FREE CONSENT FREE CONSENT

REQUIREMENTS OF “ FREE CONSENT”

• There should be consent• The consent must be free

WHAT IS CONSENT…• Section 13 defines …“ Two or more persons are said to

consent when they agree upon the same thing in the same sense”

i.e. Consensus Ad idem

FREE CONSENT 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.

• X threaten 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”

When is consent caused by coercion…

• Committing or threatening to commit any act forbidden by Indian penal code – X threatens to kill Y if the latter does not agree to sell his diamond ring for Rs. 1500. ( Threat to kill is forbidden by IPC )

Case: Ranganayakamma Vs. Alwar Settey

• A Hindu girl of 13 years, who had just lost her husband, was forced to adopt a boy of their choice by her relatives who refuses to remove the dead body of her husband unless she consented to the adoption. It was held that the adoption was not binding on her since her consent was obtained by coercion. Any person who obstructed the dead body from being removed would be guilty of an offence under section 297 of IPC.

• Unlawful detaining or threatening to detain any property :

Muthua Vs. Muthu Karuppa – an agent refused to hand over the account books of business to the new agent sent in his place, unless the principal released him from all liabilities & such release had to be given before the new agent could get the books. Held that the release deed was voidable.

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 – Yes

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:-

(b) Master & servant(c) Moneylender & borrower(d) Police officer & accused(e) Income tax officer & assesee

2. Where a person stands in a fiduciary relation to the other: A relationship of trust & confidence.

• Father & son, Advocate & client, Doctor & patient

Case : MOODY V. Cox X, sold a certain property to one of his

clients Y. Y filed a suit upon X claiming that the property was over – valued & that his consent was caused by undue influence. The court held that since the relationship X & Y is of client ( fiduciary) the existence of undue influence can be presumed.

3. Where a party to a contract is a person of mental distress – When a person’s mental capacity is temporarily or permanently affected due to advance age or mental or bodily illness.

CONSEQUENCES OF UNDUE _ INFLUENCES

• The agreement becomes voidable at the option of the aggrieved party.

• Aggrieved party may refund the benefit.• If the aggrieved party does not opt to set

aside the contract, it works as a valid contract.

DIFFERENCECOERCION• Threat of an offence

• Physical character• Intention to enter into a

contract• Criminal act is involved

UNDUE INFLUENCE• Dominate the will of

other• Moral character• Intention to take a

unfair advantage• No criminal act is

involved

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

Section 18 … defines Mis- representation

• Unwarranted positive assertion – X says to Y who intends to purchase his land that it produces 50 quintals of wheat per acre. X believes the statement to be true, although he did not have sufficient grounds for the belief. Later on, it was found that land produces only 30 quintals of wheat per acre. This is

mis – representation.

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 MIS- REPRESENTATION

• The contract is voidable at the option of aggrieved party.

• Can rescind

• Loss of recission- cant be restored, after knowing further uses it (lorry),

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

ELEMENTS OF FRAUD • To constitute fraud there must be making a false suggestion – X says to Y that his coat is made of pure wool, though he knows that it is untrue. Y purchases the coat believing X’s statement true. It is a fraud by X and contract is voidable.

• Relate to material fact- not opinion• To constitute fraud there must be an

active concealment of fact. ( Cracked Hoof of a horse )

• Before conclusion of contract- A promise made with any intention of performing it.

• Other party must have relied and been deceived

•

WHEN DOES SILENCE AMOUNT TO FRAUD

• Ordinarily, a mere silence does not amount to fraud.

• Principle of ‘ caveat emptor’• Exceptions :4. It is the duty of the person keeping

silence to speak – in fiduciary relations.5. Silence is, in itself, equivalent to speech-

• A sells by auction to B, a horse which A knows to be unsound. A says nothing about the horse’s unsoundness. B says to A – ‘ if you do not deny, I shall assume that the horse is sound” A says nothing. Here A’s silence is equivalent to speech.

3. Half truth 4. Change in circumstances.

CONSEQUENCES OF FRAUD• Voidable• Can insist on performance if put in same

position.• May claim 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:-bilateral

and unilateral

• Bilateral:-b. Mutualc. Matter of factd. Other:-5. Subject matter.> existence, identity, quality, quantity,

price2. Possibility of performance.

Unilateral mistake is no mistake:-Unless mistake is bought by

misrepresentation or fraud by other party.

Eg painting, oats

Exception• Identity of person contracted with

• Nature of contract