Free Consent in Indian Contract Act

 Free Consent 

Consent: According to Section 13 of the Indian Contract Act 

‘two persons are said to consent when they agree upon the same thing in the same sense'.

(The principle of consensus-ad-idem)

Consent is said to be free when it is not caused by-

(a) Coercion    (b) Undue influence   (c) Fraud         (d) Misrepresentation         (e) Mistake

Definition of Coercion: 

Section 15 of the Indian Contract Act, 1872, defines coercion as -

“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”.

E.g. A threatens to murder B if he does not sell his house to A, and B agrees to do so. The agreement is bought about by coercion. This agreement is voidable at the option of B.

Features of Coercion:

1. Coercion means 

(i) the committing or threatening to commit any act, which is forbidden by the Indian Penal Code, or

(ii) the unlawful detaining, or threatening to detain, any property.

2. Coercion may proceed from any person including a person, who is not a party to the contract.

3. The act or threat, which constitutes coercion, may be directed against any person and not necessarily against another party to the agreement.

4. The act must have been actually committed to induce a person to enter into an agreement.

5. It does not matter whether the IPC is or is not in operation, in the place, where coercion is employed.

 Consequences of Coercion:

Under Section 19, when a contract is brought about by coercion, it is voidable at the option of the party, whose consent was so caused. The aggrieved party has the following options-

            a) have the contract set aside, or

            b) refuse to perform it and defend it on the ground of coercion, or

            c) abide by the contract, if he so desires and insists on its performance by other party.

            d) Under Sec.72, if a person has paid money or delivered anything to another person, by mistake or under coercion, that money must be repaid or the thing received must be returned to him.

Definition of Undue Influence:  

According to Section 16(1) of the Contract Act “a contract is said to be induced by undue influence where the relations between the parties are such that one of the parties is in a position to dominate the will of the other & uses that position to obtain an unfair advantage over the other”.

“A” an old woman who stays with “B”, his nephew and he takes care of her. “B” demanded to get the property of “A” as he was taking care of her and forces her to sign the papers. In this case, “A” is under undue influence.

It is possible in relations like-

• Parent and child
• Husband and wife
• Lawyer and client
• Doctor and patient
• Trustee and beneficiary
• Creditor and debtor
• Landlord and tenant

Distinguish between Coercion and Undue Influence

1. How Consent is Obtained?

Coercion: Consent is obtained by committing, or, threatening to commit an offence under I.P.C. or, by detaining or threatening to detain property unlawfully.         

Undue Influence: Consent is obtained by dominating the will of another person with a view to secure an unfair advantage.

2. Nature

Coercion: Coercion is basically of physical nature.

Undue Influence: Undue influence is mainly of moral/mental nature.

3. Burden of Proof

Coercion: The burden of proof lies on the person, who alleges employment of coercion.  

Undue Influence: Burden of proof lies on the party, who is in a position to dominate the will of the other

Definition of Fraud:

According to Section 17 of the Indian Contract Act, 1872, 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 the intention to deceive another party, or, to induce a person to enter into a 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 the fact by one who is 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 specifically declares to be fraudulent.

Definition of Misrepresentation:

The term misrepresentation means a false statement, made by a person who honestly believes it to be true or who does not know it to be false. It also includes non-disclosure of a material fact or facts without any intent to deceive the other person.

Definition of Mistake: 

The mistake may be defined under Section 20 of the Indian Contract Act, 1872, as "an erroneous belief about something". If the agreement is made under an erroneous belief it cannot be said that the parties enjoyed free consent i.e. both the parties shall understand the same thing in the same sense.

Elements of Mistake:

1.         Mistake must be bilateral. A unilateral mistake is no mistake.

2.         The mistake must be in relation to some facts.

3.         The fact concerned must be essential to the agreement.

4.         Ignorance of Law is not an excuse.