What Constitutes a Free Consent?

One of the essential ingredients of a valid agreement is that there must be a free consent
between the two parties. This statement, thus, involves two distinct elements:
1. First, there must be a consent, which means that the two or more parties involved, must
agree to the same thing in the same sense, and at the same time (Section 13); that is, there
must be ‘consensus-ad-idem’.
Examples
(i) Suresh offers to Narain to sell his Maruti 800 to him for Rs 1 lakh. Narain agrees. This
amounts to a valid contract inasmuch as the two parties have agreed to the same thing in the
same sense, and at the same time, that is, there is a ‘consensus-ad-idem’.
(ii) Let us take another slightly different example.
Suresh had two cars, referred to hereafter as car A and car B. He had offered his car B for
sale to
Narain, for Rs 50,000. Narain had accepted the offer. Thus, the required two-way process, of
offer and acceptance, had apparently got completed. Accordingly, the agreement may be said
to have been entered into in this case, too. But then, at a later date, it got revealed that Narain
was under the impression that
Suresh had only one car A, and so he was all through under the impression that he had
purchased that very car A. As against this, Suresh had, in fact, made the offer for sale of his
other car B, instead, and not his car A. Thus, it is obvious that the two parties, while entering
into the agreement, had not thought of the same thing, in the same sense, and at the same
time. In other words, there had not been the required ‘consensus-ad-idem’. Accordingly, in its
absence, the aforementioned agreement would not constitute a valid agreement, enforceable
in law.
2. Second, the consent to the terms of the agreement must be free, too (Section 14). That is,
such consent should not be obtained in any one or more of the following manners (which, in
itself, would render the contract, in question, voidable; though not void):
(i) By coercion,
(ii) By undue influence,
(iii) By fraud,
(iv) By misrepresentation, and/or
(v) By mistake.
Alternatively speaking, if the consent would be proved to have been obtained in one or more
of the aforementioned manners, such contract would be automatically declared as voidable
(not void), but at the option of that party only, whose consent was so obtained.
Let us now explain these five different manners, one after another, in which the consent must
not be obtained, so as to qualify as a free consent.
5.1.1 Coercion (Sections 15, 19, and 72)
What amounts to ‘Coercion’? Coercion comprises:
(i) Committing, or threatening to commit, any act, forbidden by the Indian Penal Code, or
(ii) Unlawfully 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.
Examples
(i) Raghunath is compelled to marry his daughter to Dharam Singh, failing which the latter
threatens to kill the son of the former. Such marriage would be treated as voidable at the
option of Raghunath, because it was sought by coercion.
(ii) Kishna threatens to kill Lalu if the latter does not sell his house to him at a throw-away
price. Such sale would be voidable at the option of Lalu, because it was induced by coercion.
(iii) Anurag, an agent, threatens not to handover the books of accounts to his principal unless
the latter agrees to exonerate him of all the irregularities committed by him in the earlier
transactions. Such release, got under coercion, was not valid, but voidable. [Muthia vs
Karuppan, 50 Mad. 780].
(iv) Aditya threatens Anurag to kidnap his son if he would not pay him a sum of Rs 10,000.
Anurag gets frightened and pays him the amount. In such a case, Aditya will have to repay
the amount to Anurag, as the same was obtained under coercion.
(v) Ashok threatens Shrikant to kill his daughter if he would not deliver the gold ornaments to
him. Shrikant acts as required. Thus, Ashok will have to return those ornaments to Shrikant,
as these were delivered to him under coercion, and not at his free will.
As may be observed from the examples at (iv) and (v) above, the person, to whom the money
has been paid, or something has been delivered, under coercion, is required to repay the
amount or return the things so obtained. (Section 72) It may, however, be clarified here that it
is not necessary that the promisor himself must have been threatened. It could be directed
against any one. This inference may well be drawn from the words used in the Section 14, i.e.
“to the prejudice of any person, whatsoever”.
Example
Shaligram threatens to kill Jaggoo’s son, Laddoo, if he ( Jaggoo) fails to sell his Fiat car to
Ghanshyam, for Rs 5,000. Such sale, having been obtained under coercion, is voidable,
despite the fact that the coercer, in this case, is a stranger to the entire transaction.
It may be pertinent to clarify here even further that it is not necessary that the Indian Penal
Code
(IPC) should necessarily be in force at the place where the coercion had been induced.
[Explanation to
Section 15].
Example
Johnson and Joseph are travelling in a French ship on the high seas, where the provisions of
the Indian
Penal Code (IPC) are not applicable. Availing of this opportunity, Johnson criminally
intimidates Joseph to enter into an agreement. Joseph later backs out. Johnson later files a suit
against Joseph for the breach of contract in the Court in Delhi.
The contract is not enforceable in law inasmuch as it was induced under criminal
intimidation, which is a criminal offence under the IPC. It, however, is not relevant in this
context, whether such coercion was obtained at the high seas in the French ship, where the
provisions of the IPC are not applicable, under the International Law. The only material legal
point that will be applicable here, due the aforementioned fact and circumstances of the case,
would be that the person ( Johnson) would not be prosecuted under the IPC for the cognisable
offence of criminal intimidation. But, the contract would be voidable, all the same.
5.1.2 Undue Influence (Sections 16 and 19A)
As provided under Section 16, in a situation where the relations between the two parties are
such that one of the parties is in such a position whereby he can dominate the mind and will
of the other, and when he uses such position to obtain an unfair advantage over the other
party, the respective contract so obtained is said to have been induced by ‘Undue Influence’.
Thus, as per Section 16 (3), an undue influence may be presumed in the cases of the
following relationships:
(a) Doctor and patient,
(b) Parent and child,
(c) Guardian and ward,
(d) Lawyer and client,
(e) Spiritual Guru and disciple,
(f) Trustee and beneficiary, and similar other relationships.
Examples
(i) A surgeon leaves a patient on the operation table, with his stomach cut and unstitched, and
comes out to say so to his wife, and asks her to immediately pay him an unreasonable amount
by way an extra fee, and also that he will stitch up and close the patient’s stomach only
thereafter. The surgeon would be said to have employed an undue influence.
(ii) A spiritual guru asks his disciple, a Hindu devotee of an advanced age, to pay him a sum
of Rs 1 lakh so that he can ensure peace and benefit to his departed soul, after his natural
death, in the other world. In this case, too, the exercise of an undue influence would be
presumed.
The presumption of exercising the undue influence can, however, be successfully refuted, if it
could be proved that the person, said to have been induced by the alleged undue influence,
had an independent legal advice of someone, who had the full knowledge of the relevant
facts. [Inche Nora vs Shaik Allie bin Omar (1929) A.C. 127].
But then, it may be pertinent to point out here that the presumption of exercising undue
influence has not been accepted in the following relationships:
(i) Husband and wife [Howes vs Bishop (1909) 2 K.B. 390]
(ii) Master and servant [Daulat vs Gulab Rao (1925) Nag. 369]
(iii) Landlord and tenant [Lakshmi Chand vs Pt. Niader Mal, AIR (1961) All. 295] and
(iv) Creditor and debtor.
Onus (burden) of Proof [Section 16 (3)]
Thus, inasmuch as in such relationships, the exercise of undue influence cannot be presumed,
the onus of proof (of undue influence) will lie on the party who is alleging that undue
influence was exercised.
However, if it is proved that the party concerned was in a position to dominate the will of the
other party, and the transaction prima faci (on the face of it), or as per the evidences
available, appears to have been induced by exercising undue influence, the burden to prove
that no undue influence was induced will lie on the party who was in a position to dominate
the will of the other party.
Further, like the contract, induced by coercion, the contract, induced by undue influence, too,
is voidable (and not void) [Section 19A]. That is, only the aggrieved party (and not the other
party), has the following two options available to him, to choose any one of them, whichever
he may find to be beneficial to him:
(a) He can prefer to have the contract set aside, or else,
(b) He can choose to insist on the performance of the contract by the other party.
It may, however, be clarified here that such contract could be set aside, either in full, or else
only in part, at the discretion of the Court. That is, it could be set aside only in part, if the
aggrieved party, who was entitled to avoid the contract, had received some benefits
thereunder. But it would be granted in part, only on such terms and conditions as the Court
may deem fit.
Example
Mani Ram, a moneylender, advances a sum of Rs 2,000 to Virendra Singh, a villager, and by
exercising undue influence, forces him to execute a Demand Promissory Note (DPN) for Rs
5,000, instead. He also stipulates an exorbitantly high rate of interest at 5 per cent per month.
Virendra Singh, having no choice, executes the document, as forced.
The Court may set this agreement aside, and may ask Virendra Singh, to pay the actually
borrowed sum of Rs 2,000 only, plus the amount of interest accrued on this sum of Rs 2,000
only, computed at a reasonable rate of interest, and not as stipulated in the DP Note. This is
an example where the Court has set aside the contract, but only partially, as aforesaid, and not
in absolute term.
It may, however, be carefully noted here that the mere fact of charging a higher rate of
interest, in itself, may not be sufficient enough to establish that it has been induced by undue
influence.

5.1.3 Fraud (Sections 17 and 18)

Any of the following acts, committed by a party to the contract (or with his connivance, or by
his agent), with the intention of deceiving the other party to the contract, or his agent; or to
induce him to enter into the contract, amounts to fraud:
(i) The suggestion, as a fact, of that which is not true, by one who himself does not believe it
to be true;
(ii) The active concealment of a fact by one having knowledge or belief of the fact;
(iii) A promise made without any intention of performing it;
(iv) Any other act fitted to deceive; and
(v) Any such act or omission as the law specially declares to be fraudulent.
We would now proceed to discuss and explain the various essential ingredients of a fraud,
inherent in the aforementioned provisions.
(i) The Assertion (or Representation) must be made, and it must be False, and it must be
Made Knowingly, Too
(a) There must be an assertion by the person. That is, a mere silence on the part of such
person, on some of the facts, which may even be likely to affect the willingness of the other
party, would not amount to fraud.
(b) Such assertion must pertain to something, which is not true, but false.
(c) Such (false) assertion, made by the party, must be known to the party (making it), to be
not true, but false. Conversely speaking, if the party does not know that his assertion is false,
and believes it to be true, his such assertion would not amount to fraud.
Examples
(i) Hobbs sold some pigs to Ward. The pigs were suffering from some fever, the fact which
Hobbs knew for sure. But then, the pigs were sold ‘with all faults’. Hobbs, however, did not
disclose this fact to Ward, though he knew it. He rather preferred to keep silent on this point.
It was held that there was no fraud in this case. [Ward vs Hobbs (1878) A.C. 13].
(ii) Saleem sold an unsound dog, by auction, to Rahman. Saleem knew that the dog was
unsound. But then, he kept silent on this point, and did not tell anything to Rahman about the
unsoundness of the dog. In this case, too, there is no fraud committed by Saleem.
In both these cases, there is no fraud involved, on the ground that a mere silence on the part
of such person, on some of the facts, which may even be likely to affect the willingness of the
other party, would not amount to fraud.
But then, this does not mean that silence would not amount to fraud under all circumstances.
(i) In fact, it would definitely amount to a fraud, where the relationship between the two
parties to the contract is of a fiduciary nature (like the relationship between father and son or
daughter, between guardian and ward, and so on) In such cases, it is expected that the person
should not hide, but must, instead, speak out the relevant point; that he is not expected to
deliberately keep silent on that point, either, inasmuch as the fiduciary relationship demands
it likewise.
Let us take the example of a father, entering into a contract with his daughter. In such a case,
the daughter does not expect from her father that he would act in a fraudulent manner, and
would hide some known fact from her. That is, if a father would be selling an unsound dog,
by auction, to her daughter, it would be the duty of her father to specifically tell her of the
unsoundness of the dog (instead of just keeping quiet), by virtue of the very fiduciary
relationship existing between the two.
Similarly, such duty to speak exists even in the cases of the contracts, which require utmost
good faith (uberimae fidei), like the contract of insurance.
(ii) Further, ‘silence is fraudulent’, where the circumstances are such that “silence is, in itself,
equivalent to speech”. [Explanation to Section 17].
Example
Harrison tells Blanchard: “In case you don’t deny it, I shall presume that the dog is sound”.
Blanchard keeps silent. In this case, the silence, on the part of Blanchard, would amount to
speech, as if saying that the dog is sound, and not unsound.
(iii) Besides, the suppression of some relevant truth also amounts to fraud.
(ii) The Assertion (or Representation) must Pertain to a Fact
The assertion (or representation), which is alleged to be false, must be of fact, and not just an
exaggerated description. That is, an exaggerated description alone would not amount to fraud.
Example
Ahmed is selling his horse. He says that the horse is the ‘Black Princess’, a ‘pride
possession’, and is worth Rs 45,000. The expressions like ‘pride possession’, and ‘Black
Princess’, are just expressions of his opinion, and, therefore, cannot be considered to be
fraudulent as such. But then, if he had actually bought the horse for Rs 25,000 only, the
expression that it is ‘worth Rs 45, 000’, would amount to a misstatement of a fact, and thus, it
would be considered to be fraudulent.
(iii) The Assertion (Representation or Statement) must be made with the Knowledge of it
being
Not True, or Without the Belief that it is True, or even when Made Recklessly
To put it rather differently, we may say that a person may be held liable for fraud in all the
following three circumstances, under which the false statement has been made:
(i) Knowingly (i.e. with the knowledge of it being false);
(ii) Without belief in its truth; and
(iii) Recklessly, that is without taking due care to verify the truth and facts contained in the
statement, which could be either true or false.

Misrepresentation (Sections 18 and 19)

Misrepresentation, too, like fraud, comprises incorrect or false statement, but with a subtle
but significant difference, in that such inaccuracy or falsity does not involve any intention, on
the part of the party making such misrepresentation, to deceive or defraud the other party. In
other words, such misrepresentation happens to be innocent, and honest; in that, the party
concerned believed it to be true.
Under Section 18 of the Act, the cases of misrepresentation have been classified into the
following three distinct categories:
(a) 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
Example
Raghuvir tells Krishna that Chowksy was going to join the recently promoted ABC Company
as its Managing Director, and induces him to purchase the shares of the company. On the
basis of this piece ofinformation, Krishna purchases the shares of the company. Chowksy,
however, did not join the company.
And, it transpires that Raghuvir had not got the information from Chowksy direct, but it was
based on some hearsay, instead. Under such circumstances, it amounts to misrepresentation
by Raghuvir, though he had believed that the information was true, and also that there was no
intention on his part to deceive Krishna, either.
(b) Any Breach of Duty, which, without an Intention to Deceive, gives an Advantage to the
Person
Committing it (or any one Claiming under Him), by Misleading another to His Prejudice, or
to the Prejudice of anyone Claiming under Him
(c) Causing, however, Innocently, a party to an Agreement to make a Mistake as to the
Substance of a thing, which is the Subject Matter of the Agreement
Example
Johnson agrees to purchase some hops (dried flowers of this climbing plant, used for giving a
bitterflavour to beer) from Blanchard, on the condition that no sulphur must have been used
for growing them.
Blanchard tells him that no sulphur had been used for their growth. But, as a matter of fact,
sulphur had been used, though only on the five out of the 300 acres. But, Blanchard had
evidently forgotten this fact while telling him that no sulphur had been used for their growth.
It was held that, the stipulation that ‘nosulphur had been used for their growth’, was of a
primary nature, and in a sense a basic condition, without which the contract would not have
been entered into. In view of this fact, the contract could be avoided, it being non-fraudulent,
notwithstanding. [Bonnerman vs White (1861) 142 E. R. 658].
Remedies Available to the Party Subjected to Misrepresentation (Section 19)
The aggrieved party, subjected to misrepresentation, has the following two options to choose
one from:
(i) He can avoid the performance of the contract, so made; or else
(ii) He can insist that the contract should be performed, but with some required suitable
changes so made that he would be in the same position that he would have been, had the
representation madewere true.
Example
Let me reiterate and reinforce the same example here as well, as has been cited under the
previous portion on ‘Fraud’, of course, with some required changes.
Rohan’s estate was mortgaged to a bank. However, he tells Showmik that the estate in
question was free from any encumbrances. Showmik, therefore, purchases the property. But,
in fact, Rohan did not know this fact.
Here, Showmik has the following alternatives open to him to choose any one from:
(a) He may avoid the contract, or
(b) He may prefer that the contract must be performed, and the mortgage deed must be got
released from the bank (obviously after payment of the dues there-against).
It may, however, be carefully noted here that, unlike the cases of fraud, the remedy of
claiming damages is, generally, not available in the cases involving misrepresentation. Thus,
Showmik cannot file a suit against Rohan, for damages in this case.
Some Exceptions
The word ‘generally’ has been used in this context, quite deliberately, in view of the fact that
even the remedy of damages may be available in some exceptional cases of
misrepresentation, too. These exceptional cases are:
(i) In the cases of breach of warranty of authority of an agent
That is, in case an agent believes that he has the authority to represent his principal, though,
in fact, such authority had not been given to him, the agent is liable for damages, despite the
fact that he was honestly under the impression that he had such authority (that is, despite the
fact that he has committed only an innocent misrepresentation). [Collen vs Wright (1857) E.
& B. 647]
(ii) In the cases of Negligent Representation
A negligent representation may arise only in such cases where the relationship of a
confidential nature may exist between the two parties involved, e.g., between the lawyer and
the client. It may, however, be noted here that if the party, whose consent was obtained even
by misrepresentation, had the means of finding out the truth, with ordinary diligence and
effort, he would not have any remedy, whatsoever.