The Indian Contract Act, 1872
Free Consent
What is free consent?
Consent is said to be free when it is not caused by –
- Coercion
- Undue Influence
- Fraud
- Misrepresentation
- Mistake
| Consent By | Status |
|---|---|
| Coercion | Voidable Agreement |
| Undue Influence | Voidable Agreement |
| Fraud | Voidable Agreement |
| Misrepresentation | Voidable Agreement |
| Mistake | Void Agreement |
What is Coercion? (Section 15 of the Indian Contract Act, 1872)
When one party commits or threatens to commit any act which is forbidden by law, unlawfully detaining or threatens to do the same in order to enter into an agreement with the other party is known as coercion.
In simple terms, any act or practice of taking someone into doing something by the use of force or threat is called coercion.
Example – Arjun threatens Priya that he will destroy her shop if she does not agree to the dealing. This is called Coercion.
What is Undue Influence? (Section 16 of the Indian Contract Act, 1872)
When the relationship 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 such dominance is called undue influence
Example – If Arjun was Priya’s house owner and he tells her that if Priya does not agree to the contract, he will evict Priya from her house. This act of Arjun using his influence as her house owner to make her agree is called Undue Influence.
What is Fraud? (Section 17 of the Indian Contract Act, 1872)
Any act done to deceive the other party to induce them to enter into contract is known as fraud.
Example: T bought a cannon from H. It was defective, but H had plugged it. T did not examine the cannon, but it burst when he used it. Held as the plug had not deceived T, he was liable to pay for the cannon.
What is Misrepresentation?
When one party gives false statement of a fact which in turn affects the decision of the other party to agree/enter into a contract is known as misrepresentation.
Example: Breach of Duty
What is Mistake?
Example: Illiterate man sign Bill of exchanges by means of false, representation that it was a mere guarantee. It was held that he was not liable for bill of exchange because never intended to sign the bill of exchange
Mistakes are of two types –
- Mistake of Law – Any contract performed by the parties by ignoring the law or without the knowledge of law.
- Mistake of Fact – Any contract performed by the parties by ignoring the facts or without knowledge of the facts. There are two types of mistake of facts –
1. Bilateral Mistake – When both parties to the contract are under a mistake of fact that is essential to the agreement such a mistake is called a bilateral mistake.
2. Unilateral Mistake – When only one party to the contract is under a mistake, such mistake is called unilateral mistake.
What are the exceptions to Mistake of Law?
- Mistake with regard to Foreign Law – The parties to the contract are not expected to know all the provisions and meaning foreign law and hence mistake related to foreign law is treated as a mistake of fact.
- Mistake with regards to Private Right – It is impossible for a party to know the private rights of another party and hence such a mistake is excusable
In A Nutshell
- Free consent is essential for a contact to be enforceable by law
- When consent is formed by 1. Coercion 2. Undue Influence 3. Fraud 4. Misrepresentation 5. Mistake such consent is not considered to be free consent
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