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CONSENT
Lecture 3
FREE CONSENT
According to Sec 10 of the
Indian Contract Act one of
the essentials of a valid
contract is Free Consent
COERCION
According to Sec 15 coercion means
1. (a) Committing or threaten to commit
any act forbidden by Indian Penal Code
1860;
(b) The unlawful detaining or
threatening to detain any property to
the prejudice of any person, whatever.
2. The intension of the above acts must
be to cause the other person to enter
into an agreement: It is immaterial
whether the IPC is or is not in force at
the place where the coercion is
Ranganayakamma vs.
Alwar Shetty:
The relatives of a young widow
threatened her that they would not
allow her to cremate the dead body
of her husband unless she
consented to the adoption of a boy
as her son. Held, the adoption is
not binding on her on account of
the coercion
Essential requirements
of Coercion
1.There must be the committing or
threatening to commit any act
forbidden by the Indian Penal Code
2.The coercion may comprise of
unlawful detaining or threatening to
detain any property to the prejudice
of any person whatever.
3. The coercion may proceed from
either a party to the contract or
from a stranger.
Effect of Coercion
The contract is voidable at the
option of the party whose consent
has been caused by coercion. Such
a party may put the contract to an
end. In that case the other party
shall restore all the benefits
received by him under Sec. 64
According to Sec. 72, a person to
whom anything has been delivered
or money paid under coercion must
return or repay it
Undue Influence
According to Section 16(1), a
contract is said to be induced by
undue influence when:
(a)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
(b) The party uses that position to
obtain the unfair advantage over
the other.
Presumption of undue
influence
(a) Real or apparent authority
(b) Fiduciary Relationships
(c) Mental distress
Burden of Proof
When a person who is in a position
to dominate the will of another,
makes
a
contract
and
the
transaction
appears
to
be
unconscionable, the burden of
proving that the contract has not
been induced by undue influence
shall lie on the person who is in a
position to dominate the will of the
other.
Rebuttal of Presumption
The presumption of undue influence can
be rebutted by showing the following:
(i) that there has been full disclosure of
all material facts,
(ii) that the consideration was adequate,
and
(iii) that the party was in receipt of
independent advice
2
3
Distinction
Basis
Method of
obtaining
consent
There must be
some relationship
between the
parties so that one
of the parties may
dominate the will
of the other
Fraud
According to Sec 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 to induce another to
enter into the contract:
1.
2.
Silence as a Fraud
Explanation to Section 17
provides that mere silence as to
facts likely to affect the
willingness of a person to enter
into a contract is not fraud.
Thus silence without any legal
duty to speak is not fraud.
Exceptions
1. Duty to speak:
(i)Contracts uberrimae fidei
(ii)Contracts of partnership
(iii)Contracts of guarantee
(iv)Where the parties stand in fiduciary
relationship to each other.
(v)Contracts to marry
2. Where silence is equivalent to speech
3. Change of circumstances
Effects of Fraud
The party defrauded has the following
remedies;
(i) Suit for rescission provided the suit is
filed within a reasonable time.
(ii) Suit for specific performance and to
require the other party to put him in a
position in which he would have been if
the representation made had been true.
(iii) Suit for damages for fraud.
Misrepresentation
According to Section 18, misrepresentation
means and includes:
(i) 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;
(ii) any breach of duty which, without any intent
to deceive, gains an advantage to the person
committing it, or anyone claiming under him, by
misleading another to his prejudice, or the
prejudice of any one claiming under him;
(iii) causing, however innocently, a party to an
1. Unwarranted statements
A tells B, without checking records,
that in his factory 1000 tons of
indigo is manufactured every
month. A believes his assessment
to be true. The actual production is
found to be only 830 tons. A is
guilty of misrepresentation
2. Breach of Duty
A tells an insurance agent that
his age is 25, believing it to be
true. His actual age is 27. The
LIC issues a policy in his favour
charging a lower rate of
premium that what it should
have charged for the actual age
of A. A is guilty of
misrepresentation.
Effects of Misrepresentation
The aggrieved party will have the following
rights:
1.The right to rescind the contract except in the
following situations:
(a) if, after becoming aware of the
misrepresentation or fraud, it takes a benefit
under the contract, or in some other way
affirms it; or,
(b) if the parties cannot be restored to their
original position; or
(c) if third parties have acquired rights in the
subject-matter of the contract in good faith and
In certain cases, it
can become a
criminal act
punishable under
the IPC
The contract is
voidable at the
option of the
aggrieved party
even though it could
discover the truth
with ordinary
diligence.
Mistake
Mistake is an erroneous belief
about something.
Kinds of Mistake:
1. Mistake of Law
2. Mistake of Fact
1. Mistake of Law
(a) Mistake as to Indian Law:
A and B make a contract on the
belief that a particular debt is
barred by the Indian Law of
Limitation. The contract is not
voidable.
(b) Mistake as to foreign Law:
2. Mistake of Fact
(a) Bilateral mistake of fact
(i) There must be a common or mutual
mistake
(ii) The mistake must relate to a matter
of fact essential to the agreement.
Example: In Galloway vs. Galloway, a
man and a woman entered into a
separate agreement believing
themselves as lawfully married. The
agreement is void on account of mutual
mistake about a material fact relating to
Exceptions to Section 22
If the unilateral mistake goes to the very
root of the agreement, it shall be void.
This is explained in the following
exceptions:
1. Mistake as to the identity of the
person contracted with.
2. Mistake as to the nature of contract.
Legality of
Object and
Consideration
Important cases:
1.Chikkim Ammiraju vs. Seshamma:
In this case a person threatened his wife and son that he
would suicide if she doesnt transfer her property in his
brothers favor. The wife and son executed the release of
the deed under the threat . Held the threat of suicide
amounted to coercion within Sec 15 and the release
deed was therefore voidable.
This also is a very important case
to prove that threat to commit
suicide amounts to coercion
UNDUE INFLUENCE
Sometimes a party is compelled to enter into a
contract against his will as a result of unfair
persuasion by the other party.
Section 16 defines undue influence as follows
A contract is said to be induced by undue
influencewhere 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
FRAUD
1.
MISREPRESENTATION
According to Sec 18 there is misrepresentation:
1. When a person positively asserts a fact is true when his
information does not warrant it to be so, though he
believes it to be true
2. When there is any Breach of duty by a person which
brings an advantage to the person committing it by
misleading another to his prejudice
3. When a party causes however innocently the other
party to the agreement to make a mistake as to the
substance of the thing which s the subject of the
agreement
Important case:
Babul vs. R.A.Singh:
M was a marriage broker who gave Y the photograph
of a man and told him that the man was young and rich. Y
conveyed the same to his daughter who agreed for the
proposal. But on the day of marriage it was discovered
that the man was the age of 60. There is fraud between M
and Y. whereas the is misrepresentation between Y and his
daughter.
MISTAKE
Mistake of law
Of the
country
Mistake of fact
Of the foreign
country
Bilateral mistake
Mistake as to
possibility
Physical impossibility
existence
identity
quality
quantity
Unilateral mistake
As to
person
As to
nature
Legal impossibility
title
price
UNLAWFUL
OBJECTIVES
&
VOID AGREEMENTS
Unlawful agreements
illegal
immoral
wager
Restraint of
parental rights
Restraint of
profession
of
marriage
Restraint
Restraint of Restraint of
trade
martial duties
UNLAWFUL OBJECT
If the object of an agreement is the performance
of an unlawful act, the agreement is
unenforceable.
For a contract to be valid only if the object and
the consideration should be legal.
The word object means purpose or design.
Unlawful agreements
An agreement forbidden by law [Sec 23]
An agreement defecting any provisions of law [Sec
24]
Case: Alexander vs. Rayson
A leased a flat to R at a rent of 1,200 pounds.with
the object of deceiving the rating authority two
agreements were entered, one for 450 pounds
and one for 750 pounds. A sued R for recovery of
an installment of 750 pounds. Held A could not
recover and R was entitled to remain in
possession of the flat.
If it is immoral
Case: S.Yellappa vs. Y.Sabu
Cohabitation agreements are immoral
Sumitradevi vs. Sulekha Kundu
An agreement between a husband and wife to
separate in future is immoral and void
An agreement opposed to public policy
If it is fraudulent
If it is creating damage to person or property
Case: Ramswaroop vs. Bansimandir
B borrowed Rs. 100 from L and executed a bond promising to
work for L without pay for a period of two years.In case of
default B was to pay interest at a very exorbitant rate and the
principal sum of once. Held the contract was void as it
involved injury to the person of B.
Injunction
When a party is in breech of a negative term of
contract the court may,by issuing an
order,restrain him by doing what he promised
him not to do. Such an order of the court is called
injunction
Court refuses grant of injunction
[1] whereby a promisor undertakes not to do
something
[2] which is negative in substance though not in
form
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