INTRODUCTION
· In the Indian Contract Act, the definition of
Consent is given in Section 13, which
states that “it is when two or more persons agree upon the same thing and in
the same sense”.
So the two people must agree to something in the same sense as well.
· Example: A agrees to sell his car to B. A owns three
cars and wants to sell the Maruti. B thinks he is buying his Honda. Here A and
B have not agreed upon the same thing in the same sense. Hence there is no
consent and subsequently no contract.
Free Consent has been
defined in Section 14 of the Act.
The
section says that consent is considered free consent when it is not caused or affected by the following:
1)
Coercion.
2)
Undue Influence.
3)
Fraud.
4) Misrepresentation.
5) Mistake.
1) COERCION (SECTION 15)
Section 15 of
the Act describes coercion as
·
Coercion means
using force to compel a person to enter into a contract. So force or threats
are used to obtain the consent of the party under coercion, i.e. it is not free
consent.
·
committing or
threatening to commit any act forbidden by the law in the IPC
·
Unlawfully
detaining or threatening to detain any property with the intention of causing
any person to enter into a contract.
For example, A threatens to hurt B if he does not sell his house
to A for 5 lacs rupees. Here even if B sells the house to A, it will not be a
valid contract since B’s consent was obtained by coercion.
·
Now the effect
of coercion is that it makes the contract voidable. This means the contract is
voidable at the option of the party whose consent was not free.
·
So the
aggravated party will decide whether to perform the contract or to void the
contract. So in the above example, if B still wishes, the contract can go
ahead.
2) UNDUE INFLUENCE (SECTION 16):
·
According
Section 16 of the It states that
when “the relations between the two parties are such that one party is in a
position to dominate the other party, and uses such influence to obtain an
unfair advantage of the other party it will be undue influence”.
The section also
further describes how the person can abuse his authority in the following two
ways:
1.
When a person
holds real or even apparent authority over the other person. Or if he is in a fiduciary
relationship with the other person
2.
He makes a
contract with a person whose mental capacity is affected by age, illness or
distress. The unsoundness of mind can be temporary or permanent.
Example: A sold his gold watch for only Rs 500/- to his teacher
B after his teacher promised him good grades. Here the consent of A (adult) is
not freely given, he was under the influence of his teacher.
·
Now undue
influence to be evident the dominant party must have the objective to take
advantage of the other party. If influence is wielded to benefit the other
party it will not be undue influence.
·
But if consent
is not free due to undue influence, the contract becomes voidable at the option
of the aggravated party. And the burden of proof will be on the dominant party
to prove the absence of influence.
PARDANASHIN
WOMEN:
·
A Pardanashin
woman is one who observes seclusion because of religion or custom of a
community.
·
Such women do not intermingle with outsiders
and keep their face and body covered by a Burqa.
·
In India, a
Pardanasian woman is one who stays within the four walls of the house, or
observes seclusion.
·
As per law, such
women need to prove that they are Pardanashin.
·
A women who goes
to court, and gives evidence, collects and settles rent with tenants, and
communication in business matters with men other than his family members
·
Then that woman
is not a Pardanashin women even if she lives in seclusion or does all these
things dressed in a BURQA.
3)
FRAUD (SECTION 17)
· According to
section 17 frauds 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 or induce person to
enter in to a contract.
Example: A bought a horse from B. B claims the horse can be
used on the farm. Turns out the horse are lame and A cannot use him on his
farm. Here B knowingly deceived A and this will amount to fraud.
·
One factor to
consider is that the aggravated party should suffer from some actual loss due
to the fraud.
·
There is no
fraud without damages. Also, the false statement must be a fact, not an
opinion. In the above example if B had said his horse is better than C’s this
would be an opinion, not a fact. And it would not amount to fraud.
a) The suggestion that
a fact is true when it is not true and the person making he suggestion does not
believe not believe it to true.
b) The active
concealment of fact by a person having knowledge or belief of the fact.
c) A promise made
without any intention of performing it.
d) Any other act meant
to deceive. e) Any such act or commission as the law specially declares to be
fraudulent.
FORMS OF FRAUD
1)
Fraud by
suggestion: when a party to a
contract makes a suggestion that a fact is true, being aware that it is not
true, it is deemed that he is trying to induce the other party by fraud to
enter into a contract.
Example: A is a dealer in pure ghee, but he very will know
that the ghee he is selling is not 100per cent pure. If a customer if a
customer buys ghee, from a on his assurance of it being totally pure, it would
be a case of fraud by suggestion by A
2) Fraud by Active
Concealment: When a party to a contract, knowingly or were non-disclosure
of some immaterial facts would not per se five a right to recession
·
Unless it is
further found that the consent has been secured by practicing some deception.
·
Where the seller
sold property already sold by him to a third person, his conduct amounted to
active concealment and fraud.
·
The buyer could
recover the price despite the agreement that the seller could not be
responsible for a defect in title.
EFFECTS OF FRAUD
1). Right to repudiate
the contract.
2). Right to affirm the
contract.
3). Claim for damages.
4)
MISREPRESENTATION
· As the word
suggests, it is made up of two words mis plus representation which literally
means a false statement.
· Misrepresentation
is a false statement which the person making it believes to be true or which he
does not know to be false.
The Indian Contract Act classifies misrepresentation
under two heads.
a) Fraudulent Misrepresentation: A fraudulent misrepresentation is one which is
knowingly and willfully made or deceives or defrauds a person. The law uses the
word ‘fraud’ for such misrepresentation, which has been defined in Section 17of
the act
b)
Innocent Misrepresentation: A
misrepresentation which is made unknowingly is termed an innocent
misrepresentation and the person making such misstatement is not guilty of
fraud.
·
The law
classifies it as ‘innocent misrepresentation’. A carelessly made statement
could later be proved to be untrue and become a misrepresentation.
Essentials
of Misrepresentation
1).
A misrepresentation is a positive assertion about a material fact. Mere
expressing an opinion does not amount to misrepresentation.
2).
It made before the conclusion of the contract with a view to induce the other
party to enter into the contract.
3).
It is not essentially an intension to defraud a party to the contract.
4).
The party making a representation is normally benefited at the expense of the
other party.
5).
The party making a misrepresentation believes the fact of statement to be true
while it really is not.
5)
MISTAKE
·
The Indian
Contract Act does not define a mistake, but it may be defined as an erroneous
belief about something. It may be a mistake of law or a mistake of fact.
·
A contract is valid when the parties to it are
agreed about something in the same spirit. If the concept of the parties about
an issue is not the same, or their views are divergent, the parties are not
deemed to be in agreement. Such a situation is what is called a mistake.
FORMS OF MISTAKE:
1) Unilateral Mistake: if the mistake is on the part of one party to the
contract as fact essential to the contract, the contract remains valid unless
the mistake is not the result of fraud or willful misrepresentation on the part
of the other party.
2) Bilateral Mistake: As both parties to a contract are under a mistake
as to a matter of fact essential to the contract, it is a case of bilateral.
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