CONTRACTS

TOPIC
DISCUSS HOW COERCION AND UNDUE
INFLUENCE OPERATE AS VITIATING
FACTORS OF FREE CONSENT.
 FREE CONSENT
Consent is said to be free when it is not caused
by:-
 Coercion, as defined in section 15, or
 Undue influence, as defined in section 16, or
 Fraud, as defined in section 17, or
 Misrepresentation, as defined in section 18,
or
 Mistake, subject to the provisions of section
20,21 and 22.
VITIATING FACTORS AND THEIR
EFFECTS
 Where consent to an agreement is caused by
coercion, undue influence, fraud or
misrepresentation, the agreement is a contract
voidable at the option of the party whose
consent was so caused.

 Where consent is caused by mistake, the

agreement is void.
FREE CONSENT
Coercion
 COERCION
According to section 15 of Indian Contract
Act, 1872 coercion is the committing, or
threatening to commit, any act forbidden by
the Indian Penal Code (45 of 1860), 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 an agreement.
EXPLANATION--It is immaterial whether the
Indian Penal Code(45 of 1860) is or is not in
force in the place where coercion is
employed.
 TECHNIQUES OF CAUSING
COERCION
Consent is said to be caused by coercion when
it is obtained by pressure exerted by either
of the following techniques:-

 Committing or threatening to commit any act

forbidden by the Indian Penal Code.
 Unlawfully detaining or threatening to detain
any property.
 COERCION
1.Indian Law
2.Definition is wide
3.It includes the unlawful
detention of property also.
Coercion may be committed
by any person, not
necessarily a party to the
contract. It need not be
directed against the
contracting party. It may be
directed against any person,
even if he is a stranger.
DURESS OR MENACE
1.English Law
2.Definition is Narrow
3.It consist in actual or
threatened violence or
imprisonment of the
contracting party or his
wife, parent or child by the
other party or by any one
acting with his knowledge
and for his advantage .
FREE CONSENT
Undue Influence
 UNDUE INFLUENCE
Section 16 of the Indian Contract Act, 1872
defines undue influence.
 A contract is said to be induced by “undue
influence” where 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.
 DOCTRINE OF INEQUALITY OF
BARGAINING POWER
 There are cases under the English law, where
equity intervened not because the terms were
harsh or oppressive, but because it refused to
allow one party to take advantage of the others
weakness or need.

 The pressure in these cases was not of undue

influence or personal pressure, but arose because
the other party took advantage of its economic
power and necessity of the vendor or the borrower
which has been termed as pressure resulting from
an inequality of bargaining position.

 This doctrine has been applied as an independent

principle.
LLOYDS BANK LTD V BUNDY
[1974] 3 ALL ER 797
 A further guarantee and a charge were given
by the father to a bank on the advice of the
bank manager in regard to the debt of his son.

 The father was held to have complete faith

and did not get outside advice.
`
 The court of appeal held that a special
relationship of confidence existed between
the bank and the father and the last
guarantee and charge were liable to be set
aside for undue influence. Lord Denning
considered them voidable on the large ground
of inequality of bargaining powers.
He stated - “There are cases in our books in
which the courts will set aside a contract,
or a transfer of property, where the
parties have not met on equal terms-
when one is so strong in the bargaining
power and the other so week that, as a
matter of common fairness, it is not right
that the strong should be allowed to push
the weak to the wall.”