FREE CONSENT OF PARTIES- MEANING, COERCION, UNDUE INFLUENCE, FRAUD, MISREPRESENTATION AND MISTAKE.

 

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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