Free consent and factors which vitiate the free consent.

INTRODUCTION :

there are some essentials of a valid contract and one of them  is that the consent of the contracting parties must be free. If the consent is not  free, the contract shall be treated as void or voidable depending upon the factor  which affected the consent. In this project I am going to write about the meaning of  consent and the various factors that affect the consent viz., coercion, undue  influence, fraud, misrepresentation, and mistake and also about how far the validity of an agreement is affected by each of these factors. With every topic I am going to discuss one or more case laws about that topic or point in details which was decided by the court and used now a days to give decision similar to that case

MEANING OF CONSENT ;

Section 13 of the Indian Contract Act defines the term ‘Consent’ as Two or more persons are said to consent when they agree upon the same thing in the same sense .

For a contract to be valid it is not enough that the parties have given their consent. The consent should also be free i.e., it has been given by the free will of the parties involving no pressure or use of force.

Section 10 of the Contract Act : All agreements are contracts if they are made by the free consent of the parties.

Section 14 of the Act states that 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 section 16, 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. 

  1. COERCION :-

Coercion means forcibly compelling a person to enter into a contract i.e., the consent of the party is obtained by use of force or under a threat.

Section 15 of Indian contract act : “Coercion” is the committing, to threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) 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.

If free consent vitiated by coercion than the contract can be voidable at the wish of the party whose consent is not free.

CASE LAW :- Chikkam Ammiraju And Ors. vs Chikkam Seshamma And Anr.

  • Citation :-     L.P.A.No.121 of 1916
  • Dated:- 23 January, 1917
  • Judges :– Chief justice Mr. John wallis, Mr. Justice oldfield, Mr. Justive seshagiri     aiyar, Mr. Justice sadashiv  aiyar, Mr. Justice moor.
  • Fact :-  Chikkam Seshammas husband and Ammiraju were brothers. Chikkam ammiraju executed a mortgage deed in favour of his brother and obtained a certain amount of money, later he failed to pay the amount to his brother. Due to love and affection chikkam seshammas husband wanted to release the mortgage in favour of his brother. Seshamma and her son did not accept this. Chikkam seshammas husband threatened to commit suicide if they did not listen to him. Due to such threat they executed the release mortgage in favour of the brother. Later they claimed the said properties of their own.
  • Held :- It was by the judges that this was the case of coercion because hes husband threaten them to do commit suicide if they do not release the mortgage in his name which was given to her and her son by her husband’s brother so this comes under section 15 of Indian contract act and seshamma was forced to release the deed so her consent was not free so she can make the contract voidable at her side.
  • UNDUE INFLUENCE:-

The second factor which affects consent and makes it unfree, is undue influence. The term ‘undue influence’ means the improper or unfair use of one’s superior power in order to obtain the consent of a person who is in a weaker position.

           Section 16 of Indian contract act :

 (1)A contract is said to be induced by “under influence” where 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. 

(2) In particular and without prejudice to the generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another-

(a) where he hold 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 a 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 be upon the person in a position to dominate the will of the other. 

If free consent vitiated by undue influence than the contract can be voidable at the wish of the party whose consent is not free.

CASE LAW :- Ranee Annapurni Nachiar vs Swaminatha Chettiar And Ors.

  • Dated:- 18 February, 1910
  • Citations : (1910) 20 MLJ 785
  • Judges:- The honourable Chief Justice, Mr Charles Arnold White kt. and the Honourable Mr Justice Munro
  • Facts :- A poor Hindu widow who needed the money to establish her right to maintenance and for her livelihood, was persuaded by a money lender to agree to pay 100% rate of interest on money lent by him. It was a clear case of undue influence.

Here in this case because of the need and urgency woman was ready to take the money at the 100% interest rate which is very high and not possible for her to pay the interest.

  • Held :- We hold then, on the evidence, that the plaintiff was in a position to dominate the will of the defendant. We also hold that the bargain, on the face of it and on the evidence, was unconscionable. We think Illustration (c) to Section 16 of the Indian Contract Act applies and not illustration (d). Under Sub-s. 3 of the section the burden was on the plaintiff to prove that the contract was not induced by undue influence and, in our opinion, he has failed to discharge it.

We modify the decree of the Subordinate Judge and give the plaintiff a decree for the amount of the advance with interest at 24 p. c. per annum from the date of the bond to the date fixed for payment, and with further interest at 6 p. c. on the total amount due from the date fixed for payment to the. date of payment. The mortgage will stand.

Payment will be made within three months from this date. The parties must pay their own costs throughout. We appoint a receiver by consent.

  • FRAUD :-

Fraud simply means a wilful wrong representation of a fact made by a party to a contract with the intention to deceive the other party or to induce him to enter into a contract.

Section 17 of Indian contract act :

Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive another party thereto 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.

If free consent vitiated by fraud the contract can be voidable at the wish of the party whose consent is not free.

CASE LAW :- Peek vs. Gurney

  • Jurisdiction:-England and wales
  • Dated:- 1873
  • Citation:- (1873) LR 6 HL 377
  • Judge:- Lord cairns
  • Fact :- A prospectus for an intended company was issued by promoters who were aware of the disastrous liabilities of the business of Overend and Gurney which the company was to purchase. The prospectus made no mention of a deed of arrangement under which those liabilities were, in effect, to be transferred to the company. The appellant bought shares in the company and, when it was wound up, he was declared liable as a contributory and had to pay almost andpound;100,000. He sought an indemnity against the directors, alleging misrepresentation and concealment of facts by the directors in the prospectus.
  • Held: The action failed because he had not in fact relied on the prospectus but had purchased the shares in the market. Lord Cairns expressed his agreement with the observations of Lord Chelmsford and Lord Colonsay that mere silence could not be a sufficient foundation for the proceedings: ‘Mere non-disclosure of material facts, however morally censurable, however that non-disclosure might be a ground in a proper proceeding at a proper time for setting aside an allotment or a purchase of share, would in my opinion form no ground for an action in the nature of an action for misrepresentation. There must, in my opinion, be some active misstatement of fact, or, at all events, such a partial and fragmentary statement of fact, as that the withholding of that which is not stated makes that which is stated absolutely false.’
  • MISREPRESENTATION :-  A statement of fact by one party to a contract to the other party for a matter essential for the contract, with an intention to induce the other to enter into contract and when the statement wrongly made either innocently or intentionally it will be misrepresentation of statement.

When a wrong representation is made wilfully with the intention to deceive the other party, it is called fraud. But, when it is made innocently i.e., without any intention to deceive the other party, it is termed as ‘misrepresentation’.

Section 18 of Indian contract act

 “Misrepresentation” defined.—“Misrepresentation” means and includes— —“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 intent to deceive, gains an advantage of 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

Essentials of Misrepresentation

1) The representation should be made innocently, honestly believing it to be true and without the intention of deceiving the other party.

2) Misrepresentation should be of facts material to the contract. A mere expression of one’s opinion is not a statement of facts.

3) The representation must be untrue, but the person makkg it should honestly believe it to be true.

If free consent vitiated by Misrepresentation than the contract can be voidable at the wish of the party whose consent is not free.

 CASE LAW :- With v o’s flanagan

  • Jurisdiction:- England and Wales
  • Dated:- 1936
  • Citation:-  [1936] Ch 575, [1936] 1 All ER 727
  • Judges :- Lord Wright MR, Romer LJ
  • Facts :- There was a doctor o’s flanagan who told with before signing a contract the he earn 50000 for 5 months but in this period of contract the earning fall down to pnly 5000 per month and dr. Unintentionally keep quiet and didn’t tell about the change in the circumstanceso when Mr with came to know about the same he wants to breach the contract on the basis of fraud.
  • Held:- Lord Wright MR held that Mr With could rescind either because there was a duty to point out the change in circumstance or because the representation continued till the point when the contract was signed. He referred to Fry J in Davies v London Provincial Marine Insurance[1] that there is no duty to disclose, even when someone believes facts to be operating on another’s mind. He noted fiduciary relationships can bring an entire duty of disclosure. Uberrimae fidei contracts, including partnership and marine insurance, do too. But also where in negotiations a statement is false and then the representor discovers it, though if he had said nothing he is entitled to hold his tongue throughout. He noted that a ‘representation made as a matter of inducement to enter a contract is to be treated as a continuing representation.’

Romer LJ stated, I agree. The only principle invoked by the appellants in this case is as follows. If A with a view to inducing B to enter into a contract makes a representation as to a material fact, then if at a later date and before the contract is actually entered into, owing to a change of circumstances, the representation then made would to the knowledge of A be untrue, and B subsequently enters into the contract in ignorance of that change of circumstances and relying upon that representation, A cannot hold B to the bargain. There is ample authority for that statement and, indeed, I doubt myself whether any authority is necessary, it being, it seems to me, so obviously consistent with the plainest principles of equity. [2]

  • MISTAKE :-

Mistake refers to an erroneous belief held by one or both parties to a contract at the time the agreement is entered into. The both party were not know about the mistake they are making and they believes it to be true. contract entered into under a mistake (or a ‘mistake contract’) may arise in various different ways including:

  • a mistake as to the subject matter or nature of the transaction.
  • a mistake as to the terms of the contract.
  • a mistake as to the identity of the person with whom the contract is entered into.

Types of mistake:-

  1. Mistake of fact:-
  2. Unilateral
  3. Bilateral
  • Mistake of law :-
  • Mistake of law of country
  • Mistake of law of a foreign country

If both parties are under mistake than the contract Will be void. And this is only factor where the contract is void.

Section 20 of Indian contract act:-

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 the agreement is void. Explanation.—An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.   

CASE LAW :- Raffles v Wichelhaus

  • Dated :- 20 January, 1864
  • Citation:- [1864] EWHC Exch J19, (1864) 2 Hurl & C 906
  • Judges :- Pollock CB, Martin B and Pigott B
  • Facts :- The claimant entered into a contract to sell “125 bales of Surat cotton, guarantied middling fair merchant’s Dhollorah” to the defendant at the rate of ​17 14 d. per pound. The contract specified that the cotton would be arriving in Liverpool on the ship Peerless from Bombay (“to arrive ex Peerless from Bombay”). It so happened that there were two British ships named Peerless arriving in Liverpool from Bombay, one departing in October and another departing in December. The defendant, according to statements presented in court, thought the contract was for cotton on the October ship while the claimant thought the contract was for the cotton on the December ship. When the December Peerless arrived, the claimant tried to deliver it, however the defendant repudiated the agreement, saying that their contract was for the cotton on the October Peerless.

The claimant sued for breach of contract, arguing that the date of the ship was not relevant and the only purpose of specifying the name of the ship is that in the contingency that the ship sink en route, the contract could be voided.

The issue before the Court was whether the defendant should be bound by the agreement to buy the cotton of the claimant’s Peerless.

  • Held:- Though courts will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court in Raffles could not determine which ship named Peerless was intended in the contract. Consequently, as there was no consensus ad idem (as defendant alleged), the two parties did not agree to the same thing and there was no binding contract. Therefore, the defendants prevailed, and did not have to pay.

CONCLUSION:-

In this project I wrote about the consent and how it can be vitiates.

Free consent is defined in section 13 of Indian Contract Act 1872 and the component which vitiates the free consent are in section 15 to 22 and these are coercion (15), undue influence (16), fraud(17), misrepresentation (18), and mistake (20 to 22) and in section 19 voidable agreement are their. Out of these five if coercion, undue influence,  fraud, misrepresentation any one of these present than the contract will be voidable at the option of a party whose consent to be forced and if there is mistake then the contract will be void.

These section are very important because a large part of contract is depend on these because consent is the most important factor in contracts if consent is not free than the whole contract will be void or voidable according to the conditions.

There are many cases in daily where we can see the exploitation of the persons who do not know and forced to go against their will so this part of contract plays an important role in agreements.

Coercion means to threat somebody to do something.

Undue influence is the domination of powerful on poor

Fraud is providing false information to do contract

Misrepresentation is different from fraud it means an unknown information which is false at time of contract

Mistake means the erroneous belief of both parties at time of agreement.


Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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