FREE

CONSENT
Lecture 3

FREE CONSENT
According to Sec 10 of the
Indian Contract Act one of
the essentials of a valid
contract is Free Consent

Sec 13 defines consent as Two or

more persons are said to consent
when they agree upon the same
thing in the same sense. According
to Sec 14, consent is said to be free
when it is not caused by:
1.Coercion
2.Undue influence
3.Fraud
4.Misrepresentation
5.Mistake

COERCION
According to Sec 15 coercion means
1. (a) Committing or threaten to commit
any act forbidden by Indian Penal Code
1860;
(b) The unlawful detaining or
threatening to detain any property to
the prejudice of any person, whatever.
2. The intension of the above acts must
be to cause the other person to enter
into an agreement: It is immaterial
whether the IPC is or is not in force at
the place where the coercion is

Ranganayakamma vs.
Alwar Shetty:
The relatives of a young widow
threatened her that they would not
allow her to cremate the dead body
of her husband unless she
consented to the adoption of a boy
as her son. Held, the adoption is
not binding on her on account of
the coercion

Essential requirements
of Coercion
1.There must be the committing or
threatening to commit any act
forbidden by the Indian Penal Code
2.The coercion may comprise of
unlawful detaining or threatening to
detain any property to the prejudice
of any person whatever.
3. The coercion may proceed from
either a party to the contract or
from a stranger.

4. Coercion may be directed to the

prejudice of any person whatever.
5. The intension of the coercion
must be to cause the other person
to make a contract.
6. The application of IPC or
otherwise at the place of coercion is
immaterial.

1.There must be the committing or threatening to

commit any act forbidden by the Indian Penal Code

In Chikham Ammirayu vs. Chikham

Seshamma, a release deed was executed
on the basis of threat to commit suicide.
The deed was held to be not enforceable
as the same was obtained by coercion.
The term forbidded by IPC is wider than
punishable under the IPC.
Though
threat to commit suicide is not
punishable under the IPC yet it must be
deemed to be forbidden because
abetment of suicide (Sec. 306 IPC) and

2. The coercion may comprise of unlawful detaining or

threatening to detain any property to the prejudice of any person
whatever.

In Muthia Chettiar vs. Koruppen

Chetty, a person secured a release
from liabilities from his principal by
refusing to hand over the books of
account. The release deed was
held to be voidable of the option of
the principal

3. The coercion may proceed from either a

party to the contract or from a stranger.

A threatens to kill B if he does not

sell his house to C. B agrees. A has
committed coercion though he is
stranger to the contract between B
and C

6. The application of IPC or

otherwise at the place of coercion
is immaterial.

A forces B to make a contract

through criminal force. At that
time A and B were on a voyage
and the ship was on the high
seas. A sues B for coercion. B
is liable, though IPC did not
extend to high seas.

Effect of Coercion
The contract is voidable at the
option of the party whose consent
has been caused by coercion. Such
a party may put the contract to an
end. In that case the other party
shall restore all the benefits
received by him under Sec. 64
According to Sec. 72, a person to
whom anything has been delivered
or money paid under coercion must
return or repay it

Undue Influence
According to Section 16(1), a
contract is said to be induced by
undue influence when:
(a)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
(b) The party uses that position to
obtain the unfair advantage over
the other.

A, having advanced money to

his son B during his minority,
upon Bs coming of age, obtains
by parental influence, a bond
from B for a greater amount
than the sum due in respect of
the advance. A employs undue
influence.

Presumption of undue
influence
(a) Real or apparent authority
(b) Fiduciary Relationships
(c) Mental distress

Burden of Proof
When a person who is in a position
to dominate the will of another,
makes
a
contract
and
the
transaction
appears
to
be
unconscionable, the burden of
proving that the contract has not
been induced by undue influence
shall lie on the person who is in a
position to dominate the will of the
other.

Rebuttal of Presumption
The presumption of undue influence can
be rebutted by showing the following:
(i) that there has been full disclosure of
all material facts,
(ii) that the consideration was adequate,
and
(iii) that the party was in receipt of
independent advice

Cases in which Presumption

of Undue Influence Applies
1. Contracts with pardanashin
woman
2.Unconscionable bargains

2
3

Distinction
Basis
Method of
obtaining
consent

Between Coercion and Undue Influence

Coercion
Undue Influence
The consent of the
The consent of the
party is obtained by
party is obtained
committing or
by dominating the
threatening to commit will of the other
an offence forbidden
by the IPC
Nature of
It involves physical
It involves moral
Force
force
pressure.
Presumptio There is no
There is a
n
presumption of
presumption of
coercion by law under undue influence in
any circumstance. It the case of certain
must be proved by the relationships.
party alleging
coercion.

Place of use The act or the threat

amounting to
coercion may be
committed even
outside India
Criminal
It entails criminal
Element
liability.

It must have been

exercised in India

Relationship There may not be

any relationship
between the parties
involved

There must be
some relationship
between the
parties so that one
of the parties may
dominate the will
of the other

It does not entail

criminal liability.

Fraud
According to Sec 17, fraud
means and includes any of
the following acts committed
by a party to a contract or
with his connivance or by his
agent to induce another to
enter into the contract:

1.

2.

The suggestion, as to a fact, of that

which is not true, by one who does
not believe it to be true
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

Essential elements of fraud

1. There must be a false representation.
It may be of the following type:
(a) Making of a false representation
relating to a fact.
(b) Active concealment of a fact
(c) Making of a promise without any
intension to perform it.
(d) Any other act fitted to deceive
(e) Any act or omission which the law
specifically declares to be fraudulent.

2. The above must have been made

either by the party to the contract or
with his connivance, or by his agent.
3. The representation must be made
with the knowledge that it is false.
4. The representation must be made
with an intention to deceive the
other party.
5. The plaintiff must have been
deceived and suffered damage or
loss

Silence as a Fraud
Explanation to Section 17
provides that mere silence as to
facts likely to affect the
willingness of a person to enter
into a contract is not fraud.
Thus silence without any legal
duty to speak is not fraud.

Exceptions
1. Duty to speak:
(i)Contracts uberrimae fidei
(ii)Contracts of partnership
(iii)Contracts of guarantee
(iv)Where the parties stand in fiduciary
relationship to each other.
(v)Contracts to marry
2. Where silence is equivalent to speech
3. Change of circumstances

In Rajgopala Iyer vs. The South

India Rubber Works, the prospectus
of
a
company
contained
a
statement that certain persons
were its direction. This was true.
But before allotment, some of them
had retired.
This was not
communicated. It can be the basis
to avoid the contract.

Effects of Fraud
The party defrauded has the following
remedies;
(i) Suit for rescission provided the suit is
filed within a reasonable time.
(ii) Suit for specific performance and to
require the other party to put him in a
position in which he would have been if
the representation made had been true.
(iii) Suit for damages for fraud.

The right of rescission is lost

in the following cases:
(a)By affirmation of the contract even
after becoming aware of the fraud; or
(b)If the parties cannot be restored to
their original position; or
(c)If the third parties have acquired rights
for consideration and in good faith; or
(d)If the aggrieved party could have
discovered the truth by ordinary
diligence.

Misrepresentation
According to Section 18, misrepresentation
means and includes:
(i) 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;
(ii) any breach of duty which, without any intent
to deceive, gains an advantage to the person
committing it, or anyone claiming under him, by
misleading another to his prejudice, or the
prejudice of any one claiming under him;
(iii) causing, however innocently, a party to an

Thus misrepresentation may be

committed in any of the
following ways:
1. Unwarranted statements
2. Breach of Duty
3. Inducing Mistake about Subject
Matter

1. Unwarranted statements
A tells B, without checking records,
that in his factory 1000 tons of
indigo is manufactured every
month. A believes his assessment
to be true. The actual production is
found to be only 830 tons. A is
guilty of misrepresentation

2. Breach of Duty
A tells an insurance agent that
his age is 25, believing it to be
true. His actual age is 27. The
LIC issues a policy in his favour
charging a lower rate of
premium that what it should
have charged for the actual age
of A. A is guilty of
misrepresentation.

3. Inducing Mistake about Subject Matter

In Johnson vs. Crow, the defendant

agreed to sell and deliver a boiler to the
plaintiff at Rajgarh.
At the time of
making the contract, the plaintiff had
represented that there was a road all the
way to carry the boiler. But, there was a
suspension bridge on the way and the
bridge was not strong enough to bear the
weight of the boiler. On knowing this, the
defendant abstained from delivering the
boiler. Held, the agreement was voidable

Effects of Misrepresentation
The aggrieved party will have the following
rights:
1.The right to rescind the contract except in the
following situations:
(a) if, after becoming aware of the
misrepresentation or fraud, it takes a benefit
under the contract, or in some other way
affirms it; or,
(b) if the parties cannot be restored to their
original position; or
(c) if third parties have acquired rights in the
subject-matter of the contract in good faith and

2. Right to accept the contract but insist on

restitution
Exception: The contract will not be voidable if
the party alleging misrepresentation could
have discovered the truth with ordinary
diligence.
Example:
A, by a misrepresentation, leads B erroneously
to believe that 500 quintals of indigo are made
annually at As factory. B examines the
accounts of the factory which shows that only
400 quintals are made. B then buys the
factory. The contract is not voidable on the
ground of As misrepresentation.

Difference between Fraud and Misrepresentation

Belief
The person making
The false statement
the false statement
is made by the
honestly believes it to person who knows it
be true.
to be false or makes
it recklessly
whether it be true
or false
Intention There is no intention There is an intention
to deceive the other to deceive.
party.
Implicatio It makes the contract Not only is the
n
voidable at the option contract voidable
of the party
but also gives rise
misrepresented
to an independent
action in tort for
damages.

Criminalit It is not an offence

y
and does not fall
within the purview of
the IPC

In certain cases, it
can become a
criminal act
punishable under
the IPC

Discovery The aggrieved party

of truth
cannot avoid the
contract if it could
have discovered the
truth with ordinary
diligence

The contract is
voidable at the
option of the
aggrieved party
even though it could
discover the truth
with ordinary
diligence.

Mistake
Mistake is an erroneous belief
about something.
Kinds of Mistake:
1. Mistake of Law
2. Mistake of Fact

1. Mistake of Law
(a) Mistake as to Indian Law:
A and B make a contract on the
belief that a particular debt is
barred by the Indian Law of
Limitation. The contract is not
voidable.
(b) Mistake as to foreign Law:

2. Mistake of Fact
(a) Bilateral mistake of fact
(i) There must be a common or mutual
mistake
(ii) The mistake must relate to a matter
of fact essential to the agreement.
Example: In Galloway vs. Galloway, a
man and a woman entered into a
separate agreement believing
themselves as lawfully married. The
agreement is void on account of mutual
mistake about a material fact relating to

The various cases relating to

bilateral mistake are enumerated
below:
Mistake as to the subject-matter of
contract. It could be of the
following types:
(i) Regarding the existence of the
subject matter
(ii)Regarding the identity of the
subject-matter
(iii) Regarding the quality of the
subject-matter

(iv) Regarding the quantity of the

subject-matter
(v) Regarding the price of the
subject-matter
(vi) Regarding the title of the
subject-matter
(vii)Mistake as to the physical or
legal possibility of performance

(i) Regarding the existence of the subject

matter
In Couturier vs. Hastie, A agreed to
sell a cargo of corn supposed to be
in voyage. Unknown to the parties,
the corn had been damaged by bad
weather and had already been sold
by the master of the ship at an
intermediate port.
Held, the
contract is void.

(ii)Regarding the identity of the subject-matter

In Raffles vs. Wichelhaus, W agreed

to buy from R a cargo of cotton to
arrive ex-Peerless from Bombay.
There were two ships of that name
sailing from Bombay. One sailing in
October, and the other in December.
W meant the former ship and R
meant the latter. Held, the contract
is void on account of mistake as to
identity of the subject matter.

(iii) Regarding the quality of the subject-matter

In Nicholson & Ven vs. Smith

Mariott, table napkins were sold at
an auction by a description with
the crest of Charles I and the
authentic property of that
monarch. In fact, the napkins were
Georgian. The agreement was held
to be void.

(iv) Regarding the quantity of the subject-matter

In Henkel vs. Pape, the defendant after

enquiring about the prices of rifles, ordered
by telegram three rifles. The message was
wrongly transmitted as the rifles. Since
defendant had inspected fifty rifles, the
plaintiff supplied all the fifty. Held, there
was no contract although the mistake has
been caused by the negligence of a third
party.
Also Tarsem Singh vs. Sukhminder Singh, in
which one of the parties thought of the area
of land in terms of bighas and the other in

(v) Regarding the price of the subjectmatter

In Webster vs. Cecil, C wrote to W offering
to sell a certain property for 1250. He had
earlier declined an offer to W to buy the
same property for 2000. W knew that the
offer of 1250 was a mistake for 2250.
Therefore, he immediately accepted the
offer.
Held, W cannot ask for specific
performance since he knew perfectly well
that the offer was a mistake.

(vi) Regarding the title of the

subject-matter
If a person buys some property
which neither party knew that it
already belonged to the buyer, the
contract will be void.

(vii)Mistake as to the physical or

legal possibility of performance
In
Griffith
vs.
Brymer,
an
agreement for the hiring of rooms
to watch the coronation of Edward
VII was held to be void because
unknown to the parties, the
procession
had
already
been
cancelled.

(b) Unilateral Mistake

In A A Singh vs. Union of India, the
plaintiff was the highest bidder at an
auction of the right of fishery thinking
that the right was sold for three years
but which was actually for one year
only. Held, he cannot avoid the contract
because of unilateral mistake caused by
his own negligence.

Exceptions to Section 22
If the unilateral mistake goes to the very
root of the agreement, it shall be void.
This is explained in the following
exceptions:
1. Mistake as to the identity of the
person contracted with.
2. Mistake as to the nature of contract.

1. Mistake as to the identity of the

person contracted with.
In Said vs. Butt, the managing director of a
theatre gave instructions that no tickets
were to be sold to S as he had been a bad
critic of all plays of the theatre company. S
knew of the fact. Therefore, he sent one of
his friends to buy a ticket for him. He was
however refused admission. Held, there
was no contract as the theatre company
never intended to contract with S.

2. Mistake as to the nature of contract.

In Carlisle & Cumberland banking, one
Riggs asked the defendant to sign a
document telling him that he was only
signing a proposal for insurance. The
defendant signed without reading it and it
turned out to be a guarantee for Riggs
overdraft plaintiff banks. Held, the
defendant is not liable on the guarantee.

Legality of
Object and
Consideration

For a valid contract, both the consideration

and object should be lawful. According to
Section 23, the objects and the
consideration of an agreement shall be
unlawful in the following cases if:
1. It is forbidden by law
2. It is of such nature that, if permitted it
would defeat the provisions of law.
3. It is fraudulent
4. It involves or implies injury to the person
or property of another.
5. The court regards it as immoral or
opposed to public policy.

Agreements opposed to public

policy
An agreement is said to be opposed
to public policy when it is harmful to
public welfare.
Public policy is defined as that
principle of law which holds that no
subject can lawfully do that which has
a tendency to be injurious to the
public or against the public good
which may be termed the policy of

Following agreement have been held to be

opposed to public policy and therefore void:

1. Trading with the enemy

2. Stifling Prosecution
3. Maintenance and Champerty
4. Interference with course of
justice
5. Trafficking in public offices and
titles
6. Marriage brokerage agreements

7. Agreement restricting personal liberty

8. Agreement in restraint of parental
rights
9. Agreements tending to create interest
opposed to duty
10. Agreements interfering with marital
status
11. Agreements to vary the period of
limitation
12. Agreements to defraud creditors or
revenue authorities.

Effect of Unlawful agreements

1. Every agreement the object or
consideration of which is unlawful is void
ab initio.
2. The collateral transaction to such
illegal agreement is also void.
3. In case the parties in pari delicto
(equally guilty), the defendant is in a
better position.

Consequences Where Object and

Consideration are Unlawful in Part
1. Agreement void if consideration and
object are unlawful in part.
2.Reciprocal promise to do things legal
and also other things illegal.
3. Alternative promise, one branch being
illegal.

It is not important whether the IPC is or not

in force where the coercion is taking place.
For example A and B , both Indians are on a
voyage trip to America when the ship is on
the Atlantic ocean B threatens a that if
doesnt transfer his property to Bs name
then he will push him into the water.now
though the IPC is not in force on the
Atlantic ocean it is still considered a
coercion.

Important cases:
1.Chikkim Ammiraju vs. Seshamma:
In this case a person threatened his wife and son that he
would suicide if she doesnt transfer her property in his
brothers favor. The wife and son executed the release of
the deed under the threat . Held the threat of suicide
amounted to coercion within Sec 15 and the release
deed was therefore voidable.
This also is a very important case
to prove that threat to commit
suicide amounts to coercion

2. Ranganayakamma vs. Alwar Setty:

A young widowed girl of 13 years was forced to
adopt a boy by her relatives who prevented the
removal of his body for cremation until she
consented. Held the consent was not free but was
induces by coercion.Consequently the adoption was
set aside.

3.Muthia vs. Muthu Karuppa:

An agent refused to hand over the account books of a
business to the new agent unless the principal
released him from all liabilities.the principal had to
give a release deed.held the deed was
given under coercion
and was voidable
at the option of the
principal.

4. Bansraj vs. Secretary of State:

The government gave a threat of attachment against
the property of P for the recovery of the fine due
from his son. P paid the fine. Held contract was
induced by
coercion

UNDUE INFLUENCE
Sometimes a party is compelled to enter into a
contract against his will as a result of unfair
persuasion by the other party.
Section 16 defines undue influence as follows
A contract is said to be induced by undue
influencewhere 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

Essentials of undue influence

1. There are two persons
2. The relations are satisfying between
them
3. One must dominate the other
4. There must be unfair advantage
5. It involves the moral pressure

There is an undue influence between the

following persons:
-Principal and agent
-Superior and and subordinate
Doctor and patient
Father and son
Teacher and student
Promoter and company
Master servant
Spiritual advisor and devotee

Among the following relations there is no undue

influence
1.wife and husband
2.landlord and tenant
3.debtor and creditor
CASE: Raniannapurna vs. Swaminathan
A poor Hindu widow was persuaded by a money
lender to agree to pay 100% rate of interest on money
lent by him. She needed the money to establish her
right to maintenance.it was a clear case of undue
influence and the court reduced the rate of interest to
24%

FRAUD

According to Sec 17 fraud means and

includes any of those acts committed
by a party to contract or with his
connivance or by his agent with an
intent to deceive or induce a person
to enter a contract:

1.

The suggestion that a fact is true when it is not true and

the person making it does not believe in it to be true

2. The active concealment of a fact by a person 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

The essentials of fraud are:

1. There must be a representation or assertion and
it must be false
2.The representation must relate to a fact
3.The representation must have been made with
the intention of inducing the other party to act
upon it
4.the representation must have been made with a
knowledge of its falsity
5.the other party must have subsequently suffered
some loss

MISREPRESENTATION
According to Sec 18 there is misrepresentation:
1. When a person positively asserts a fact is true when his
information does not warrant it to be so, though he
believes it to be true
2. When there is any Breach of duty by a person which
brings an advantage to the person committing it by
misleading another to his prejudice
3. When a party causes however innocently the other
party to the agreement to make a mistake as to the
substance of the thing which s the subject of the
agreement

Important case:
Babul vs. R.A.Singh:
M was a marriage broker who gave Y the photograph
of a man and told him that the man was young and rich. Y
conveyed the same to his daughter who agreed for the
proposal. But on the day of marriage it was discovered
that the man was the age of 60. There is fraud between M
and Y. whereas the is misrepresentation between Y and his
daughter.

MISTAKE

Mistake of law

Of the
country

Mistake of fact

Of the foreign
country

Bilateral mistake

Mistake as to subject matter

Mistake as to
possibility

Physical impossibility

existence

identity

quality

quantity

Unilateral mistake

As to
person

As to
nature

Legal impossibility

title

price

UNLAWFUL
OBJECTIVES
&
VOID AGREEMENTS

Unlawful agreements

illegal

immoral

Agreement opposing public policy

wager

An agreement which interferes

with administration of
government
An agreement interfering
with the administration of
justice
An agreement interfering with
administration of personal liberties

Restraint of
parental rights

Restraint of
profession

of
marriage

Restraint

Restraint of Restraint of
trade
martial duties

UNLAWFUL OBJECT
If the object of an agreement is the performance
of an unlawful act, the agreement is
unenforceable.
For a contract to be valid only if the object and
the consideration should be legal.
The word object means purpose or design.

Unlawful agreements
An agreement forbidden by law [Sec 23]
An agreement defecting any provisions of law [Sec
24]
Case: Alexander vs. Rayson
A leased a flat to R at a rent of 1,200 pounds.with
the object of deceiving the rating authority two
agreements were entered, one for 450 pounds
and one for 750 pounds. A sued R for recovery of
an installment of 750 pounds. Held A could not
recover and R was entitled to remain in
possession of the flat.

If it is immoral
Case: S.Yellappa vs. Y.Sabu
Cohabitation agreements are immoral
Sumitradevi vs. Sulekha Kundu
An agreement between a husband and wife to
separate in future is immoral and void
An agreement opposed to public policy

If it is fraudulent
If it is creating damage to person or property
Case: Ramswaroop vs. Bansimandir
B borrowed Rs. 100 from L and executed a bond promising to
work for L without pay for a period of two years.In case of
default B was to pay interest at a very exorbitant rate and the
principal sum of once. Held the contract was void as it
involved injury to the person of B.

Injunction
When a party is in breech of a negative term of
contract the court may,by issuing an
order,restrain him by doing what he promised
him not to do. Such an order of the court is called
injunction
Court refuses grant of injunction
[1] whereby a promisor undertakes not to do
something
[2] which is negative in substance though not in
form

Thank You