Free consent

Free consent: Sec 14

Section 13; "Two or more persons are said to consent
when they agree upon the same thing in the same
sense".
Section 14 lays down that consent is not free if it is
caused by (1) coercion, 2) undue influence, (3) fraud,
(4) misrepresentation, or (5) mistake.
Coercion
Undue influence
Misrepresentation
Fraud
Mistake
Coercion: Sec 15
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 unlawful detaining or threatening to detain, any
property 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.
It does not matter whether the IPC is or is not in force
where the coercion is employed. If suit is filed in India the
said provision will apply.
 Effects of Coercion:
Voidable
Sec 64
The party exercising coercion exposes himself to criminal
liability under the IPC, besides an action in contract.
Burden of proof lies on the party who wants to set aside
the contract on the plea of coercion.
Undue Influence: Sec 16
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.
Presumption of Undue Influence:
 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, e.g., master & servant, police officer & accused.
Fiduciary relationship e.g., father & son, doctor &
patient.
The contracting parties mental capacity is temporarily
or permanently affected due to age, illness, mental or
bodily distress, e.g., old illiterate persons.
Contd..
Undue influence implies mental & moral coercion in
such a way that the consent given is not free.
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; it is sufficient if the third party benefits
as long as he is interested in the third party.
Unreasonable bargains, high prices, high rate of interest
etc are instances of circumstances when undue
influence is presumed.
No presumption of undue influence:
 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.
Effects 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.
There is no criminal liability in case of undue influence.
Misrepresentation:
A representation means a statement of fact made by
one party to the other either before or at the time of
contract, relating to some matter essential to the
formation of the contract, with an intention to induce
the other party to enter into a contract.
It may be expressed by words spoken or written or
implied from the acts or conduct of the parties.
In law, a representation when wrongly made without
an intention to deceive the other party is known as
misrepresentation.
Sec 18:
Positive assertion of unwarranted statements of material
facts believing them to be true.
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 , then a duty is cast upon the
person to disclose the change of circumstances to the other
party.
Causing mistake about the subject matter innocently.
Effects of misrepresentation:
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, if the representation made had
been true.
The remedy is lost if the other party had sufficient means
of discovering the truth with ordinary diligence.
Fraud: Sec 17
 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:
1. A false statement made intentionally is fraud
2. Active concealment of a material fact by a person
having knowledge of the fact is fraud. However, mere
non-disclosure is not a fraud, if there is no duty to
disclose.
3. A promise made without an intention of performing it.
4. Any cat or omission declared by law to be fraudulent.
5. Any other act fitted to deceive.
Silence & fraud:
 Mere silence as to facts likely to affect the willingness
of a person to enter into a contract is not fraud, unless:
1. Such a person is under a duty to speak or
2. Silence is in itself equivalent to speech.
Effects of fraud:
Right to rescind the contract.
Affirm the contract and ask for restitution, i.e., to be put in
a position, he would have been, if the statement made had
been true.
The aggrieved party can also claim damages.
Fraud by a stranger to the contract does not affect the
contract.
Action for fraud:
Fraudulent statement must be instrumental in inducing the
party to enter into a contract.
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.
Loss of right of rescission:
Affirmation: where the aggrieved party after
becoming aware of his right to rescind the contract,
chooses to affirm it, either by express words or
through his conduct, which shows an intention to
affirm it, loses his right to rescind the contract.
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.