Free Consent

One of the essentials of a valid contract mentioned in Section 10

is that the parties should enter into contract with free consent.
According to Section 14, Consent is said to be free when it is not
caused by –
1. coercion, as defined in Section 15, or
2. undue influence, as defined in section16, or
3. fraud, as defined in Section 17, or
4. misrepresentation as defined in Section 18, or
5. mistake, subject to the provisions of Section 20, 21 and 22.
Consent is said to be caused when it would not have been given
but for the existence of such coercion, undue influence, fraud,
misrepresentation or mistake.
If the consent of one of the parties is not free consent, i.e., it has
been caused by one or other of the above stated factors the
contract is not a valid one. When consent to an agreement is
caused by fraud, coercion, misrepresentation or undue influence,
the agreement is a contract voidable at the option of the party
whose consent was so caused. If, however, the consent is
caused by mistake the agreement is void.
1. Coercion
 According to Section 15, “Coercion” is the
committing, or threatening to commit, any act
forbidden by the Indian Penal Code, 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.
Coercion is said to be there when the consent of a
person has been caused either by
1. committing, or threatening to commit any act
forbidden by the Indian Penal Code, or by
2. unlawful detaining, or threatening to detain any
property, to the prejudice of any person whatever.
i. Act forbidden by the Indian Penal Code
It has been noted that if a person commits or threatens to commit an
act forbidden by the Indian Penal Code with a view to obtain the
consent of the other person to some agreement, the consent in such
case is deemed to have been obtained by coercion. For instance, A
threatens to shoot B if B does not agree to sell his property to A
at a stated price, B’s consent in this case has been obtained by
coercion.

For coercion to be there it is not necessary that the Indian Penal

Code should be applicable at the place where the consent has been
so caused. Explanation to section 15 makes it clear that to constitute
coercion, “it is immaterial whether the Indian Penal Code is or is not
in force in the place where the coercion is employed.” The following
illustration would explain the point :

A, on board an English ship on the high seas, causes B to enter into

an agreement by act amounting to criminal intimidation under the
Indian Penal Code. A afterwards sues B for breach of Contract at
Calcutta. A has employed coercion, although his act is not an
offence by the law of England, and although section 506 of the Indian
Penal Code was not in force at the time when, or at the place where,
the act was done.
 In Ranganayakamma Vs. Alwar Setti (1889) the question
before the Madras High Court was regarding the validity of the
adoption of a boy by a widow, aged 13 years. On the death of
her husband, the husband’s dead body was not allowed to be
removed from her house by the relatives of the adopted boy until
she adopted the boy. It was held that the adoption was not
binding on the widow.
 In Chikkam Ammiraju Vs. Chikkam Seshama (1918) the
question before the Madras High Court was that whether
coercion could be caused by a threat to commit suicide. In this
case a Hindu by a threat of suicide induced his wife and son to
execute a release deed in favour of his brother in respect of
certain properties claimed as their own by the wife and the son.
The question before the court was whether a threat to commit
suicide could be considered to be an act forbidden by the Indian
Penal Code. It was held by Wallis, C.J. and Seshagiri Ayyar, J.
that a threat to commit suicide amounted to coercion within the
meaning of Section 15 of the Indian Contract Act and therefore
the release deed was voidable.
ii. Unlawful detaining of property

According to Section 15 coercion could also be

caused by unlawful detaining, or threatening to
detain, any property, to the prejudice of any
person whatever, with the intention of causing any
per to enter into an agreement. For example, if an
outgoing agent refuses to handover the accounts
books to the new agent until the principal executes
release in his favour, it is coercion. ( Muthiah
Chettiar Vs. Karupan (1927) If the detention of
property is not unlawful there is no coercion.
Thus, if a mortgagee refuses to convey the equity
of redemption except on the terms dictated by
him, there is nothing unlawful in it and, therefore,
no coercion is caused in this case. (Bengal Stone
Co. Ltd. Vs. Joseph Hyam (1918)
To the prejudice of a person
Section 15 requires that there is committing or threatening to commit,
any act forbidden by the Indian Penal Code, or the unlawful detaining,
or threatening to detain, any property, to the prejudice of any person
whatever, with an intention of any person to enter into an agreement.
It means that the act causing coercion should not necessarily be
directed against the contracting party, it is enough that the act is to the
prejudice of any person whatever, and with the intention of any person
to enter into an agreement. If, for example, A unlawfully detains B’s
friend C, in order to coerce B to enter into agreement, the case would
be covered within this section.
Threat to strike is no coercion
In Workmen of Appin Tea Estate Vs. Industrial Tribunal (1966) the
demand of the workers for bonus was accepted after a threat of strike.
The question which had arisen was, whether such a decision between
the Union of the workers and the Indian Tea Association could be
declared void on the ground that there was coercion. It was held that
because of the doctrine of collective bargaining under the Industrial
Dispute Act the demand of the workers could be backed by a threat of
strike. Such a threat was neither a threat to commit an offence under
the Indian Penal Code, nor was it unlawful detaining or threatening to
detain any property and hence it did not amount to coercion, and as
such the agreement was valid.
 Statutory Compulsion is no coercion

 When a Statue requires a contract to be entered into

the consent in such a case is not deemed to be
caused by coercion, undue influence, fraud,
misrepresentation or mistake. In Andhra Sugars
Ltd. Vs. State of A.P. (1968) if any cane grower
offered to sell his sugarcane to a factory in a certain
zone, the factory was bound to accept the offer
under the Andhra Pradesh Sugarcane (Regulation
of Supply and Purchase) Act, 1961, and
accordingly the agreement was entered into. It was
held that in such a case even though there was a
legal compulsion for the factory to make the
agreement, the agreement could not be said to be
entered into by lack of free consent, and there was
no coercion either.
 “Duress” under English law
Under common law duress consists in actual violence or threat of
violence to a person. It only includes fear of loss to life or
bodily harm including imprisonment, but not a threat of damage
to goods. The threat must be to do something illegal, i.e., to
commit a tort or a crime. The duress must be directed against a
party to the contract, or his wife, child, parent or other near
relative, and also caused by the party to the contract, or within
his knowledge. It has been noted above that the common law
recognises only a threat to a man’s person, and not to his goods
to constitute duress. It may be noted that Indian law also
recognises an action for the recovery of money paid or goods
delivered under coercion, through the provision contained in
section 72,Indian Contract Act. The provision is as under :
“ A person to whom money has been paid. Or anything delivered,
by mistake or undue coercion, must repay or return it “
For example, 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.
 Difference between Coercion and
Duress
1. Coercion in India means committing or threatening to
commit an act forbidden by the Indian Penal Code, or
unlawful detaining or threatening to detain the property.
Thus it may be an act or threat directed against a person
or his property. In England duress is constituted only by
acts or threats against the person of a man and not
against his property.
2. In India coercion may proceed from a person who is not a
party to the contract, and it may also be directed against
a person who, again, may be a stranger to the contract. In
England duress should proceed from a party to the
contract and is also directed against the party to the
contract himself, or his wife, parent, child, or other near
relative.
2. Undue influence
 If the consent of a party to the contract has been obtained by
undue influence the consent is not free consent which is needed
for the validity of a contract and if the consent has been caused
by undue influence, the contract is voidable at the option of the
party whose consent had been so obtained. Section 16 defines
undue influence as under :
 “16. “Undue influence” defined.—(1) 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 obtain an unfair advantage over the other.
(2)In particular and without prejudice to the generality of the
foregoing principle, a person is deemed to be in a position to
dominate the will of another—
(a) where he holds a real or apparent authority over the other ; or
where he stands in a fiduciary relation to the other ; or
(b) where he makes a contract with a person whose mental capacity
is temporarily or permanently affected by reason of age, illness,
or mental or bodily distress.
 (3) Where a person who is in a position to
dominate the will of another, enters into contract
with him, and the transaction appears, on the face
of it or on the evidence adduced, to be
unconscionable, the burden of proving that such
contract was not induced by undue influence shall
lie upon the person in a position to dominate the will
of the other.

 Nothing in this sub-section shall affect the provisions

of Section 111 of the Indian Evidence Act, 1872.”
 Explaining the nature of the provisions contained in section 16,
Indian Contract Act and the adoption of English law in India, our
Supreme Court has observed in the case of Ladli Parshad Vs.
Karnal Distillery Co., (1963)

 “The doctrine of undue influence under the common law was

evolved by the courts in England for granting protection against
transactions procured by exercise of insidious forms of influence
spiritual and temporal. The doctrine applies to acts of bounty as
well as to other transactions in which one party by exercising his
position of dominance obtains an unfair advantage over another.
The Indian enactment is founded substantially on the rules of
English Common law. The first Sub-section of Section 16 lays down
the principle in general terms. By sub-section (2) a presumption
arises that a person shall be deemed to be in a position to dominate
the will of another if the conditions set out therein are fulfilled. Sub-
section (3) lays down the conditions for raising a rebut table
presumption that a transaction is procured by the exercise of undue
influence. The reason for the rule in the third sub-section is that a
person who has obtained an advantage over another by dominating
his will, may also remain in a position to suppress the requisite
evidence in support of the plea of undue influence.”
 Effect of undue influence
 Section 19-A declares that when consent to an agreement is caused by
undue influence, the agreement is a contract voidable at the option of
the party whose consent was so caused. For example, A’s son has
forged B’s name to a promissory note. B, under threat of prosecuting
A’s son, obtains a bond from A, for the amount of the forged note. If B
sues on this bond, the court may set the bond aside.
 Because of undue influence one party to the contract may take an
undue advantage under the contract, or the party entitled to avoid the
contract may have already received some benefit under the contract.
The court in cases has been empowered to set aside the contract either
absolutely or upon such terms and conditions as the Court may deem
just. Second para to Section 19-A incorporates the following provision
in this regard :
 “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 to the Court may seem just”
 For example, a , a money-lender, advances Rs. 100 to B, an
agriculturalist, and, by undue influence, induces B to execute a bond
for Rs. 200 with interest at 6 per cent per month. The court may set the
bond aside, ordering B to repay Rs.100 with interest as may seem
just.
 Essentials of undue influence
In order to constitute undue influence it is necessary that :
1) 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.
2) such a person uses his dominant position to obtain an unfair
advantage over the other.
It is manifest that both the conditions have ordinarily to be
established by the person seeking to avoid the transaction : he
has to prove that the other party to the transaction was in a
position to dominate his will and that the other party had obtained
an unfair advantage by using that position.
Person in dominant position and obtaining of unfair
advantage
Sometimes one of the parties to the contract may be in such
a dominant position in relation to the other that he has peculiar
opportunity of exercising that position to the prejudice of the
other party. If the dominant party takes an undue advantage of
his position in procuring a contract to the detriment of the other
contracting party, the contract is voidable at the option of the
party whose will is so dominated.
 In the following cases a person is deemed to be
in a position to dominate the will of another –
(1) where he holds a real or apparent authority over
the other, or,
(2) where he stands in a fiduciary relation to the
other, or,
(3) where he makes a contract with a person whose
mental capacity is temporarily or
permanently affected by reason of age, illness, or
mental or bodily distress.
(1) Real or apparent authority
If a person has an authority over the other contracting party it is
expected that he would not abuse that authority to gain an undue
advantage from the other. An employer may be deemed to be
having authority over his employee, an income-tax authority
over the assessee, a police or a judicial officer over the accused,
or a licensing authority over the licence

(2)Fiduciary relation
Fiduciary relationship means a relationship of confidence and
trust. When a person reposes confidence in the other, it is
expected that he will not be betrayed. If a person betrays the
confidence and trust reposed in him and gains an unfair
advantage over the other party in any contract, the suffering
party has an option to avoid the contract. The principle of undue
influence applies to every case, where influence is acquired and
abused, where confidence is reposed and betrayed.
Examples of fiduciary relationship are solicitor and client, spiritual
advisor and devotee, medical attendant and patient, parent and
child, husband and wife, master and servant, creditor and debtor,
principal and agent, land lord and tenant, lover and beloved,
guardian and ward.
For example, A,, having advanced money to his son b, during
his minority, upon B’s coming of age obtains, by misuse of
parental influence, a bond from B for a greater amount than the
sum due in respect of the advance. A employs undue influence.
In MannuSingh Vs. Umadat Pande, (1890) the plaintiff, an
aged person executed a deed of gift in respect of whole of his
property in favour of the defendant, who was plaintiff’s guru or
spiritual adviser.

The only reason for the gift was his desire to secure benefits to
his soul in the next world and also in view of the plaintiff having
heard recitation of the holy book, Bhagwat. Soon after the
execution of the said deed the plaintiff applied for the
cancellation of the same by a suit brought by him under section
39 of the specific relief Act, 1877.
 Section 111, Indian Evidence Act, 1872 was applied to this
situation, according to which in case of a person being in a
position of active confidence, the burden of proof lies on such a
person who enjoys such a confidence. It was held that because
of the fiduciary relationship between the parties, and the
absurdity of the reason given by the plaintiff in the gift deed for
executing the gift deed, and in view of the provision contained in
section 111, Indian Evidence Act, the defendant must prove the
absence of undue influence. And since he failed to prove the
same the plaintiff is entitled to obtain the cancellation of the
deed.

 Similarly in Diala Ram Vs Sarga (1927) where there was a

debtor-creditor relationship between the parties and the
defendant signed a bond agreeing to pay exorbitant rate of
interest on the loan taken from the plaintiff, who was a money
lender of his village, the presumption of undue influence was
raised.
 3. Fraud
When the consent of a party to the contract has been obtained
by fraud, the consent is not free consent, which is necessary for
the formation of a valid contract. In such a case the contract is
voidable at the option of the party whose consent has been so
obtained. Fraud or deceit is also9 tort, for which an action for
damages can also lie. Section 17 defines fraud as follows :
“Fraud” means and includes any of the following acts committed
by a party to a contract, or with his connivance, or by his agent,
with intent to deceive another party thereto or his agent , or to
induce him, to enter into the contract---
(1) the suggestion, as a fact, of that which is not true by one
who does not believe it to be true :

(2) the active concealment of a fact by one having knowledge

or belief of the fact :
(3) a promise made without any intention of performing it :

(4) any other act fitted to deceive :

(5) any such act or omission as the law specially declares

to be  fraudulent.

 Explanation :-- Mere silence as to facts likely to affect the

willingness of a person to enter into a contract is not fraud,
unless the circumstances of the case are such that, regard
being had to them, it is the duty of the person keeping
silence to speak, or unless his silence is, in itself,
equivalent to speech.
 The essentials of fraud are :

1. There should be a false statement of fact by a person who

himself does not believe the statement to be true.

2. The statement should be made with a wrongful intention of

deceiving another party thereto and inducing him to enter into
the contract on that basis.

1. False statement of fact.

In order to constitute fraud it is necessary that there should be a

statement of fact which is not true. Mere expression of opinion
is not enough to constitute fraud. Thus, if while taking a policy of
marine insurance, the insured communicates to the insurers a
letter from the master of his vessel mentioning that in the
master’s opinion the anchorage of a place of destination of the
vessel is safe and good, there is only an expression of opinion
and not a statement of fact, which could constitute fraud.
If A intending to deceive B , falsely represents that five
hundred maunds of indigo are made annually at A’s factory, and
thereby induces B to buy the factory, the contract is voidable a
the option of B.

Representation as to untrue facts may be made either by

positively stating certain fats or by conduct.

In Edington Vs. Fitzmaurice (1885) a company was in grea

financial difficulties and needed funds to pay some pressing
liabilities. The company raised the amount by issue o
debentures. While raising the loans the directors stated tha
the amount was needed by the company for its
development, purchasing assets and completing buildings.
It was held that the directors has committed fraud.
Mere Silence Is No Fraud
It has been noted above that for constituting fraud there should
be representation as to certain untrue facts. Active concealment
has also been considered to be equivalent to a statement
because in that case there is a positive effort to conceal the truth
and create untrue impression on the mind of the other, Mere
silence, however, as to facts is no fraud. Explanation to Section
17, in this connection, incorporates the following provisions :

“Mere silence as to facts likely to affect the willingness of a

person to enter into a contract is not fraud, unless the
circumstances of the case are such that, regard being had to
them, it is the duty of the person keeping silence to speak, or
unless his silence is, in itself, equivalent to speech.”
A contracting party is not obliged to disclose each and everything
to the other party. If a person is to sell his goods he is under no
duty to disclose the defects in his goods. If he makes false
statement as to the quality of his goods, it would be fraud, but if
he merely keeps silence as regards the defects in them there is
no fraud. In case of sale of goods the rule is caveat emptor, i.e.,
buyer be aware, which means that it is the duty of the buyer to
be careful while purchasing the goods, and there is no implied
condition or warranty by the seller as to the quality or fitness of
the goods for any particular purpose.

If A sells, by auction, to B , a horse which A knows to be

unsound. A says nothing to B about the horse’s unsoundness.
This not fraud in A . Similarly, if A and B, being traders, enter
upon a contract A has private information of a change in prices
which would affect B’s willingness to proceed with the contract.
A is not bound to inform B.
 In Keates Vs. Lord Cadogan (1851), A let his house to B
which he knew was in a ruinous condition. He also knew that the
house is going to be occupied by B immediately. A did not
disclose the condition of the house to B. It was held that he had
committed nom fraud.

 In Shri Krishan Vs. Kurushetra University 1976 SC, Shri

Krishan, a candidate for the LL.B. Part I exam., who was
short in attendance, did not mention that fact himself in the
admission form for the examination. Neither the Head of the
Law Department nor the University authorities made proper
scrutiny to discover the truth. It was held by the Supreme Court
that there was no fraud by the candidate and the University had
no power to withdraw the candidature of the candidate.
 Exceptions

Although as a general rule mere silence or non-disclosure of

facts do not amount to fraud, but in some exceptional cases
keeping silence may de deemed to be an act of deception.
Explanation to Section 17, which mentions the rule that mere
silence is not fraud also mentions the following two exceptions :

(1) When there is a duty to speak, keeping silence is fraud.

(2) When silence is, in itself, equivalent to speech, such silence

is a fraud.
 (1) Duty to speak
 When the circumstances of the case are such that, regard
being had to them, it is the duty of the person keeping
silence to speak, keeping silence in such a case amounts to
fraud. When there is a duty to disclose fats, one should do so
rather than to remain silent. By remaining silent one may be
responsible for creating a false impression in the mind of the
other. Certain contracts are uberrima fides , i.e., contracts of
utmost faith. In such a case it is supposed that the party in
whom good faith is reposed would make full disclosures and not
keep silent. Suppression of truth in such cases is equivalent to
suggestion of false hood. Withholding the facts, which ought to
be disclosed, is fraud. Contracts of insurance are contracts of
utmost good faith. Since some of the facts may be in the in the
sole knowledge of the insured, he must make full disclosure to
the insurer.
 Speaking half—truth may also amount to
misrepresentation as regards those facts which
have not been disclosed. Withholding a part of the
information may be enough to convey a false
impression and it amounts to fraud. Thus, if the
cleaner of clothes makes a customer sign a
document orally telling him that the terms exempt
the cleaner from liability for damage to beads and
sequins, but in fact the document contains a clause
giving him exemption from any damage however
arising, this is a fraud. (Curtis Vs. Chemical
Cleaning and Dyeing Co. 1951)
 4. Misrepresentation
 When a false statement is made with the knowledge that it is false and
also with the intention to deceive the other party and make him to enter
into a contract on that basis, it is known as fraud. But when the person
making a false statement believes the statement to be true and does
not intend to mislead the other party to the contract it is known as
“Misrepresentation”. When the consent of a party to a contract has
been obtained by misrepresentation it is not free consent and the
contract is voidable at his option. Section 18 defines misrepresentation
as under :
 “Misrepresentation” means And includes—

(1) 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 :
(2) any breach of duty which, without an intention to deceive, gains an
advantage to the person committing it, or any one claiming under him,
by misleading another to his prejudice or to the prejudice of any one
claiming under him ;
(3) causing, however, innocently. A party to an agreement, to make a
mistake as to the substance of the thing which is the subject of the
agreement.
 Positive assertion, i.e. an explicit statement, of fact
by a person of that which is not true, but he believes
it to be true amounts to misrepresentation. There
should be a false statement made innocently, i.e.,
without any intention to deceive.
 When there is a breach of duty whereby the person
making a false statement gains some advantage at
the cost of the other party, and the statement though
false is made without an intention to deceive, it also
amounts to misrepresentation. For example,
Section 57, Indian Easement Act, 1882, lays down
that the grantor of a licence i8s bound to disclose to
the licensee any defect, which is likely to be
dangerous to the person or property of the licensee,
of which the grantor is aware but the licensee is not.
Omission to make such a disclosure, if it is without
any intention to deceive, would amount to
misrepresentation.
If one party, acting innocently, causes another party to
make a mistake as to the substance of the thing which is
the subject of the agreement, there is said to be
misrepresentation.

In case of misrepresentation the person making the

statement is innocent and he makes the statement without
any intention to deceive the other party. His statement is
false although he himself believes that the same is true. It
is known as innocent misrepresentation as against fraud,
where the person making the false statement knows that
the same is false but makes the same intentionally to
deceive the other party and make him enter into an
agreement which he would not have done otherwise. For
instance, A sells his horse to B which is unsound but A
himself does not know about this fact. He tells B that the
horse is sound. There is misrepresentation.
 Mistake
 When the consent of the parties is caused by mistake, it is not
the free consent which is needed for the validity of a contract.
One, or both, of the parties may be working under some
misunderstanding or misapprehension of some fact relating to
the agreement. If such a misunderstanding or misapprehension
had not been there, probably they would not have entered into
the agreement. Such contracts are said to be have been
caused by mistake.
Mistake may work in two ways :
1. Mistake in the mind of the parties is such that there is no
genuine agreement at all. They may be no consensus ad idem.
i.e. the meeting of the two minds. The offer and acceptance do
not coincide and thus no genuine agreement is constituted
between the parties.
2. There may be a genuine agreement, but there may be mistake
as to a matter of fact relating to that agreement.
1. Mistake may work in two ways :
For a valid contract both the parties should
have given their consent and the consent should be
free also. According to section 13 :
“Two or more persons are said to consent when
they agree upon the same thing in the same sense.”
Sometimes even such a consent, where two or
more persons agree to the same thing in the same
sense, may not be there. In other words, there may
be absence of meeting of the minds of the parties,
or there may be no consensus ad idem. In such
case there is no contract which can be enforced
 In Raffles Vs. Wichelhaus (1864) the buyer and
the seller entered ito an agreement under which the
seller was to supply a cargo of cotton to arrive “ex
peerless from Bombay”. There were two ships of
the same name. i.e., Peerless, and both were to
sail from Bombay, one in October and the other in
December. The buyer in mind Peerless sailing in
October, whereas the seller thought of the ship
sailing in December. The seller dispatched cotton
by December ship but the buyer refused to accept
the same. In this case the offer and acceptance did
not coincide and there was no contract and,
therefore, it was held that the buyer was entitled to
refuse to take delivery.a
 2. Mistake as to a matter of fact
essential to the agreement
Section 20 deals with such mistake. It provides :
 20. Agreement void where both parties are under mistake
as to matter of fact.-- Where both the parties to an agreement
are under a mistake as to a matter of fact essential to the
agreement is not to be deemed a mistake as to a matter of fact.
Illustration
(a) A agrees to sell to B a specific cargo of goods supposed to be
on its way from England to Bombay. It turns out that, before the
day of the bargain, the ship conveying the cargo had been cast
away, and the goods lost. Neither party was aware of these
facts. The agreement is void.
(b) A agrees to buy from B a certain horse. It turns out that the
horse was dead at the time of the bargain, though neither party
was aware of the fact. The agreement is void
c) A being entitled to an estate for the life of B , agrees to
sell it to C . B was dead at the time of the agreement,
but both the parties were ignorant of the fact. The
agreement is void.

When the type of mistake contemplated is section 20 is

present in an agreement, the agreement is void.
Section 20 requires that :
1. Both the parties to the contract should be under a
mistake and
2. Mistake should as regards a matter of fact.
3. The fact regarding which the mistake is made should be
essential to the agreement.
1. Mistake of both the parties
 Section 20 makes the agreement void if there is
mistake on the part of both the parties. For
example, A and B make an agreement for the
sale and purchase of a particular horse.
Unknown to both the parties the horse was dead
at the time of the agreement. Since both the
parties are under a mistake the agreement is
void. If the mistake is a unilateral one, i.e., only
one of the parties is having some mis-
impression, the validity of the agreement is not
affected thereby. This is made clear by section
22, which reads as under :
 22. Contract caused by mistake of one party as to
matter of fact.--- A contract is not voidable merely
because it was caused by one of the parties to it being
under a mistake as to matter of fact

 In Ayekam Angahal Singh Vs. The Union of India,

A.I.R. 1970 there was auction for the sale of fishery
rights and the plaintiff was the highest bidder making a
bid of Rs. 40,000. The fishery right had been auctioned
for 3 years. The rental in fact was Rs. 40,000 per year.
The plaintiff sought to avoid the contract on the ground
that he was working under a mistake and he thought that
he ha made a bid of Rs. 40000 being the rent for all the
three years. It was held that since the mistake was
unilateral the contract was not affected thereby and the
same could not be avoided
 (2) Mistake of fact
 There should be mistake of fact and not of law. The validity of
the contract is not affected by mistake of law. Regarding
mistake of law the provision contained in section 21 is as follows
21. Effect of mistake as to law.--- A contract is not voidable
because it was caused by a mistake as to any law in force in
India : but a mistake as to law not in force in India has the same
effect as a mistake of fact.
 Illustration
 A and B make a contract grounded on the erroneous belief that
a particular debt is barred by the Indian Law of Limitation : the
contract is not voidable.
 Every one is supposed to know the law of the land. Ignorance of
law is no excuse. If a person wants to avoid the contract on the
ground that there was a mistaken impression in his mind as to
the existence of some law while he entered into the contract, he
will get no relief.
Consideration
Presence of consideration is one of the essentials of
a valid contract. Subject to certain exceptions, the
general rule in India is that “ an agreement without
consideration is void.
Consideration means something in return for the
promise. It may be either some benefit conferred on
one party or some detriment suffered by the other.
In the words of Lush J. In Curie Vs. Misa (1875)
“ A valuable consideration in the sense of the law
may consist either in some right, interest, profit or
benefit accruing to one party, or some forbearance,
detriment, loss or responsibility given, suffered or
undertaken by the other.”
Definition under Section 2(d)

Section 2(d), Indian Contract Act, defines

consideration as under :

“When at the desire of the promisor, the

promisee or any other person has done or
abstained from doing, or promises to do or
abstain from doing something, such act or
abstinence or promise is called a
consideration for that promise”.
The definition mentions the following
requirements to be satisfied in order that there is
valid consideration :

1. Consideration must be given ‘at the desire of the promisor”.

2. Consideration must be given ‘ by the promisee or any other
person ‘.
3. Consideration may be past, present or future in so far as the
definition says that the promisee :
(i) has done or abstained from doing, or
(ii) does or abstains from doing, or
(iii) promises to do or abstain from doing, something.
4. There should be some act, abstinence or promise by the
promisee, which constitutes consideration for the promise.
 1. CONSIDERATION ONLY AT THE
DESIRE OF THE PROMISOR
 It is essential that the consideration must have been given at the desire of
the promisor, rather than voluntarily or at the instance of some third party.

 In Durga Prasad Vs. Baldeo (1880) the consideration for the promise
had not moved at the desire of the promisor but some other person, and
that was held not to be sufficient consideration to support the promise.
The facts of the case are
The Plaintiff constructed certain shops in a market at the instance of the
collector of that place. Subsequently the defendants occupied one of the
shops in the market. The money for the construction of the market having
been spent by the plaintiff, the defendants, in consideration thereof, made
a promise to pay to the plaintiff commission on the articles sold through
their agency in that market. The defendants failed to pay the promised
commission. In an action by the plaintiff to recover the commission it was
observed that the consideration for the promise to pay the commission for
the construction of the market was not at the desire of the defendants, but
on the order of the collector. It was, therefore, held that since the
consideration did not move at the desire of the defendants (promisors) in
this case, this did not constitute valid consideration and therefore the
defendants were not liable in respect of the promise made by them.