You are on page 1of 5

ASSIGNMENT-01

BUSINESS AND INDUSTRIAL LAW

NAME

TEHSEEN GHAFOOR

ID

7788

CLASS

BBA-6

SUBMITTED TO
HAMZA

SIR AMEER

FLAWS IN CONSENT:
Consent is said to be so caused when it would not have been given but for
the existence of such coercion, undue influence, misrepresentation, fraud or
mistake (Sec. 14). This means that in order to bring a case within this
Section, the party, who alleges that his consent has been caused by any of
the above elements which vitiate consent, must show that, but for the
vitiating circumstance the agreement would not have been entered into. To
put it differently, in order to prove that his consent is not free, the
complainant must prove that if he had known the truth, or had not been
forced to agree, must prove that if he had known the truth, or had not been
forced to agree, he would not have entered into the contract.
There are five types of Flaws in consent which are following,
1. Coercion
2. Fraud
3. Mistake
4. Miss Representation
5. Undue-influence

1. Coercion:
Coercion generally means to impose ones will on another by means of force
or threats. Coercion may be accomplished through physical or psychological
means. Coercion is the practice of forcing another party to act in an
involuntary manner by use of intimidation or threats or some other form of
pressure or force. It involves a set of various types of forceful actions that
violate the free will of an individual to induce a desired response, usually
having a strict choice or option against a person in such a way a victim
cannot escape.
For Example: A contractor is stopped from submitting his bid at the bid
opening. Persons connected to a competitor block the contractor from
entering the building where the bid opening is taking place, and tell him that
if he cares for his family, he should not submit a bid. Another bidder who
comes to submit a bid is also stopped by these same persons who tells the
bidder that it is not his turn to win this contract. The two bidders leave the
bid opening and do not submit a bid out of fear.

2. Fraud
A false representation of a matter of factwhether by words or by conduct,
by false or misleading allegations, or by concealment of what should have
been disclosedthat deceives and is intended to deceive another so that the
individual will act upon it to her or his legal injury.
Fraud is commonly understood as dishonesty calculated for advantage. A
person who is dishonest may be called a fraud. In the U.S. legal system,
fraud is a specific offense with certain features.
Fraud is most common in the buying or selling of property, including real
estate, Personal Property, and intangible property, such as stocks, bonds,
and copyrights. State and federal statutes criminalize fraud, but not all cases
rise to the level of criminality. Prosecutors have discretion in determining
which cases to pursue. Victims may also seek redress in civil court.
For Example: The telephone is used by criminals to make calls pretending
to be a bank investigator, examiner or an employee of a bank or credit card
company. Now, with advances in telephone technology, it is possible for
these criminals to make fraudulent calls and have the call display show the
legitimate bank or credit card companies name and telephone number.

3. Mistake
Erroneous belief about something or having wrong opinion about something
is called mistake. While entering into Contract parties think that a particular
thing with regard to their Contract is in a particular way. But that particular
thing will not be in that way as they think.
A mistake of fact is unilateral when only one party is mistaken. A bilateral
mistake of fact occurs when both parties to the contract are operating under
a mistaken reality. Bilateral mistakes are also known as mutual mistakes or
common mistakes.
A mistake of fact that is unilateral in nature is not normally a reason to set
aside a contract or a reason that will allow a plaintiff in a civil trial to seek
damages. A unilateral mistake of fact will result in an enforceable voidable
contract.
For Example: A contract would be voidable at Luke's discretion if Ben took
advantage of Luke's unilateral mistake regarding the purchase of a painting
Luke thought was genuine. If Ben did not know that Luke thought he was

buying the genuine painting, then Luke's unilateral mistake would not
prevent the contract from being enforceable.
A bilateral mistake would result in a contract that could be voided by both
individuals in the event that Luke and Ben both believed the forgery was a
genuine work by Dali. If Ben believed Luke intended to buy an artificial Dali
painting, and Luke believed Ben was selling a genuine work by Dali, a mutual
mistake has again been made because there was no intention to defraud and
both parties made a mistake of fact.
Mistakes of fact should not be confused with mistakes of value. A mistake of
value would occur if Jim sold Jack a random painting that he believed had
only a slight value for $50. If Jim later learns that the painting was in fact
done by a famous artist and worth $500, he cannot sue Jack to make up the
$450. This sort of mistake is not permitted because the value of an object is
not a fact. It can change. In order for a mistake to provide the basis to
overturn a contract, the mistake must be of a fixed and provable nature.

4. Miss Representation
A miss representation is a false statement of fact or law which induces the
representee to enter a contract. Where a statement made during the course
of negotiations is classed as a representation rather than a term an action for
misrepresentation may be available where the statement turns out to be
untrue. A brief definition of Miss representation could be "A
misrepresentation is a positive statement of fact, which is made or adopted
by a party to a contract and is untrue. "It may be made fraudulently,
carelessly or innocently.
For Example: The plaintiff put up his hotel for sale stating that it was let to
a 'most desirable tenant'. The defendants agreed to buy the hotel. The
tenant was bankrupt. As a result, the defendants refused to complete the
contract and were sued by the plaintiff for specific performance. The Court of
Appeal held that the plaintiff's statement was not mere opinion, but was one
of fact.

5. Undue-influence
The unconscientious use by one person of his/her power over another in
order to induce the other to compromise a property right. It is a situation in
which an individual is able to persuade another's decisions due to the
relationship between the two parties. In exerting undue influence, the

influencing individual is able to gain an advantage. In contract law, a party


claiming to be victim of undue influence may be able to void the terms of the
agreement.
For Example: Let's say John Doe for whatever reason lands in jail for a
night. He calls his girlfriend, Jane Smith, to bail him out. She does so only on
the condition that John signs a contract agreeing to purchase 40% of her
pizza parlor business for $100,000.
John, wanting to get out of jail and not lose Jane Smith's affections, signs the
contract. He does not do so with reasonable care because he is being
pressured by the other party, which happens to have the upper hand over
John.
Undue influence is often claimed in estate disputes; disappointed heirs often
argue that the deceased wrote a will or created a trust under undue
influence from a beneficiary of the will or trust.