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L7,8 Free Consent
L7,8 Free Consent
Learning outcome:
Interpret the situations under which the
consent is not free and comprehend its’
effect on validity of a Contract.
Consensus ad idem
• Coercion
• Undue influence
• Fraud
• Misrepresentation
• Mistake
Coercion
Consent without pressure or
compulsion
Where a person commits an act or threatens
to commit an act forbidden by Indian Penal
Code,1860, including threat to commit
suicide, he is applying coercion
not free and was induced by coercion. Thus, the promissory note so signed is voidable
at the option of David, whose consent was taken by threat of killing his son.
Committing or threatening to commit an act forbidden by
Indian Penal Code, or unlawfully detaining or threatening to
detain any property.
Essentials
of The act constituting coercion, must have been done or
Coercion threatened with the intention of causing any person to enter
into an agreement.
Effect of
Coercion
Aggrieved party can also get the contract
enforced on other party and insist upon
its performance.
Accept the contract
David threatens to shoot himself if Bishop does not agree to sell his property to
him at a stated price.
In this case the consent of Bishop is received by coercion and thus voidable at
the option of Baishop.
Suppose X threatens to kill Y, if he does not sell his house for Rs. 50,000. Y sells the house
to X. Does it formulate a valid Contract? Give reasons in support of your answer.
NO, as the consent of Y is not free. Here, coercion has been applied to obtain the assent
of Y. The contract is thus voidable a the option of Y.
If he decides to cancel/ avoid the contract, he may do so. Thus, X will have to return the
house. Y will have to return his Rs. 50,000 to him.
Alexander Barton v Alexander Ewan Armstrong
and Others [1975] 2 W.L.R. 1050
It was held that the contract could be set aside.
Where there is coercion to the person there was no obligation to show that he would have
entered the agreement but for threat, it simply being sufficient that the death threat s
were a cause.
Thus making the contract was voidable and Barton had an option to set it aside.
????
A 13 years old girl Carol got widow. She was not
allowed to be part of cremation rituals of her
husband, until she adopted a 2 years old boy in
her in laws family. Decide whether such
adoption to attend cremation of dead husband
is legal?
????
An agent refuses to handover the account
books, bonds etc. of the business to his
successor agent unless the principal gave him a
release of all liabilities during the term of his
agency. The principal does so but later filed a
suit to declare the release deed as cancelled.
Decide can they do so?
Undue influence :
When one party is in a position to dominate
the will of other party
When a
contract is
induced by One of the party uses its position to obtain
undue an unfair advantage over the other
influence?
Burden of Proof
Nutshell:
Burden lies on the shoulder of the party who
was in a position to dominate the will of the
other party that the contract was not induced by
undue influence.
If a party holds real or apparent authority over the other or
stands in a fiduciary relation to the other.
solicitor-client
spiritual guru
father-son
(c) Mental Distress/ mental capacity affected
by age, illness etc.(e.g Aged patient-
overcharged)
(medical attendant-patient)
Perry enfeebled by disease or his age was
induced by Lauras’ influence over him as his
medical attendant , as per which he agreed to
transfer an unreasonable sum of money for her
professional services. Here, Laura employed
undue influence.
Effect of Undue Influence :
• Agreement is voidable at the option of the
aggrieved party.
• Court may set aside the case
or
Implement it in the modified form
(e.g bond of Rs.100 signed for Rs.200)
• To return the benefit if contract is set aside
An act of assenting to an offer
(deed of gift to nephew- given to manage lands)
????
Janki, an illiterate woman, executed a deed of
gift in favour of nephew under the impression
that it was deed authorising her nephew to
manage the lands. Evidence adduced that
woman never intended to execute such deed
nor deed read or explained to her. Is the deed
legally binding on janki?
Held: No, the deed was void and inoperative as
she was illiterate and depended on her nephew
to be informed .The, nephew exercised undue
influence by taking advantage of illiteracy of her
aunt.
A poor Hindu widow who was in dire need of
money , was forced by money lender to agree to
pay 100% rate of interest.
Basis of Coercion Undue Influence
difference
Definition Committing, or threatening to commit, any act where the relations subsisting
forbidden by the Indian Penal Code or the between the parties are such that
unlawful detaining or threatening to detain, one of the parties is in a position to
any property, to the prejudice of any person dominate the will of the other and
whatever, with the intention of causing any uses that position to obtain an
person to enter into an agreement. unfair advantage over the other.
Burden of Proof Party whose consent was so caused. Party who was in a position to
dominate the will of other party.
Effect Rescision of contract- return any benefit Court discretion to direct aggrievd
received by aggrieved party party to restore benefit whether in
whole or part or set aside the
contract with directions for refund
of benefit
It can be :
(a) Innocent
(b) Intentional
What is Misrepresentation??
It is a false statement which the person making
it honestly believes it to be true
OR
Which he doesn’t know to be false
Categorization of
Misrepresentation
Innocent Mistake
Innocent Misrepresentation
There should be a representation or assertion - mere expression or opinion will not
amount to misrepresentation
Such representation must relate to a matter of fact which has become untrue.
Should be done prior to finalization of transaction to induce other party to enter into
contract.
Essentials of
Misrepresentation Party should have actually acted upon it.
Effect
Insist on performance
If truth could have been discovered by means of diligence-then
no remedy for misrepresentation.
Fraud
Fraudulent Acts:
False statement [
Deception
Sahara scam]
Intentional non –
performance [speak Asia
fraud]
Avoid or rescind the contract
Intention to deceive
Essentials
elements of
Fraud Fraudulent act must be
committed with knowledge of its
falsity
Intention Involves intention to decieve the other party. No such intention involved.
Belief If the statement is dishonest, it is a case of fraud. If the statement is honest, even though it was wrong, it will
be considered as misrepresentation.
Rights Rescind contract and can also sue for damages. Rescission only possible remedy.
Defence If from independent sources truth could be recovered but those were not If truth could be discovered with ordinary diligence, the
availed, yet aggrievd party may rescind the contract and/or sue for damages. contract cannot be avoided by aggrieved party.
Mistake is an erroneous
belief concerning
something
Bilateral
Unilateral
• Subject matter
• Possibility of performance
Mistake as to subject matter:
Mistake of possibility of performance:
Unilateral Mistake:
QUIZ