Contract

A binding agreement between two or more parties for performing, or refraining from performing, some specified act(s) in exchange for lawful consideration.

The contract, to be valid must contain some ingredients. One of the most important element is the free consent of parties.

CONSENT

According to section 13 two or more persons are said to consent when they agree upon the same thing in the same sense. This means that there should be perfect identity of mind. consensus ad idem) regarding the subject matter of the contract.

free consentA Consent is said to be free when it is not caused by the following: -Coercion (sec 15).Undue Influence (sec 16).Fraud (sec 17).Misrepresentation (sec 18).Mistake (sec 14).

Flaw in ConsentFlaw in Consent

Coercion(sec15)

Coercion(sec15) Undue Influence

(sec 16)

Undue Influence(sec 16) Misrepresentation

(sec 17,18)

Misrepresentation(sec 17,18) Mistake

(sec 20,21)

Mistake(sec 20,21)

Fraudulent or Willful(sec 17)

Fraudulent or Willful(sec 17) Innocent or

Unintentional(sec 18)

Innocent orUnintentional

(sec 18) Mistake of Fact(sec 20)

Mistake of Fact(sec 20) Mistake of Law

(sec 21)

Mistake of Law(sec 21)

Coercion

SECTION 15 – 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, whatsoever with the intension of causing any person to enter into an agreement .

Effect of Coercion - Section 19

When the consent of a party to an agreement is obtained by coercion, the contract becomes voidable at the option of the party ,whose consent is so obtained.

The burden of proving that the consent was obtained through coercion shall be upon the party who wants to set aside the contract on the plea of contract.

Example: -

An agent refused to hand over the account books of business to the new agent unless the principle released him for all liabilities. The principal had to give a release deed as , demanded. Held , the release deed was given under coercion and was voidable at the option of the principle (MUTHTA Vs MUTHU KARUPPA, (1925) 50 Mad. 786

UNDUE INFLUENCE - Section16

Undue influence is the improper use of any power possessed over the mind of the contracting party. According to section 16, a contract is said to be affected by undue influence when:

The relations subsisting between the parties are such that one of the parties is in a position to dominate the will of other.

Uses that position to obtain an unfair advantage over the other.

Example of Undue Influence

By operation you just execute a deed of giving your Whole property to me

Difference between coercion and undue influence

Coercion Coercion

The consent of the aggrieved party is The consent of the aggrieved party is taken by committing or threatening to taken by committing or threatening to commit an act forbidden by Indian commit an act forbidden by Indian

Penal Code.Penal Code.

Undue InfluenceUndue Influence

The consent of the aggrieved party is The consent of the aggrieved party is obtained by dominating the party by obtained by dominating the party by taking an unfair advantage of his taking an unfair advantage of his position.position.

Physical force is exercised. Physical force is exercised.

Relationship between the promisor Relationship between the promisor and the promisee is not necessary.and the promisee is not necessary.

Moral force is used in undue Moral force is used in undue influence.influence.

Some sort of relationship must exist Some sort of relationship must exist between the two parties to the between the two parties to the contract.contract.

Fraud (SANDEEP)

Section 17

Meaning of Fraud

Misrepresentation of facts may be intentional or innocent. Intentional misrepresentation has been termed as Fraud and innocent misrepresentation has been termed simply as ‘misrepresentation’

in the contract act.

Misrepresentation

Misrepresentation is a false representation made innocently without any intention of deceiving the other party .It may include two things:

Wrong statement of a material fact not known to be false

Non-disclosure of facts where there is a legal duty to disclose without intention to deceive.

Difference between Fraud and Misrepresentation

Misrepresentation FraudThere is no intention to deceive or to gain any undue advantage.

In fraud the false statement is made deliberately with a clear intention of deceiving the other party.

It makes the other contract only voidable at the option of the party whose consent has been so caused.

In fraud the injured party besides avoiding the contract may also claim the damages.

MISTAKE

Mistake of Law

Mistake of law is further divided into three categories: -

Mistake of Indian law Mistake of Foreign law Mistake as to Private rights of

the parties

Mistake of Fact

Mistake of fact can be categorized into: -

Bilateral mistake Unilateral mistake

Example: -

H bought oats from S a sample of which had been shown to H. H erroneously thought that oats were old. The oats were however New. Held, H could not avoid the contract. [Smith v. Hughes, (1871) L. R. 6 Q. B. 597].

Role play

A NRI couple wants to come to India A NRI couple wants to come to India and sell their property.and sell their property.

They fly from New York to Chennai.They fly from New York to Chennai. The play starts here.The play starts here.

Husband wants to sell wife’s IPod!

He also knew that this IPod was not working…

A horse for contract!

The Stable On Fire…

ROLE PLAY

Case A

Case BCase CCase D

• Undue Influence

• Mistake• Coercion• Fraud

Questions

Can we ask some???

MCQs

1. According to the Indian Contract Act, free consent is not the product of: -

a) Coercionb) Undue Violencec) Fraud d) Misrepresentation

I. a, b & cII. b, c & dIII. a, c & dIV.a, b & d

MCQS

2. Match it up: -Fraud Moral force is used.

Coercion No intention to deceive.

Misrepresentation

Consent of aggrieved party taken by committing an act.

Undue Influence Injured party besides avoiding the contract may also claim the damages.

MCQS

Q.3: Which of the following is not a type of mistake of law?

a) Mistake of Foreign Lawb) Mistake of Indian Lawc) Mistake as to Public rights of the partyd) Mistake as to Private rights of the party

MCQs

Q.4: When the consent of a party to an agreement is obtained by coercion, the contract becomes __________ at the option of the party whose consent is so obtained.

Voidable

MCQs

Q.5: The various elements of free consent fall under section _____ to section ______.1

418

Subjective

1. Explain free consent and elucidate with an example.

2. Describe the flaws of Free Consent.3. Distinguish between Fraud &

Misrepresentation.4. Differentiate between Undue Influence

and Coercion.

Caselet

An unconscious man is brought to an emergency department in vascular collapse. He had been thrown off a motorcycle and ruptured his spleen. The surgeon recommended emergency surgery and blood transfusion, but no next of kin was readily available to give consent. An old wrinkled card in his wallet indicates the patient is a Jehovah's Witness and should never receive blood, but there is a diagonal line drawn across that part of the card. Which of the following is best?

CaseletA. All interventions require informed consent, so in

this case the surgeon should not operate. B. Because this is an emergency, no con sent for

operation or blood transfusion is necessary, as long as you get two sup porting doctor signatures.

C. If the man's spouse can be located and she gives consent for transfusion, then it's okay.

D. Operate on the patient, but respect his disavowal of blood even if it means death.

E. If the patient desperately needs a lifesaving blood transfusion, it should be given, because his wishes are not entirely clear.

Caselet

Answer: E - Some of the other choices have merit, but the best answer is E. This is because of the dire nature of the patient's condition, the critical and immediate need for blood, and most of all, the reasonable belief that the line across the wrinkled card represents a revocation of an earlier refusal of blood. Some may view D as the better option, and it is arguably the legally "safe" approach. However, a life hangs in the balance, and a doctor's first duty is to the patient.

THE COURT IS ADJOURNED TO NEXT GROUP!!!