1.

“For Giving Rise to a Valid Contract, there must be a consensus ad-idem among the
contracting parties.” Explain this statement and discuss the meaning of free
consent?

There are some essentials of a valid contract and one of them is that the consent of the
contracting parties must be free. If the consent is not free, the contract shall be treated as
void or voidable depending upon the factor which affected the consent. In this topic you
will learn about the meaning of consent and the various factors that affect the consent
viz., coercion, undue influence, fraud, misrepresentation, and mistake. And the
consensus ad-idem talks about the mutual consent i.e. meeting of minds of the parties. 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. Let’s say for 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.

Now 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 Coercion, Undue Influence,
Fraud, Misrepresentation, Mistake. Overall there are certain factors that will render a
contract void or voidable based upon the particular circumstances of the case. If a
contract is void then it cannot be enforced by either of the parties, whereas if a contract is
rendered voidable then although it is a valid contract, it can, in fact, be cancelled.
Essentially, whilst a void contract cannot be performed, a voidable contract can be until
either of the parties decides to cancel it. If there has been a misrepresentation or a
mistake the contract may be rendered void and therefore be rescinded. If duress or undue
influence has occurred, then the contract may be rendered voidable and thereby capable
of being cancelled.

According to the concept of consensus ad-idem the legal maxim means meeting of mind of
the parties. A meeting of the minds is an essential element in the validation of a legally
binding contract. Meeting of the minds refers to the comprehension and mutual
agreement or mutual assent of both parties to a contract’s terms. Arbitrarily it denotes the
time of mutual agreement though the acts of mutual agreement need not necessarily
occur simultaneously. Meeting of the minds is synonymous with mutual agreement,
 mutual assent, and consensus ad idem. It is the time at which all parties acknowledge that
they fully understand and agree to all of the terms of a contract. Contracts become active
once they are signed. This leads to the element of fulfilment and delivery on the
contract’s terms. After a contract has been signed, both parties are obligated to fulfil their
obligations and deliver what is required as detailed in the contract. Accordingly, it was
clear on the part that consensus ad-idem as well as Free Consent are the basic essential to
validate an agreement.

2. “Company is not a citizen.” Comment?

Corporation in the last century have made vast progress in trade and business sector in a
country and if we compare it in terms of economic power, they often outweigh even
state. This change is vital in the context of Indian constitution, as it was framed in the
mid-twentieth century with a view of state controlled economy and was not drafted in a
manner to include corporation in the clear sense. The studies of corporate citizenship
only dwelled into the social responsibilities of businesses carried out by the corporations
whereas it has somehow neglected their constitutional rights.
Word Corporation is derived from a Latin word ‘corpus’ which means a ‘body’ or ‘body
of people’. Under the Roman Law we can find certain entities under ‘universities’,
corpus or collegium’, which possess some rights and liabilities such as right to own
property and perhaps make contract, sue and be sued. The somehow same is being
carried under the old companies Act as well as the new one. Sec. 2(20) of the Companies
Act, 2013 defines a company which says “company means a company which is
incorporated under this act or under any previous law”, but the section does not give
any technical meaning, therefore one can conclude that the reason of it being open-ended
is that a company is not just a group of people or a legal or juristic personality. , a
company registered under Indian Companies, Act 1956, is a citizen within the meaning
of Art. 19 of the constitution and can ask for the enforcement of fundamental rights
granted to citizens under constitution and can they claim F.R under part III of the
constitution.

Majority judgement was delivered by Sinha, C.J, held that word ‘citizen’ intended to
refer only to natural persons and therefore a juristic person like corporation cannot claim
the status of citizen under Part III of the constitution. His reasoning was that Part II and
Indian Citizenship Act, 1955 both are exhaustive on the question of citizenship in India
and according to them only natural persons can be citizens. He further said that in Part III
 certain F. R’s are available only to citizens, whereas certain to any person. The
expression ‘person’ has been defined to include corporate bodies also. These findings
compelled him to conclude that constitution makers were careful enough to use word
“citizen” whenever they felt that particular right was to be enjoyed exclusively by
citizens. Justice Hidayatullah in his concurrent opinion held the same with an additional
reasoning. He cited several articles where expression ‘citizen’ and ‘citizenship’ was used
and pointed out that those articles cover only natural persons.

Law relating to corporate citizenship in India is not in existence yet, the major act also
does not talk about the same, whereas the constitution of India is also silent or I may say
does not provide any express provision which would have helped in settling the position.
The need of hour is of legislatures to address these questions in parliament and come up
with an Act which may solidify this position and may protect the corporations who is
ultimately the citizens of India.

3. “A bank as a matter of fact is just like a heart in the economic structure and the
capital provided by it is like a blood in it. As long as blood is in circulation the
organs will remain sound and healthy.” Discuss the statement with reference to the
historical development of banking system.

According to the given statement in the question, it was clear that the banking system is
the heart of the economy of the country, as nothing in the country can be done without
the money as the liquidity in the economy in the of a country decides that whether there
is the situation of Inflation or whether there is a case of deflation in the country.

Historical development of the Banking system simply goes from the barter system; it
was the situation of the pre-independence era of India. In the barter system, the persons
used to exchange goods for goods as there are only goods that can be used as a medium
of exchange. Barter system used to be prevalent when there were no banks in the
nations and later this medium of exchange goods for goods became the heart and blood
of the economy and later this system abolished in India during the colonial period, the
Britishers used to develop the banking system in India to develop their colonies and to
fund the army of Britishers. 

From this era of British rule, the world came to know about the concept of banking
systems. The banking crises started from this period as perusing to the year of 1945, in
the Bretton Woods Committee the committee set for the incorporation of IMF, UNO,
WB, etc. to maintain peace and order in the world and for maintaining the international
relations. On the other hand, the world on a very big crisis as this was just after the end
of the II World War that made the world at a sake. Later on, the money is used as a
common medium of exchange as it is defined as “Money is a common value that used
to exchange the goods and services as every transition of is done the same
currency”. As to the concept the money was created as a common unit of exchange of
goods and services in a particular nation.

In the present scenario, the banking system of a country depends on the central bank as
the central bank is the one who deltas with all the money related matters and all the
monetary policy of a nation. Accordingly, the central bank provides a supervisory role
in maintaining liquidity if the country. Money is the blood of the economic system of a
country and the circulation of that money is done by the banking system that operates
the liquidity of the nation. As every nation depends on the monetary policy and the
inflation and deflation is also depends on the money and the control over all the
monetary policies and the supply of money is controlled by the central bank of a
country this is why we can say that the bank is the heart of the economic system and the
money is to be considered as the blood of the economic system and without money, the
economic system of a country will collapse and the economy dies. So money and
banking are necessary for a nation to make it stand in the world’s economic system.