Section10 says that free consent is one of the essential elements of a valid contract. The expression “free consent” is defined in Section 14.
“Free consent defined – Consent is said to be free when it is not caused by:-
- Coercion, as defined in Sec 15, or
- Undue influence, as defined in Sec 16, or
- Fraud, as defined in Sec 17, or
- Misrepresentation, as defined in Sec 18
- Mistake, subject to provisions of Sec 20, 21, 22.
FACTORS VITIATING CONSENT
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation, and mistake. Where consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. It is a contract which is enforceable at the option of only one of the parties, namely, the party whose consent was not free.
Section 2(i) defines voidable contract as: An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract.
Where consent is caused by mistake, the agreement is void. A void agreement is not enforceable ab the option of other party. Section 2(g) defines void agreement as an agreement not enforceable by law.
An agreement to which consent is caused by coercion is voidable at the option of the party whose consent was so caused, “Coercion” is defined in Sec 15
“Coercion” is the 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 an agreement.
Explanation- it is immaterial whether the Indian Penal Code, is or not in force in the place where coercion is employed.
For example: A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under IPC. A afterwards sues B for breach of contract at Calcutta.
A has employed coercion, although his act is not an offence by the law of England.
Thus consent is caused by coercion by
- Committing or threatening to commit any act forbidden by IPC
- Unlawfully detaining or threatening to detain any property.
ACT FORBIDDEN BY IPC
If a person commits or threatens to commit an act forbidden by the Indian Penal Code 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. In Ranganayakamma vs. Alwar Setti I.L.R (1889) 13 Mad 214 On the death of her husband, the husband’s dead body was not allowed to be removed from her house for cremation, by the relatives of the adopted boy until she adopted the boy. It was held that the adoption was not binding on the widow as her consent had been obtained by coercion.
UNLAWFUL DETAINING OF PROPERTY:
Under Section 15 coercion could also be caused by 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.
Cases in which there is no coercion
- Threat to strike: Such a threat is neither to commit an offence under IPC, nor is unlawful detaining or threatening to detain any property and hence it did not amount to coercion and agreement made due to strike are valid
- Statutory Compulsion: When a Statute requires a contract to be entered into, the consent in such a case is not deemed to be caused by coercion, undue influence, fraud, misrepresentation or mistake. As held in Andhra Sugars Ltd. vs. State of A.P AIR 1968 S.C 599.
DIFFERENCE BETWEEN ENGLISH AND INDIAN LAW:
Under Common Law ‘duress” consists in actual violence or threat of violence to a person. It only includes fear of loss to life or bodily harm including imprisonment, but not threat of damage to goods. The treat must be to do something illegal, i.e. to commit a tort or a crime.
Coercion & Duress
- In India, coercion means containing or threatening to commit an act forbidden by IPC. Duress, under Common Law, consists in actual violence or threat of violence to a person, whether it be a crime or a tort. Thus unlike coercion, duress is not confined to unlawful acts forbidden by any specific penal law, like IPC, in India.
- In India, coercion can also be there by detaining or threatening to detain any property. In other words, in coercion, an act may be directed against a person or his property. In England, duress is constituted by acts or threats against the person of a man and not against his property.
- Coercion, in India, may proceed from a person who is not a party to the contract, and it may also be directed against a person who may be a stranger to a contract. Whereas in England, duress should proceed from a party to the contract and is also directed against the party to the contract himself, or his wife, parent, child, or other near relative.
Undue Influence is defined in Section 16 of the Contract Act.
- 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.
- 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-
- Where he holds a real or apparent authority over the other or where he stands in a fiduciary relation to the other; or
- Where 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.
- When a person who is in position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on evidence adduced, to be unconscionable, the 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 Section11 of the Indian Evidence Act, 1872.
In order to constitute undue influence, it is necessary to prove that:
- The relations subsisting between the parties are such that one of the party is in position to dominate the will of the other and
- Such a person uses his dominant position to obtain an unfair advantage over the other.
It is necessary that both the condition have ordinarily to be established by the person seeking to avoid transaction.
INSTANCES OF UNDUE INNFLUENCE
- Real or Apparent Authority: A personin authority is definitely able to dominate the will of the person over whom the authority is held. The authority may be real or apparent.
- Fiduciary Relation: Fiduciary relation means a relationship of confidence and trust. A person betrays the confidence and trust reposed in him and gains an unfair advantage over the other party in any contract the suffering party has an option to avoid the contract. Ex. Solicitor and client, husband and wife etc.
- Mental Distress: The last category of person whose will is vulnerable to all sorts of influence is that of “persons in mental distress”. A person is said to be in distress when his mental capacity is temporarily or permanently affected. It may be due to extreme old age or mental or bodily illness or any other cause.
PRESUMPTION OF UNDUE INFLUENCE
In certain cases presumption of undue influence is raised. The effect of the presumption is that once it is shown that the defendant was in a position to dominate the will of the plaintiff, it will be presumed that he must have used his position to obtain an unfair advantage. It will be then for the defendant to show that the plaintiff freely consented in Lancashire Loans Ltd vs. Black (1934) 1KB 380.
According to Section 17, “Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into a contract-
- The suggestion, as a fact, of that which is not true, by one who does not believe it to be true.
- The active concealment of a fact by one having 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.
- Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them
- It is the duty of the person keeping silence to speak or
- Unless his silence is, in itself, equivalent to speech.
A contract the consent to which is induced by misrepresentation is voidable at the option of the deceived party. Misrepresentation means misstatement of a fact material to the contract. Misrepresentation is defined in Section 18
Misrepresentation means and include
- 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.
- Amy breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him.
- 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.
Mistake may operate upon a contract in two ways. It may defeat the consent altogether that the parties are supposed to have given. The mistake may mislead the parties as to the purpose which they contemplated. The cases in which the consent is defeated or rendered unreal fall under the Section 13. This section defines “consent” as follows
“Consent” defined– Two or more persons are said to consent when they agree upon the same thing in the same sense. Consensus ad idem is essential for the creation of the contract.
DEFINITION OF MISTAKE:
Section 20 applies where the mistake does not defeat consent, but only misleads the parties:
Agreement void where both parties are under mistake as to matter of fact- 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.
Explanation: An erroneous opinion as to the value of the thing which forms the subject- matter or the agreement, is not to be deemed a mistake as to a matter of fact.
Section 20 will come into operation:
- When both the parties to an agreement are mistaken
- Their mistake is as to a matter of fact
- The fact about which they are mistaken is essential to the agreement.
Section 22 deals with a situation where only one party is mistaken.
Contract caused by mistake of one party as to matter of fact- A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to matter of fact.
- The identity of the parties
- The identity and nature of the subject- matter of the contract and
- The nature and content of the promise itself.
Mistake operates to avoid an agreement subject to the following limitations
- Mistake of Both Parties: Under Section 20 an agreement is void by reason of mistake when both parties are mistaken as to matter of fact essential to the agreement.
- Erroneous Opinion: The explanation of Section 20 provides that “ an erroneous opinion as to the value of the thing which forms the subject- matter of the agreement is not to be deemed a mistake as to a matter of fact.
- Mistake of Fact and not of Law: Mistake should be of fact and not of law, for Section 21 declares that “a contract is not voidable because it is caused by a mistake as to any law in force in India”.