Assignment

on

“Free Consent”
Submitted to :

DR. VIRENDER SINDHU

NAME: MUKUL PRATAP SINGH

SUBJECT: LAW OF CONTRACT

COURSE : LLB. HONS 1ST YEAR FIRST SEMESTER

ROLL NO: 20491

COLLEGE : CENTRE FOR PROFESSIONAL AND ALLIED STUDIES, GURUGRAM

UNIVERSITY- MAHARISHI DAYANAND UNIVERSITY ROHTAK

 Table Of Contents
Date Topic Page #

Law 1

Free consent 2

Coercion (Section 15) 2-4

Fraud (Secion 17) 4-6

Misrepresentation (Section 18) & Mistake 7-8

Conclusion 9

Biblography 9
 LAW

Law is a system of rules, usually enforced through a set of institutions. It shapes

politics, economics and society in numerous ways and serves as a primary social
mediator of relations between people.
Law is a system of rules, usually enforced through a set of institutions. It shapes
politics, economics and society in numerous ways and serves as a primary social
mediator of relations between people. Contract law regulates everything from buying a
bus ticket to trading on derivatives markets. Property law defines rights and obligations
related to the transfer and title of personal (often referred to as chattel) and real
property. Trust law applies to assets held for investment and financial security, while
tort law allows claims for compensation if a person's rights or property are harmed. If
the harm is criminalized in a statute, criminal law offers means by which the state can
prosecute the perpetrator. Constitutional law provides a framework for the creation of
law, the protection of human rights and the election of political representatives.
Administrative law is used to review the decisions of government agencies, while
international law governs affairs between sovereign nation states in activities ranging
from trade to environmental regulation or military action. Writing in 350 BC, the Greek
philosopher Aristotle declared, "The rule of law is better than the rule of any individual."
Legal systems elaborate rights and responsibilities in a variety of ways. A general
distinction can be made between civil law jurisdictions, which codify their laws, and
common law systems, where judge made law is not consolidated. In some countries,
religion informs the law. Law provides a rich source of scholarly inquiry, into legal
history, philosophy, economic analysis or sociology. Law also raises important and
complex issues concerning equality, fairness and justice. In a typical democracy, the
central institutions for interpreting and creating law are the three main branches of
government, namely an impartial judiciary, a democratic legislature, and an
accountable executive. To implement and enforce the law and provide services to the
public, a government's bureaucracy, the military and police are vital. While all these
organs of the state are creatures created and bound by law, an independent legal
profession and a vibrant civil society inform and support their
 FREE COSENT

Consent means to agree to something. Free consent means to agree without coercion
without being forced or threatened. It is essential to the creation of a contract that both
parties agree to the same thing in the same sense. When two or more persons agree
upon same thing , they are said to consent.
Example:-
1) A agrees to sell his Fiat car 1983 model for rupees 80000. B agrees to buy the same
.there is a valid contract since A and B have consented to the same subject matter.
2) A, who owns three Fiat cars, offers to sell one, say “car x”, to B for rupees 90000 . B
agrees to buy the car for price thinking that A is selling “car Y”. There is no consent
and hence no contract . A and B have agreed not to the same thing but to different
things.

WHEN IS CONSENT SAID TO BE FREE?

For consent to be free, you must be old enough to consent. The age of consent varies
according to country, state, and type of contract. Second, in order for consent to be
free, you must not be coerced, or forced. And you must not be drunk or drugged or
otherwise in a state of body or mind which affects your decision-making ability.
According to INDIAN CONTRACT ACT, free consent is said to be free when it is not
caused by
1) Coercion, as defined in section 15
2) Undue influence, as defined in section 16
3) Fraud , as defined in section 17
4) Misrepresentation, as defined in section 18
5) Mistake, subject to provisions of section 20, 21, 22

Coercion (Section 15)

Coercion is
i) The commiting or threatening to commit any act forbidden by Indian Penal Code
ii) 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

Example:-
1) A hindu widow is forced to adopt X under threat that her husband’s corpse(dead
body) would not be allowed to be removed unless she adopts X.The adoption is
voidable as having been induced by coercion.

2) A threatens to kill B if he doesn‟t transfer his house in A‟s favor for a very low price.
The agreement is voidable for being the result of coercion.

NOTE- it is not necessary that coercion must have been exercised against the
promissory only, it may be directed at any person.

Example:-
1. A threatens to kill B(c‟s son)if C does not let out of his house to A. the agreement is
caused by coercion.

Threat to commit suicide-is it coercion-

The doubt arises because suicide though forbidden by Indian Penal Code is for
obvious reasons not punishable. A dead person cannot be punished. But, since the
section 15 declares that committing or threatening to commit any act is forbidden by
Indian Penal Code is coercion.

CONSEQUENCES OF COERCION(SECTION 19)

When consent of an agreement is caused by coercion, the agreement is a contract
voidable at the option of the party whose consent was so obtained. In other words the
aggrieved party can have the contract set aside or if he so desires to insist on its
performance by other party.

Examples of effect of coercion

1. Anuj executes a transfer bond for the house under fear of assault .it will be a
contract voidable at the option of Anuj since his consent was obtained by coercion.
2. A railway company refuses to deliver up certain goods to the consignee, except
upon the payment of an illegal charge for carriage. The consignee pays the sum
charged in order to obtain the goods. He is entitled to recover so much of the charge
as was illegally excessive.

Undue Influence(Section 16)

Undue influence is the improper use of any power possessed over the mind of the
contracting party. According to section 16 a contract is said to be affected by undue
influence when:
The relations subsisting between the parties are such that one of the parties is in a
position to dominate the will of other and uses that position to obtain an unfair
advantage over the other.
Following are the parties that can be affected by undue influence
a) Doctor and patient
b) Lawyer and client
c) Guardian and ward
d) Trustee and beneficiary
e) Teacher and student

Example:-
1) A having advanced money to his son B during his minority, upon B coming of age
,obtains, by misuse of parental influence a bonds from B for greater amount than the
sum due in respect of the advance A employs undue influence.

2) A man enfeebled by disease or age is induced by B‟s influence over him as his
medical attendant to agree to pay B an unreasonable sum for his professional service.
B employs undue influence.

CONSEQUENCES OF UNDUE INFLUENCE(section 19-A)

An agreement caused by undue influence is a contract voidable at the option of the
party whose consent was obtained by undue influence. However, any such contract
may be set aside either absolutely or if the party who was entitled to avoid it has
received any benefit there under upon such terms and conditions as the court deems
fit.
Example:-
A, a money lender advances Rs 100 to B, an agriculturist, and by undue influence,
induces B to execute a bond for Rs 200 with interest at 6%/ month. The court may set
the bond aside, ordering B to reply Rs 100 with such interest as may seem just.
Fraud(Section 17)

Misrepresentation of facts may be intentional or innocent. Intentional misrepresentation

has been termed as Fraud and innocent misrepresentation has been termed simply as
„misrepresentation‟ in the contract act.
Definition under
Definition under law section 17
According to section 17 fraud means and includes any of the following acts, Committed
by a party to a contract or by any one with his connivance or by his agent with intent to
deceive another party thereto or his agent or to induce him to enter into contract:
(a) A suggestion as to fact of that which is not true by one who does not believe it to
be true
(b) (b) An active concealment of a fact by one having knowledge or belief of the fact.
(c) (c) Any other act fitted to deceive
(d) (d) A promise made without any intention of performing it

Essentials of fraud
1. There must be a representation and it must be false.

(Peek vs Gurney(1873) L.R 6 H .L 377)

2. The representation must relate to material fact

(Bisset vs Wilkinson (1972) A.C 177)

3. The representation must have been made before the conclusion of the contract with
the intention of inducing the other party to act upon it.
4. The other party must have been induced to act upon the representation
5. The other party must have relied upon the representation and must have been
deceived.

(Horsefull vs thomas , (1862) 1 H & C 90)

There must be false representation Peek vs Gurney (1873) L.R 6 H .L 377

The prospectus of a company did not refer to the existence of a document disclosing
liabilities. This gave the impression that the company was prosperous. If the existence
of the document had been disclosed the impression would have been quite different.
Held, non-disclosure amounted to fraud and anyone who purchased shares on the
faith of this prospectus could avoid the contract.
The representation must relate to material fact Bisset vs Wilkinson (1972) A.C
177
The vendor of a piece of land told a prospective purchaser that, in his opinion the land
would carry 2000 sheep. In fact the land could carry only a number less than this. Held
there was no misrepresentation as the statement was one of opinion which was
honestly held

Examples :-
1. Manoj was induced to buy shares in a company on account of a false statement
made by a stranger. It was held that he could not get out of the bargains because false
statement was not made by the company or its agent.

2. Manoj says to deepika his coat is made of pure wool, though he knows that it is
untrue .Deepika purchases the coat believing Manoj‟s statement to be true, It is a fraud
by Manoj and therefore contract is voidable at deepika‟s option.

Decided case on silence is not a fraud

Hands vs. Simpson, fawcett & co ltd (1928) 44T LR 295
H a commercial traveller, obtained an employment with S. S regarded driving as an
essential part of H‟s duties but he did not specifically ask H if he is qualified to drive a
car. H kept quiet about his disqualification to drive a car. S contended that H‟s silence
is misrepresentation. But it was held that H was under no duty to volunteer the
information and there was no misrepresentation.

Essentials of fraud

1. The act must have been committed by a party to the contract or with his connivance
or by agent .It should not have been committed by a stranger
2. The act must have been committed with the intention of inducing the deceived party
to act upon it-It implies that the assertion should be such that it would necessarily
influence and induce other party to act
3. Plaintiff must have suffered

Effect of Fraud

The party whose consent to the contract is obtained by fraud can exercised any of the
following rights:
1. He may avoid the contract and may (i) ask for the damages suffered because of the
non-fulfillment of the contract
2. He may insist for the performance of the contract.
Misrepresentation (Section 18)

Misrepresentation is a false representation made innocently without any intention of

deceiving the other party .It may include two things:
(a) wrong statement of a material fact not known to be false
(b) Non-disclosure of facts where there is a legal duty to disclose without intention to
deceive.
Example:-
1)X entered into contract with C for the sale of hops.X told Y that no sulphur has been
used in their growth. Y agrees to buy only if no sulphur has been used for their growth.
As a matter of fact, sulphur has been used in 5 out of 100 acres which fact was
evidently forgotten by X when represented that no sulphur was used.

CONSEQUENCES OF MISREPRESENTATION:-

In the cases of misrepresentation the party aggrieved or wronged can be-

a) Avoid the agreement
b) Insist that the contract be performed and that he be put in the position in which he
would have been if the representation made had been true.

Unlike fraud, misrepresentation by a party does not entitle the other to claim damages.
This, however is subject to certain exceptions, ie, incertain cases the right to claim
damages arises even in case of misrepresentation. These are-
a)breach of warranty of authority of an agent-
where an agent believes that he has the authority to represent his principal while in fact
he has no such authority, the agent is liable in damages, even though he is guilty of
innocent misrepresentation.
b)negligent representation-
made by one person to another between whom a confidential relationship exist, eg-
solicitor and client.
However, if the party whose consent was caused by misrepresentation had the means
of discovering the truth with ordinary diligence, he has no remedy.
 Mistake

The term mistake is used in contract law to describe a situation in which one or both
parties to an agreement acted under an untrue belief about the existence or
nonexistence of a material fact.”

Essentials
The following conditions must be fulfilled;
1. There must be a mistake as to the formation of the contract.
2. It must be mistake of fact.
3. It must be about a fact essential to the agreement.

Kinds Of Mistake Of Fact

Mistake cases are classed as mutual or unilateral, depending on whether both or only
one of the parties were acting under a mistaken belief.
Bilateral Mistake:
Section 20 states that were both the parties to an agreement are under a mistake as to
a matter of fact, essential to the agreement shall be void. The mistake shall be termed
as bilateral mistake of fact only when both of the following conditions are satisfied
(a) it should be committed by both the parties
(b) it should relate to a matter of fact essential to the agreement.
Example:
“A contracts B to sell his car. Both the parties thank it is in A‟s garage. Actually the car
was stolen before the agreement. The agreement is void.”
Unilateral Mistake:
When in a contract only one party is at mistake regarding the terms of the agreement.
Example: “A wants to contract only with B, but makes a contract with C; believing him
to be B.”
CONCLUSION

All the agreements are contracts if they are made by free consent of the parties.
Without the consent of the parties contract cannot take place. Where the parties have
different things in mind or understand the same thing in different ways is not real
consent.
Effect of Absence of free consent: When there is consent but it is not free (i.e. when it
is caused by coercion or undue influence or fraud or misrepresentation), the contract is
usually voidable at the option of the party whose consent was so caused.

BIBLIOGRAPHY

1. Business law by S S GULSHAN and G.K KAPOOR

2. www.google.com
3. www.wikipedia.com
4. Elements of mercantile law by N.D.Kapoor.