FREE CONSENT AND

LEGAL OBJECT OF A
CONTRACT
SUBMITTED TO: MUHAMMAD YAHYA MINHAS

MUHAMMAD ALI ASIF

 01-111182-056
FREE CONSENT AND LEGAL OBJECT OF A CONTRACT

Consent
Two or more persons are said to consent when they agree upon the same thing in the same
sense.1
Free Consent
Free consent means to agree without coercion without being forced or threatened. It is essential
to the creation of a contract that both parties agree to the same thing in the same sense.
Example
Ali agrees to sell his land cruiser car 1993 model for rupees 70000. Bilal agrees to buy the same.
There is a valid contract since Ali and Bilal have consented to the same subject matter.
Now if Ali, who owns three land cruiser cars, offers to sell one car, to Bilal for rupees 70000.
Bilal agrees to buy the car for price thinking that Ali is selling car with black color. There is no
consent and hence no contract. Ali and Bilal have agreed not to the same thing but to different
things.
WHEN IS CONSENT SAID TO BE FREE?
For consent to be free, you must be old enough to consent. And you must not be drunk or
drugged or otherwise in a state of body or mind which affects your decision-making ability 2.
According to CONTRACT ACT 1872, free consent is said to be free when it is not caused by
1) Coercion, as defined in section 15
2) Undue influence, as defined in section 16
3) Fraud, as defined in section 17
4) Misrepresentation, as defined in section 18
5) Mistake, subject to provisions of section 20, 21, 22
1. Coercion
Coercion is the committing, or threatening to commit, any act forbidden by the Penal
Code 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.3
Example
Alina threatens to kill Butt if he doesn’t transfer his house in Alina’s favor for a very low
price. The agreement is voidable for being the result of coercion.

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CONTRACT LAW 1872 SECTION 13
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 It is not necessary that coercion must have been exercised against the promisor only, it
may be directed at any person.
Example
Ahmed threatens to kill Bob (Cat’s son) if Cat doesn’t let out of his house to Ahmed. The
agreement is caused by coercion.
Interesting facts
Threat to commit suicide-is it coercion?
The doubt arises because suicide though forbidden by Pakistan Penal Code 4 is for
obvious reasons not punishable. A dead person cannot be punished. But, since the section
15 declares that committing or threatening to commit any act is forbidden by Pakistan
Penal Code is coercion.
Consequences of Coercion (Section 19)
Aggrieved party can have the contract set aside or if he so desires to insist on its
performance by other party.5
Example
Ali executes a transfer bond for the house under fear of assault. It will be a contract
voidable at the option of Ali since his consent was obtained by coercion

2. Undue Influence(Section 16)

A contract is said to be induced by "undue influence" where the 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.6
Following are the possible parties that can be affected by undue influence
a) Doctor and patient
b) Lawyer and client
c) Guardian and ward
d) Trustee and beneficiary
e) Teacher and student
Example
Let's say Ali for whatever reason lands in jail for a night. He calls his girlfriend, Alia, to
bail him out. She does so only on the condition that Ali signs a contract agreeing to
purchase 40% of her pizza parlor business for rupees 100,000.
Consequences of Undue Influence (Section 19-A)
When consent to an agreement is caused by undue influence, the agreement is a contract
voidable at the option of the party whose consent was so caused. Any such contract may
be set aside either absolutely or, if the party who was entitled to avoid it has received any
benefit thereunder.7

Example

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LAW OF CONTRACT 1872 SECTION 19
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LAW OF CONTRACT 1872 SECTION 16
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LAW OF CONTRACT SECTION 19A
 Ali, a money-lender, advances rupees 100 to Butt, an agriculturist, and, by undue
influence, induces Butt to execute a bond for rupees 200 with interest at 7 per cent per
month. The Court may set the bond aside, ordering Butt to repay the rupees 100 with
such interest as may seem just.

3. Fraud(Section 17)
Fraud 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 another party thereto or his
agent, or to induce him to enter into the contract.8
Misrepresentation of facts may be intentional or innocent. Intentional misrepresentation
has been termed as Fraud and innocent misrepresentation has been termed simply as
misrepresentation in the contract act.
Essentials of fraud
 False Statement: The prospectus of a company did not refer to the existence of a
document disclosing liabilities. This gave the impression that the company was
prosperous. (Peek vs Gurney (1873) L.R 6 H .L 377)
 Concealment of Facts: Ali sells his house to Omer the walls of house was
cracked. Ali fills it up to conceal the defect. Omer cannot find the defect. Ali is
guilty of fraud.
 Non Performance: A builder made bookings three times more than the available
units of accommodation. Builder was guilty of fraud. (Delhi development
authority Vs Skipper construction)
 Fitted to Deceive: Same example mentioned in false statement essential.
 Act or Omission: Ali sold his house to Alia for 45 Lac. The house was
mortgaged with Omer for 16 Lac. Ali did not inform Alia about it, Omer claimed
16 Lac from Alia. Alia can avoid contract as Ali is guilty of fraud.
Mere silence as to facts likely to affect the willingness of a person to enter into a
contract is not fraud, unless the circumstances of the case are such that, regard being
had to them, it is the duty of the person keeping silence to speak, or unless his silence
is, in itself, equivalent to speech.9
Consequences of Fraud
The party whose consent to the contract is obtained by fraud can exercised any of the
following rights:
1. He may avoid the contract and may ask for the damages suffered because of the
non-fulfilment of the contract.
2. He may insist for the performance of the contract.
4. Misrepresentation(Section 18)
Misrepresentation is a false representation made innocently without any intention of
deceiving the other party10 .It may include two things:

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LAW OF CONTRACT SECTION 17
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LAW OF CONTRACT SECTION 17
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LAW OF CONTRACT 1872 SECTION 19
 (a) Wrong statement of a material fact not known to be false
(b) Non-disclosure of facts where there is a legal duty to disclose without intention to
deceive.
Example
Ali, intending to deceive Butt, falsely represents that five hundred mounds of indigo are
made annually at Ali's factory, and thereby induces Butt to buy the factory. The contract
is voidable at the option of Butt.
Consequences of Misrepresentation:-
In the cases of misrepresentation the party aggrieved or wronged can
a) Avoid the agreement
b) Insist that the contract be performed and that he be put in the position in
Which he would have been if the representation made had been true?

Unlike fraud, misrepresentation by a party does not entitle the other to claim damages.
This, however is subject to certain exceptions, i.e., in certain cases the right to claim
damages arises even in case of misrepresentation.
Negligent representation
Made by one person to another between whom a confidential relationship exist, e.g. -
solicitor and client.

5. Mistake (Section 20, 21 and 22)

Agreement void where both parties are under mistake as to matter of fact.11
The term mistake is used in contract law to describe a situation in which one or both
parties to an agreement acted under an untrue belief about the existence or nonexistence
of a material fact
Essentials
1. There must be a mistake as to the formation of the contract.
2. It must be mistake of fact.
3. It must be about a fact essential to the agreement.
Kinds of Mistake
Mistake cases are classed as mutual or unilateral, depending on whether both or only one
of the parties were acting under a mistaken belief.
Bilateral mistake
It should be committed by both the parties and it should relate to a matter of fact essential
to the agreement.
Example
Ali contracts Butt to sell his car. Both the parties think it is in Ali’s garage. Actually the
car was stolen before the agreement. The agreement is void.
Unilateral Mistake:
When in a contract only one party is at mistake regarding the terms of the agreement.
Example:
Ali wants to contract only with Butt, but makes a contract with cat believing him to be
Butt.

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LAW OF CONTRACT 1872 SECTION 20
Legal Object of Contract
The consideration or object of an agreement is lawful, unless- it is forbidden by law; or is of such
a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves
or implies injury to the person or property of another; or the Court regards it as immoral, or
opposed to public policy.12
 Forbidden by law: When the object of a contract or the consideration of a contract is
prohibited by law, then they are not lawful consideration or object anymore.
Example
Adam and Cat agree to divide goods obtained by theft. The argument is unlawful.
 Defeats Provisions of Law: This means if the contract is trying to defeat the intention of
the law.
Example
Ali and Bilal enter into an agreement, where Ali is the debtor, that Bilal will not plead
limitation. This, however, is done to defeat the intention of the Limitation Act, and so the
courts can rule the contract as void due to unlawful object.
 Fraudulent: Lawful consideration or object can never be fraudulent. Agreements entered
into containing unlawful fraudulent consideration or object are void by nature.
Example
Ali is the agent of Omer. Ali agrees to sell land of Omer for lesser price without telling
Omer. Agreement is void.
 Injury to Person or Property: In legal terms, an injury means to a criminal and harmful
wrong done to another person. So if the object or the consideration of the contract does
harm to another person or property, this will amount to unlawful consideration.
Example
An agreement to beat a person or burn someone’s property is void.
 Immoral: If the object or the consideration are regarded by the court as immoral, then
such object and consideration are immoral.
Example
Say for example Alia lent money to Butt to obtain a divorce from her wife Saba. It was
agreed once Butt obtains the divorce Alia would marry him. But the court passed
the judgment that Alia cannot recover money from Butt since the contract is void
on account of unlawful consideration.13
 Against Public Policy: An agreement which is harmful for welfare of society is against
public policy. If court consider the object to be opposing public policy. Then agreement
is unlawful.
Example
1. An Agreement to Traffic in Public Offices
2. Agreements to create Monopolies
3. An agreement to brokerage marriage for rewards
4. Interfering with the Courts: An agreement whose object is to induce a judicial or state
officials to act corruptly and interfere with legal proceedings

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Conclusion
All the agreements are contracts if they are made by free consent of the parties. Without the
consent of the parties contract cannot take place. Where the parties have different things in mind
or understand the same thing in different ways is not real consent.
Effect of Absence of free Consent: When there is consent but it is not free the contract is
usually voidable at the option of the party whose consent was so caused.