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Consent is said to be free when it is not caused by:

1. Coercion,

2. Undue influence,

3. Fraud,

4. Misrepresentation or

5. Mistake.

COERCION

Coercion is:

The committing or threatening to commit any act forbidden Or the unlawful detaining, or
threatening to detain any property to the prejudice of any person whatever, with the intention of
causing any person to enter into an agreement.

Even threat to commit suicide amounts to coercion

The threat need not proceed from the party to the contract, it may proceed from a third person
also

A threat to file a civil or criminal suit is not forbidden by the Indian Penal Code.

Burden of Proof: that the consent was obtained by coercion shall lie upon the aggrieved party
who wants to set aside the contract.

Example: A threatens B to marry him, or else he will kill her whole family. In this situation, the
consent of B is not free i.e. coercion influences it
UNDUE INFLUENCE

Undue Influence is:

Where relations subsisting between the parties are such that one of the parties is in a position to
dominate the will of the other and uses that position to obtain an unfair advantage over the other

When is a person in a position to dominate the will of the other:

Real or apparent authority.

Fiduciary relation.

Persons with affected mental capacity.

When a transaction appears to be unconscionable, it is presumed that the stronger party


has exercised undue influence over the weaker party

Undue influence may be exerted by a person who is not a party to the contract.

Burden of proof: is on the party who is in a position to dominate the will of the other.

Example: A teacher forces his student to sell his brand new watch, in a very nominal price, to
get good grades in the examination. In this situation, the consent of the student is affected by the
undue influe

FRAUD

Fraud exists when it is shown that a false representation has been made,

knowingly,

or without belief in its truth,


or recklessly, not caring whether it is true or false,

and the maker intended the other party to act upon it

It also exists when there is a concealment of a material fact.

Fraud cannot be committed by a stranger to the contract.

Fraud must have been committed upon the other party.

An example of fraud is when a person promises you that you can make a lot of money by
investing with him, but then just takes your money and disappears.

MISREPRESENTATION

Misrepresentation is a misstatement of a material fact made innocently with an honest belief as


to its truth or non-disclosure of a material fact, without any intent to deceive the other party

The effect of misrepresentation is that the agreement is voidable by the party whose consent is
obtained by misrepresentation.

For example, telling someone a television is "practically new" so that they buy it, when it is in
fact 5 years old and heavily used.

MISTAKE

Mistake is erroneous belief about something. It may be mistake of law or mistake of fact
.Mistake of law does not result in a voidable contract. Bilateral mistake of fact renders a contract
void. The mistake must relate to fact, not opinion. The fact must be essential to the agreement
The fact must be existing at the time of contract.
Mistake of Law

If parties are under confusion with regard to legal provisions. It is called Mistake of law. Again
mistake of law is of two types. Namely;

Mistake of Home Law and

Mistake of Foreign Law.

Mistake of Home Law: In case where parties are confused with regard to home law provisions,
it becomes mistake of home law. It is not excusable mistake. Contract cannot be avoided.
Consequences are to be faced. In the Court, a person cannot say that he has no knowledge of
home law.

For example: A has given a loan of Rs. 10000/- to B. It has become time barred. A has
no awareness with regard to limitation act and therefore he has filed suit for recovery
after becoming time barred. Now Court will not excuse him. His Suit will not be taken
into consideration.

Mistake of Foreign Law: If parties are under confusion with regard of foreign law provision, it
is called Mistake of Foreign Law and it will be excused by Courts. Contract can be avoided. The
provision is so because it is not at all possible to a person to have touch with law of all Countries.

Mistake of Fact

If parties are under confusion with regard to terms of Contract, It is called Mistake of Fact.
Mistake of Fact is of two types, namely;

Bilateral Mistake and

Unilateral Mistake.
Bilateral Mistake

If both parties are under Confusion, it is called Bilateral Mistake. In case of, contract can be
avoided. Again Bilateral Mistake is of two types, namely;

Mistake as to Subject Matter

Mistake as to Possibility of performance.

Unilateral Mistake

If only one party is under Confusion, it is called Unilateral Mistake. In case of Unilateral Mistake
Contract cannot be avoided.

For example: A wants to sell away his house at a price of $6000. He makes an offer to B and by
mistake he quotes a price of $5000 to which B gives his acceptance. Here only A is under
mistake. It is Unilateral mistake and Contract cannot be avoided.