threat amounts to coercion.
Effect of Coercion
When consent to an agreement is caused by
coercion, fraud or misrepresentation, the
agreement is a contract voidable at the option
of the party whose consent was so caused
(Sec.19).

According to Sec.72, a person to whom money has

been paid, or anything delivered by mistake or
under coercion, must repay or return it.
Threat to commit suicide-Does it amount to coercion?
Chikham Amiraju vs. Seshamma (1917) Madras HC.
• In this case, a person held out a threat of
committing suicide to his wife and son if they did
not execute a release in favor of his brother in
respect of certain properties. The wife and son
executed the release deed under the threat.
• Held, “ the threat of suicide amounted to coercion
within Sec.15 and the release deed was, there fore,
voidable”.
Threat to commit suicide-Does it amount to coercion?
[Purabi Bannerjee vs. Basudev Mukherjee(1969)Calcutta]
 It was observed that, “one committing suicide places
himself or herself beyond the reach of the law, and
necessarily beyond the reach of any punishment too.
 But it does not follow that suicide is not forbidden by the
Penal Code.Sec.306 of the Penal Code punishes abetment
of suicide.Sec.309 punishes an attempt to commit suicide.
 Thus suicide as such is no crime, as indeed, it cannot be.
But its attempt is: its abetment too is. So, it may very
well be said that the Penal Code does forbid suicide.” As
such a threat to commit to suicide amounts to coercion.
Duress
In the English Law, the near equivalent of the term
“coercion” is “duress”. Duress involves actual or
threatened violence over the person of another (or
his wife, parent, or child) with a view to obtaining
his consent to the agreement.
If the threat is with regard to the goods or property
of the other party, it is not duress.”
UNDUE INFLUENCE
Section 16(1)

• Definition:

“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 other
and uses that position to obtain an
unfair advantage over the other.”
Burden of proof
 UNDUE INFLUENCE
Section 16(1)
 A person is deemed to be in a position to dominate the the
will of another.

(a) Where he holds real or apparent authority over the

other.E.g.,the relationship between master and servant, doctor
and patient.
(b) Where he stands in a fiduciary relation.[legal relation of
trust and confidence] to the other. E.g., father and son, solicitor
and client, trustee and beneficiary, and promoter and company.
(c) Where he makes a contract with person whose mental
capacity is temporarily or permanently affected by reason of
age, illness or bodily distress. E.g., Between a medical
attendant and his patient.
Examples of UNDUE INFLUENCE
2.A spiritual guru induced his devotee
to gift to him the whole of his property
in return of a promise of salvation of
the devotee.
Held, the consent of the devotee was
given under undue influence
[Mannu Singh vs.Umadat Pandey (1890)]
 UNDUE
Examples of
INFLUENCE
3.An illiterate elderly woman made a
deed of gift of practically the whole of
her property to her nephew who
managed her affairs.Held, the gift
should be set aside on the ground of
undue influence.
[Inche Noriah vs.Shaikh Allie Bin Omar(1929)]
Difference Between
Coercion and Undue Influence
 1.The consent is given under the  1.The consent is given by a
threat of an offence person who is so situated in
relation to another that the other
(Forbidden by Indian Penal person is in a position to
Code) dominate the will of the other.

 2.Coercion is mainly of physical  2.Undue influence is of moral

character.(Violent force) character.(Mental pressure)

 3.It involves criminal act.  3.No criminal act is involved.

 4.There must be an intention of  4.Uses to obtain an unfair

causing any person to enter in to advantage over the other.

contract.
Misrepresentation
A statement of fact which one party makes in the
course of negotiations with a view to inducing the
other party to enter in to a contract is known as a
representation.
It may be expressed by words spoken or written or
implied from the acts and conduct of the parties.
A representation when wrongly made, either
innocently or intentionally, is a misrepresentation.
MISREPRESENTATION &
FRAUD
 Misrepresentation may be-
(I) An innocent or unintentional misrepresentation, or
(II) An intentional, deliberate or willful
misrepresentation with an intent to deceive or
defraud the other party.
The former is called “MISREPRESENTATION”
and the latter “FRAUD”
MISREPRESENTATION

“Misrepresentation” is a
misstatement of a material fact
made innocently with an honest
belief as to it’s truth or non-
disclosure of a material fact,
without any intent to deceive the
other party.
Examples of Misrepresentation
 A while selling his horse to B, tells him that the horse
is thoroughly sound. A genuinely believes the horse to
be sound although he has no sufficient ground for the
belief. Later on B finds the horse to be unsound. The
representation made by A is a misrepresentation.
Requirements of MISREPRESENTATION
 1.It must be a representation of material fact. Mere expression of
opinion does not amount to misrepresentation even if it turns out to be
wrong.

 2.It must be made before the conclusion of the contract with a view to
inducing the other party to enter in to contract.

 3.It must be made with the intention that it should be acted upon by
the person to whom it is addressed.

 4.It must actually have been acted upon and must have induced the
contract.
5.It must be wrong but the person who made it honestly
believed it to be true.
6. It must be made without any intension to deceive the
other party
7.It need not be made directly to the plaintiff

A wrong statement of facts made to a third person with

the intention of communicating it to the plaintiff,also
amounts to misrepresentation.
FRAUD
 “Fraud” exists when it is shown that,
(1) a false representation has been made
(i) knowingly, or
(ii)without belief in it’s truth, or
(iii)recklessly, not caring whether it is true or false, and
(iv)the maker intended the other party to act upon it.
or
(2) there is a concealment of material fact.
………..FRAUD
The intention of the party
making fraudulent
misrepresentation must be to
deceive the other party to the
contract or to induce him to enter in
to a contract.
 ………..FRAUD
 According to Sec.17. “fraud” means and includes any of the following
acts committed by a party to a contract:

1.The suggestion that a fact is true when it is not true and the person
making the suggestion does not believe it to be true;
2.The active concealment of a fact by a person
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 omission as the law specially declares to be
fraudulent.
ESSENTIAL ELEMENTS OF
FRAUD
1. There must be a representation and it must be false:

E.g.,The prospectus of a company did not refer to the existence of

a document disclosing liabilities.This gave the impression that the
company was prosperous.If the existence of the document had
been disclosed the impression would have been different.Held,
non disclosure of information amounted to fraud and any one
who purchased shares on the faith of this prospectus could avoid
the contract.
[Peek vs.Gurney(1873)]
 …………ESSENTIAL ELEMENTS OF
FRAUD
 2.The representation must relate to a material fact which
exists now or existed in the past.

A mere opinion or puffing expression is not regarded as representation of

fact
(i)A sells some spoons to B and makes the following
statements.The spoons are as good as that of X.
[This is a statement of opinion].
(ii) The spoons have as much silver in them as that of X
[This is a statement of fact]
(iii) The spoons are the best available in the market for the price.
[This is a puffing statement].
…………ESSENTIAL ELEMENTS OF
FRAUD
3.The representation must have been made before the
conclusion of the contract with the intention of
inducing the other party to act upon it.
4.The representation must have been made with a
knowledge of it’s falsity or without belief in it’s truth
or recklessly, not caring whether it is true or false.
 …………ESSENTIAL ELEMENTS OF
FRAUD
 5.The other party must have been induced to act upon the
representation or assertion.A mere falsehood is not enough
to give a right of action.

Eg., A bought shares in a company on the faith of a prospectus

which contained an untrue statement that one B was a director
of the company.A had never heard of B and, therefore, the
statement was immaterial from his point of view.A’s claim for
damages in this was dismissed because the untrue statement
had not induced A to buy the shares.
[Smith vs.Chadwick(1884)]
…………ESSENTIAL ELEMENTS OF
FRAUD
6.The other party must have relied upon the
representation and must have been deceived.If
representation does not come to the notice of a
party, it cannot be said to have misled that party
because it does not lead that party at all.

7.The other party, acting on the representation or

assertion, must have subsequently suffered some
loss.
Contracts not necessarily voidable
-Exceptions.

When consent to an agreement is caused by coercion,

fraud or misrepresentation, the agreement is a contract
voidable at the option of the party whose consent was so
caused.But in the following cases, the contract is not
voidable:
1.Where the consent of a party to a contract was
caused by misrepresentation or fraud and that party
could discover the truth by ordinary diligence.
E.g., A by misrepresentation, leads B erroneously to
believe that five hundred tonnes of indigo are made
annually at his factory. B examines the accounts of the
factory, which show that only four hundred tonnes of
indigo have been made. After this B buys the
factory.The contract is not voidable on account of A’s
misrepresentation.
2.Where the party enters into a contract in ignorance to
the misrepresentation or fraud
3.Where, before the contract is avoided,the interest of
third parties intervene .
4 .Where the parties cannot be put back to the
situation ,which would have happened if they were not
misrepresented.
Silence
The general rule is that a person before entering into a
contract need not disclose the material facts which the
party already knows,but he must refrain from making
active concealment .
MISTAKE
 Mistake is erroneous belief about something.
It may be a (1) Mistake of law, or (2) Mistake of fact.

 (1)Mistake of law: It may be….

(a) Mistake of law of the country
(b) Mistake of law of foreign country
 (2) Mistake of fact: Mistake of fact may be,
(a) Bilateral Mistake, or
(b) Unilateral Mistake.
 MISTAKE OF LAW

(1) Mistake of law of the country

 Ignorantia non excusat

 A party cannot be allowed to get any relief on the ground that it had
done a particular act in ignorance of law. A mistake of law is,
therefore, no excuse, and the contract cannot be avoided.

 E.g., A and B enter in to contract on the erroneous belief that a

particular debt is barred by Indian Law of Limitation. This contract is
not voidable.
But, if a person enters in to a contract by making a mistake of law
through the inducement of another, whether innocent or otherwise
,the contract may be avoided.
MISTAKE OF LAW

(2) Mistake of law of a foreign country

Such a mistake is treated as mistake of fact and the
agreement in such a case is void (Sec.21).
 Bilateral Mistake: Where both the parties to an agreement are
under a mistake as to a matter of fact essential to the
agreement, the agreement is void [Sec.20].It may be Bilateral
or Unilateral Mistake

 Bilateral Mistake: It may relate to ……

(a)Subject mater,or (b) Possibility of performance
(a) Subject matter may relate to ………………..
(i)Existence (ii)Price (iii)Quantity (iv) Quality
(v) Identity or (vi) Title.
(b) Possibility of performance :It may relate to,
(i) Physical, or Legal impossibility.
Bilateral Mistake
 The following two conditions have to be fulfilled.
1.The mistake must be mutual:
E.g., A agreed to purchase B’s motor car which was lying down in B’s
garage.Unknown to either party, the car and garage were
completely destroyed by fire a day earlier.The agreement is void.

2.The mistake must relate to a matter of fact essential to the

agreement:
E.g.,A man and woman entered in to a separation agreement under
which a man agreed to pay a weekly allowance to the woman,
mistakenly believing themselves lawfully married. Held, the
agreement was void as there was mutual mistake on a point of fact
which was material to the existence of the agreement.
[Galloway vs.Galloway(19141)].
……Bilateral Mistake
 :

The various cases whish fall under Bilateral mistake are as follows.
1.Mistake as to the Subject matter:
(a)MISTAKE AS TO THE EXISTENCE OF THE SUBJECT MATTER.
E.g., A agrees to buy a horse from be a certain horse.It turns out that the horse
was dead at the time of the bargain, though the neither party was aware of the
fact.The agreement is void.
(b) MISTAKE AS TO THE IDENTITY OF THE SUBJECT MATTER:
E.g., W agreed to buy from R a cargo of cotton “to arrive ex-peerless from
Bombay”.There were two ships of that name sailing from Bombay.One sailing
in October and the other in December.W meant the former ship and R, the
latter.Held, there was a mutual or bilateral mistake and there was no contract.
[Rafles vs.Wichelhaus(1864)]
….Bilateral Mistake
 …………………………………………………1.BILATERAL MISTAKE:

(c) MISTAKE AS TO THE QUALITY OF THE SUBJECT MATER:

E.g., Table Napkins were sold at an auction by y description “with the
crest of Charles 1 and the authentic property of that monarch”.In fact
the napkins were Georgian.Held the agreement was void as there was a
mistake as to the quality of the subject matter.
[Nicholson &Venn vs.Smith Mariott(1947)]
(d) MISTAKE AS TO THE QUANTITY OF THE SUBJECT MATTER:
E.g., A silver bar was sold under a mistake as to it’s weight.There was a
difference in value between the weight as it was and as it was supposed
to be.Held, the agreement was void. [Cox vs.Prentice(1815)]
….Bilateral Mistake
 …………………………………………………1. BILATERAL MISTAKE:

(e) MISTAKE AS TO THE TITLE OF THE SUBJECT MATTER:

E.g., A person took a lease of a fishery which, unknown to either party, already
belonged to him.Held, the lease was void.
[Cooper vs.Phibbs (1815)]

(f)MISTAKE AS TO THE PRICE OF THE SUBJECT MATTER.

E.g., C wrote to W offering to sell certain property for 1,250 pounds.He had
earlier declined an offer from W to buy the same property for 2000 pounds.W
Who knew that this offer of 1,250 pounds was a mistake for 2,250 pounds,
immediately accepted the offer.Held, W knew perfectly well that that the offer
was made by mistake and hence the contract could not be enforced. [Webster
vs.Cecil(1861)]
…………….MISTAKE
 Unilateral Mistake: Where only one of the parties is under
a mistake as to a matter of fact, the contract is not
voidable(Sec.22).
 E.g., A offers to sell his house for Rs.44,000.By mistake he
makes an offer in writing for Rs..40,000.He cannot plead
mistake as a defense.
 There are however, two exceptions.
Regarding the (i) identity of the person contracted with.
(ii)Nature of contract.
Exceptions
 (I )Mistake at to the identity of the person contracted
with:
E.g. If A intends to enter in to a contract with B, C cannot
give himself any right in respect of the contract by
accepting the offer. In such a case the contract is void.
 (ii)Mistake as to the nature of the contract:
Where a person is made to enter in to a contract through the
inducement of another but through no fault.
E.g., M, an old man of poor sight, endorsed a bill of exchange
thinking that it was a guarantee. Held, there was no
contract on the ground that the mind of the signer did not
accompany the signature [Foster Vs. Mackinson (1869)]