Free Consent under Indian Contract Act, 1872
Free Consent under Indian Contract Act 1872
Author : V. Krishna Laasya
Introduction
One of the important pre-requisite for a contract to be valid and lawful is that the parties must enter into the contract out of their own free will and with their free consent. Free consent is that aspect when consent is free from-
- Coercion (Section 15)
- Undue Influence (Section 16)
- Fraud (Section 17)
- Misrepresentation (Section 18)
- Mistake, subject to Sections 20, 21 and 22.
Coercion
As per Section 15 of the Indian Contract Act, 1872 Coercion refers to the commission or threat to commit an act forbidden by Indian Penal Code or the unlawful detention, threat to detain property, to the prejudice of a person with the ill intention of causing that person to be a party to such an agreement.
Coercion requires the fulfillment of-
- Committing or threatening to commit an act made unlawful and prohibited by the Indian Penal Code. In Ranganayakamma v. Alwar Setti[1], the question was regarding the validity of an adoption made by a widow aged 13 years. Husband’s body was not allowed to be removed until the widow had adopted the boy. It was held that the adoption was obtained through coercing the widow and so it was not valid consent. In Chikkam Ammiraju v. Chikkam Seshamma[2], the question analysed by the Court of law was whether threat to commit suicide forms a part of coercion or not. It was held that it is indeed coercion as it is an Act forbidden by the Indian Penal Code.
- Unlawfully detaining, threatening to detain the person or property with an ill motive to make that person enter into the aforesaid agreement. It is pertinent to bring into regard the law of duress where actual violence or a threat of violence is made to a person. It is a common law concept prevalent under English law.
Undue Influence
A contract entered into, with traces of undue influence is said to have the ability to make a contract voidable at the discretion of the party so deceived. Section 16 of the Indian Contract Act, 1872 defines undue influence as relations between parties of the contract are in such a way that one party is able to exercise and inflict his will on the other and uses this advantageous position to his benefit.
Section 16 also devised means to analyse as to whether the party is actually in dominance over the other, which is
- Where authority is real and apparent in the nature of the relationship. The relationship is fiduciary in nature.
- Contract is made by party with the other party whose mental capacity is temporarily or permanently affected by age, illness or distresses either physically or mentally[3].
In Ladli Prasad v. Karnal Distillery Co[4], the Court held that if the transaction between the parties appears to be unconscionable that is a decision a sane man may not make when he is in his senses , then undue influence may be presumed here.
Fraud
When consent to enter into a valid contract is obtained by presence of fraud, then the contract is not valid.
Fraud is committed when the acts are committed by a party or his agent with an intention to deceive the other party or to induce him falsely into entering into a contract
- The suggestion of the fact is actually not true, but the other party believes it to be true.
- Concealment is active in nature
- Any other act that aims at deceiving the other party.
- Act which the law prescribes to be fraudulent.
It is noteworthy that silence of facts is not considered fraud, unless when such silence tantamount or is equivalent to speech.
In Derry v. Peek[5], the Court stated that the ingredients to constitute fraud are intention, no belief in its truth, reckless. Intention to cause fraud is when there is an ill motive on behalf of one party to deceive the other and whether it is made to be an advantage or expectation is not relevant[6].
Misrepresentation
Section 18 of the Indian Contract Act, 1872 states that misrepresentation is when the party makes an express statement of a fact which he has full belief to be the truth and such a statement must be made without any intention to deceive the other party.
In such a case, the person making the statement believes it to be true innocently and this is also known as innocent misrepresentation.
When there has occurred a breach of duty where a party making the statement gains advantage t the cost of the other party, statement is made with an intention to deceive, then it will be considered a clear case of misrepresentation[7].
The difference between misrepresentation and fraud is that though both the statements are false, the party making the claim of the fact must believe it to be true in the former and the party making the claim of the fact must have known it is false in the latter.
Mistake
Mistake has two effects and is caused by two factors namely
- There is no meeting of minds[8] (consensus ad idem) between the parties and the agreement is not considered genuine at all, in the minds of the parties.
- Even if there is a genuine agreement, there must be a mistake as to the fact in the agreement.
Section 20 requires that the parties must both agree that it is a case of mistake and Mistake should be factual. The fact must be of an essential nature to the agreement. The agreement of an essential nature includes Mistake as to existence of subject matter, quality of subject matter, possibility of performance, title , promise, identity of parties and conduct of the parties in the presence of each other[9].
Conclusion
Thus, if the consent has been obtained when any of the above mentioned factors are present, then the consent is not free and contract cannot be deemed valid.
If the contract is caused by error of mistake, then the whole agreement is void. If however, the consent is obtained by coercion, undue influence, fraud, misrepresentation then the consent is said to be voidable at the discretion of the party whose consent has been caused without freedom[10].
[1] Ranganayakamma v. Alwar Setti LLR (1889) 13 Mad 214
[2] Chikkam Ammiraju v. Chikkam Seshamma LLR (1918) 41 Mad 33
[3] Rangasamy v. Rangammal AIR 2003 SC 3120, Subhash Chandra Das v. Ganga Prasad AIR 1967 SC 878, Habeeb Khan v. Valasula Devi AIR 1997 AP 53
[4] Ladli Prasad v. Karnal Distillery Co AIR 1963 SC 1279
[5] Derry v. Peek (1889) 14 AC 337
[6] State of Andhra Pradesh v. T. SuryaChandra Rao AIR 2005 SC 3110.
[7] Noorudeen v. Umairathu Beevi AIR 1998 Ker 171
[8] Raffles v. Wichelhaus (1864) 2 H & C 906, Tarsem Singh v. Sukhminder Singh AIR 1998 SC 1400
[9] Conduct of Parties in Each Other’s Presence termed Inter Praesentes. Cundy v. Lindsay, Phillips v. Brooks Ltd (1919) 2 KB 243, Lewis v. Averay (1972) 1 QB 198
[10] Sections 19, 19-A, 20 of the Indian Contract Act, 1872
Free Consent under Indian Contract Act 1872 Free Consent under Indian Contract Act 1872
