(3) fraud. . or (5) mistake. Section 13. "Two or more persons are said to consent when they agree upon the same thing in the same sense". (4) misrepresentation.  Section 14 lays down that consent is not free if it is caused by (1) coercion. 2) undue influence.

 Coercion  Undue influence  Misrepresentation  Fraud  Mistake .

 The unlawful detaining or threatening to detain. .  It does not matter whether the IPC is or is not in force where the coercion is employed. Committing or threatening to commit any act forbidden by the IPC (Indian Penal Code) with an intention to cause any person to enter into an agreement.  The act constituting coercion. may be directed at any person & not necessarily at the other party to the agreement. any property with an intention to cause any person to enter into an agreement. If suit is filed in India the said provision will apply.

 Burden of proof lies on the party who wants to set aside the contract on the plea of coercion. Voidable  Sec 64  The party exercising coercion exposes himself to criminal liability under the IPC. besides an action in contract. .

. A contract is said to be induced by undue influence when the relation subsisting between the parties is such that one of the parties is in a position to dominate the will of the other and he uses this position to obtain an unfair advantage over the other.

g. mental or bodily distress. .  The contracting parties mental capacity is temporarily or permanently affected due to age. old illiterate persons. doctor & patient. e.g.g.  Fiduciary relationship e. e.. father & son. police officer & accused.. master & servant. In the following cases undue influence is presumed to exist & the burden of proof lies on the party who is in a position to dominate the will of the other:  The person holds a real or apparent authority over the other. illness..

 Unreasonable bargains. Undue influence implies mental & moral coercion in such a way that the consent given is not free. it is sufficient if the third party benefits as long as he is interested in the third party. . high rate of interest etc are instances of circumstances when undue influence is presumed. high prices.  The person in a position to dominate the will of the other need not be a party to the contract or be benefited by the contract.

 In the following cases law does not presume undue influence & the burden of proof lies on the party alleging that undue influence existed:  Mother & daughter  Grandson & grandfather  Husband & wife  Creditor & debtor  Landlord & tenant. .

.  There is no criminal liability in case of undue influence. Voidable  Sec. 64: Court has the discretion to direct the aggrieved party to refund the benefit in part or in whole or set aside the contract without any direction for refund of benefit.

 In law. relating to some matter essential to the formation of the contract. A representation means a statement of fact made by one party to the other either before or at the time of contract.  It may be expressed by words spoken or written or implied from the acts or conduct of the parties. . with an intention to induce the other party to enter into a contract. a representation when wrongly made without an intention to deceive the other party is known as misrepresentation.

 Where a statement when made was true but subsequently before it was acted upon. it became false to the knowledge of the person making it . Positive assertion of unwarranted statements of material facts believing them to be true.  Causing mistake about the subject matter innocently. . then a duty is cast upon the person to disclose the change of circumstances to the other party.

. if the representation made had been true. Voidable  May choose to rescind the contract or  Affirm the contract & insist that he be put in a position in which he would have been.  The remedy is lost if the other party had sufficient means of discovering the truth with ordinary diligence.

A promise made without an intention of performing it. Any cat or omission declared by law to be fraudulent. 3. Any other act fitted to deceive. 5. . if there is no duty to disclose. 1. 2. mere non-disclosure is not a fraud. Fraud means & includes any of the following acts committed by a party with an intention to deceive or induce the other party to enter into a contract: A false statement made intentionally is fraud Active concealment of a material fact by a person having knowledge of the fact is fraud. However. 4.

 1. . unless: Such a person is under a duty to speak or Silence is in itself equivalent to speech. Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud. 2.

 The aggrieved party can also claim damages.  Affirm the contract and ask for restitution.  Fraud by a stranger to the contract does not affect the contract. he would have been.. . if the statement made had been true. to be put in a position. i. Right to rescind the contract.e.

 The plaintiff must have been actually deceived by the fraudulent statement.  No action will lie if the plaintiff does not sustain any loss or injury.  The contract is not Voidable if the party had enough means at its disposal to discover the truth with ordinary diligence. . Fraudulent statement must be instrumental in inducing the party to enter into a contract.

which shows an intention to affirm it.  Restitution not possible: where the party seeking to rescind the contract is not in a position to restore the benefits received under the contract. cannot exercise his right of rescission. loses his right to rescind the contract. chooses to affirm it. . either by express words or through his conduct. Affirmation: where the aggrieved party after becoming aware of his right to rescind the contract.

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