MEANING

A key component of a legal contract is free consent. The consent of the

contract's parties is required for the creation of the contract . Their approval
must be free. Even if a contract is good in every other aspect, it can still fail
if one or both parties refuse to free consent to it. "All agreements are
contracts if they are made by the free consent of parties," states Section 10
of INDIAN CONTRACT ACT, 1872.

CoNsENt
Section 13 of Contract Act define the term ‘Consent’ and lays done that
“two or more parties are said to consent when they agreed upon same thing
in same sense.” Thus, consent involves identity of minds or consensus ad-
idem i.e., agreed upon same things in same sense .If whatever reason,
there is no consensus ad-idem among the contracting parties, there is no
consent and hence no valid contract.

FREE CoNsENt
Not only need the parties to a contract be of same mind, but their consent
must also be true and free. The term "free consent" refers to consent that
has been obtained by the parties' own free choice.

According to Section 14 of the Act defines free consent as "consent is said to

be free when it is not caused by:
• Coercion, as defined in section 15
• Undue influence, as defined in section 16
• Misrepresentation, as defined in section 18
• Fraud, as defined in section 17
• Mistake, subject to the provisions of sections 20, 21 and 22.
“Consent is said to be so caused when it would not have been given but for
the existence of such coercion, under influence, misrepresentation, fraud,
mistake” (Section. 14).This means that in order to bring a case within this
Section, the party who alleges that his consent has been caused by any of
the above element which vitiating circumstance the agreement would not
have been entered into the contract.
In the absence of ‘free consent’ the contract may turn out to be either void
or voidable depending upon the nature of the flaw in consent. When
consent to an agreement is caused by coercion, under influence,
misrepresentation or fraud, is there is ‘no free consent’ and the contract is
violable at the option of the party whose consent war so caused (Secs.19
and Secs.19A).But when Consent is caused by ‘bilateral mistake’ as a matter
of fact essential to the agreement, the agreement is void (Sec.20). In such a
case there is ‘no consent’ at all.
Example:- A is forced to sign an agreement to sell his car to B at the point of
pistol. A knows what he is signing but his consent is not free. The contract in
this case is voidable at his option.

ElEMENts VItIAtING FREE CoNsENt

CoERCIoN
Coercion is the threat or use of force by one party against another in order
to force the other to enter into an agreement. Coercion is used when a
person is forced to engage into a contract by the use of force or threat by
the other party.
Example: A threatens to shoot B if he does not sell his car to him. B sells the
car. The threat amounts to coercion.
Section 15 of the Contract Act defines ‘Coercion’ as follows:
“Coercion is the committing or threatening to commit any act forbidden by
the Indian Penal Code 1860 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." This section
also says that "it is immaterial whether the Indian Penal Code is or is not in
force in place where the coercion is employed“
The above definition can be analyzed as followed:
1) Coercion implies.
a) Committing any act forbidden by the Indian Penal Code : When the
consent of a person is obtained by committing any act which is forbidden
by the Indian Penal Code, the consent is said to be obtained by coercion.
Committing a murder, kidnapping, causing hurt, rape, defamation, theft etc.
are some of the example of the acts forbidden by the Indian Penal Code.
For example, A threatens to shoot B, if he does not sell his ship to A for Rs.
1,00,000. B agrees to sell his ship to A. Here the consent of I3 has been
obtained by coercion.
b) Unlawful detaining or threatening to detain of any property : If a person
unlawfully detains the property of another person and compels him to enter
into a contract with him, the consent is said to be induced by coercion. For
example, an agent refused to hand over the account books of the principal
to the new agent appointed in his place unless the principal released him
from dl liabilities. The principal had to give a release deed as demanded. It
was held that the release was not binding because the consent of the
principal was obtained by exercising coercion (Muthia vs Karuppan).
2) The act constituting coercion, may be directed by any preson, and not
necessarily at the other party to the agreement. Likewise it may proceed
even from a stranger to the contract .For example, A threatens to shoot B, a
friend of C if C does not let out his house to him. C agrees to do so. The
agreement has been brought about by coercion.
3) It does not matter weather the Indian Penal Code id or is not in force in
the place where the coercion is employed. It the suit is field in India, the
above provision will apply.
Threat to File a Suit :Sometimes a doubt may arise whether a threat to
file a suit amounts to coercion or not. You should know that a threat to file a
civil or criminal suit does not amount to coercion because it is not forbidden
by the Indian Penal Code. However, a threat to file a suit on false charge
amounts to coercion since such an act is forbidden by the Indian Penal
Code.
Threat to Commit Suicide :Under the Indian Penal Code a suicide and a
'threat to commit suicide' are not punishable. But, an attempt to commit
suicide is punishable. Now, the questions arises whether a 'threat to commit
suicide' shall amount to coercion or not. This point was considered by
Madras High Court in the case of Ammiraju v. Seshamma. In this case a
person, by a threat to commit suicide, induced his wife and son to execute a
release deed in favour of his brother in respect‘ of certain property. The
transaction was set aside on the ground of coercion. The court held that
though a threat to commit suicide is not punishable under the Indian Penal
Code, it is deemed to be forbidden by that code.
Effect of Coercion
A contract brought about by coercion is voidable at the option of the party
whose consent was so caused. This means that the agreed party either
exercise the option to affirm the transaction and hold the other party
bound by it, or repudiate the transaction by exercising a right of rescission.
As per Section 64, if the aggrieved party option to rescind a voidable
contract, he must restore any benefit received by him under the contract to
the other party from whom received.
The burden of proof that coercion was use lies on the party who wants to
set aside the contract on the plea of coercion.

UNDUE INFlUENCE
Section 16(1) defines the term 'Undue influence' as follows:
"A contract is said to be induced by undue influence where, (i) 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 (ii) he uses the position to
obtain an unfair advantage over the other."
The phrase "in a position to dominate the will of the other" is clarified by
the same Section under sub-section (2), thus:
Section 16(2). A person is deemed to be in a position to dominate the will of
another:
(a) Where he holds-a real or apparent authority over the other, e.g., the
relationship between master and the servant, police officer and the
accused.
(b) Where he stands in a fiduciary relation to the other. Fiduciary relation
means a relation of mutual trust and confidence. Such a relationship is
supposed to exist in the following cases: father and son, guardian and
ward, solicitor and client, doctor and patient, Guru (spiritual adviser)
and disciple, trustee and beneficiary, etc.
(c) Where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of age, illness, or mental
or bodily distress, e.g., old illiterate persons.
It is to be observed that for proving the use of undue-influence both the
elements mentioned above, namely, (i) the other part y Was Ina position to
dominate his will, and (ii) the transaction was an unfair one, must be
established.
Example: A husband forcing his wife to sell her necklace to another person
against her will, is a case of undue influence and the agreement may be set
aside.
Presumption of Undue Influence
Undue influence is presumed to exist under the circumstances above in sub-
clauses (a), (b) and (c). for example mentioned where the relationship
between the contracting parties is that of master and servant father and
son, doctor and patient, solicitor and client, etc., or where one of the parties
to the contract is an old illiterate person, there is no need of proving the use
of undue influence by the party whose consent was so caused. Merely
status of parties is enough to prove the existence of undue influence in
these cases. Presumption of undue influence is also there, in case of a
contract by or with a `pardanashin woman’.
There is, however, no presumption of undue influence in the following
cases:
 Husband and wife (In case of persons engaged to marry, the
presumption of undue influence will arise).
 Mother and daughter.
 Grandson and grandfather.
 Landlord and tenant.
 Creditor and debtor.
In these cases, undue influence shall have to be proved by the party alleging
that undue influence existed.
Effect of Under Influence
The following consequences will arise for an agreement resulted on account
of undue influence.
 The agreement is a contract voidable at the opinion of the party whose
consent was taken by undue influence.
 Any such contract may be set aside in its whole or on the terms and
conditions that the court deems just if the party who was entitled to
avoid it has obtained any advantage thereunder [Sec 19(A)].
 The contract can only be avoided or rescinded by one of the parties. This
right is not in the custody of a third party.

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 the contract. It may be expressed by words spoken
or written or implied from the acts or conducts of the parties (e.g., by any
half statement of truth).
According to Section 18 'Misrepresentation' means and includes:
• the positive assertion, in a manner not warranted by the information of
the person making it, of that Which is not true, though he believes it to
be true.
 any breach of duty which, without an intent to deceive, gains an
advantage to the person committing it, or any one claiming under him.,
by misleading another to his prejudice or to the prejudice of any one
claiming under him.
 causing, however innocently, a party to an agreement, to make a mistake
as to the substance of the thing which is the subject of the agreement.
Section 18 of the contract Act classifies acts of misrepresentation into the
following three groups:
• Positive assertion: When a person makes a positive statement of
material facts honestly believing it to be true though it is false, such act
amounts to misrepresentation. For example, A while selling his farm to
B, tells him that 100 quintals of rice are produced in his farm. A honestly
believes the statement to be true. Later on, it is found that the farm
produces only 80 quintals of rice. Here, A has made a misrepresentation.
• Breach of Duty: Section 18(2) says that any breach of duty which,
without an intent to deceive, gives an advantage to the person
committing it, or anyone under him, by misleading another to his
prejudice or to the prejudice of anyone claiming under him, amounts to
misrepresentation.
• Inducing mistake about subject-matter: The subject matter of every
agreement must clearly be understood by the concerned parties. If one
of the parties, leads the other, even innocently, to commit a mistake
regarding the nature or quality of the subject-matter, it is considered
misrepresentation.
Essentials of misrepresentation.
1) There should be a representation, made innocently, with an honest
belief as to its truth and without any desire to deceive the other party,
either expressly or impliedly.
2) The representation must relate to facts material to the contract and not
to mere opinion or hearsay.
3) The representation must be, or must have become untrue.
4) The representation must have been instrumental in inducing the other
party to enter into a contract (As per the Explanation to Section 19).
Effects of Misrepresentation
In case of misrepresentation, the aggrieved party has two alternative
courses open to him - (i) he can rescind the contract, treating the contract as
voidable; or ( ii) he may affirm the contract and insist that he shall be put in
the position in which he would have been if the representation made had
been true (Sec. 19). Misrepresentation does not entitle the aggrieved party
to claim damages by way of interest or otherwise for expenses incurred.

FRAUD
Fraud means an action that includes the false assertion of facts,
concealment of facts and any promise with the intention to deceive a
person.
According to Section 17,“Fraud means and includes any of the following acts
committed by a party to a contract or by any one 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.”
Example :“A” agrees to sell his horse to “B”. “A” had the knowledge that the
horse is of unsound mind and did not inform it to “B”. “B”, asked “A” if he
does not deny the fact then “B” would consider the horse to be sound and
“A” kept silence to it. In this case, mere silence amounts to the agreement,
thus “A” performed a fraudulent act.
Can Silence be Fraudulent
According to Section 17 deals with cases as to when 'silence is fraudulent' or
what is sometimes called 'constructive fraud.' The explanation declares that
"mere silence as to facts likely to affect the willingness of a person to enter
into a contract is not fraud, unless:
1. The circumstances of the case are such that, regard being had to them,
it is the duty of the person keeping silence to speak.
2. Silence is, M itself, equivalent to speech.“
Effect of Fraud
A party who has been induced to enter into a contract by fraud, has the
following remedies open to him:
1) He can rescind the contract i.e., he can avoid the performance of the
contract; contract being voidable at his option (Sec.19).
2) He can ask for restitution and insist that the contract shall be performed
and that he shall be put in the position in which he would have been, if
the representation made had been true (Sec. 19).
3) The aggrieved party can also sue for damages, if any. Fraud is a 'civil
wrong' hence compensation is payable. For instance, if the party surfers
injury because of unsound horse, which was not disclosed despite
enquiry, compensation can be demanded. Similarly, where a man was
fraudulently induced to buy a house, hew as allowed to recover the
expense involved in moving into to house as damage .
MIstAKE
Mistake is a misconception or error. It means that parties intending to do
one thing have by unintentional error done something else.
According to Section 20 of the Indian Contract Act, a contract is declared
void when a mistake is caused by both the parties that bilateral mistake,
which violates the essentials to an agreement.
Example: “A” made agreement with “B” to sell the goods and the agreement
was done. “A” was not aware of the fact that the goods are perished due to
some reason. In this case, the contract would be void because the basis on
which the contract was made does not exist.
Mistake is of two types:
• Mistake of law
When the parties are not aware of the law and done something,
which ought not to be done, it is said to be mistake of law. It is of
two types.
1. Mistake of law of the country: Ignorantia juris non-excusat, i.e.
"ignorance of law is no excuse" is a well-settled rule of law. Every citizen
is supposed to know the rule of law of his own country. A party cannot
be allowed to get any relief on the ground that it had done a particular
act in ignorance of law. A mistake of law of own country is, therefore, no
excuse, and the contract cannot be voided.
2. Mistake of law of foreign country: Mistake of law of a foreign
country vitiates the contract. The contract becomes void. Mistake of law
in force in India is treated as a mistake of fact.
• Mistake of fact
When one or both the parties to an agreement are under a mistake as to a
matter of fact essential to the agreement it is said to be mistake of fact. It is
of two types.
1. Bilateral mistake : Where both the parties to an agreement are under
a mistake as to a matter of fact essential to the agreement, there is a
bilateral mistake or mutual mistake. In such a case, the agreement is
void. Example: A agreed to purchase B's car, which was lying in B's
garage. Unknown to either party, the car or garage were completely
destroyed by fire a day earlier. The agreement is void.
2. Unilateral Mistake : Where one of the parties is mistaken about the
value or quality of the subject matter or in expressing or understanding
the terms or the legal effect of the agreement, the mistake is a
 unilateral mistake. Section 22 provides that if one party alone is under a
mistake of fact, the contract is not rendered voidable. But if the consent
is given by a party under an error or mistake which is so fundamental as
goes to the root of the agreement, it is void. Thus, in the following
cases, even though there is unilateral mistake, the agreement is void.
Example: A intends a contract with B but finds that he has contracted
with C, there is no contract if the identity of B was a material element
of the contract and C knows it.
Effect of Mistake
While discussing various types of mistakes, the effect of each type of
mistake has been clearly stated. It can now be summarised as follows:
1) Where both the parties to an agreement are under a mistake as to a
matter of fact essential to the agreement, the agreement is void.
2) 2) In most cases of unilateral mistake, the contract is not void. But,
where unilateral mistake defeats the true consent of the parties, the
agreement is treated as void.
3) 3) Any person who has received any advantage under such agreement,
$e is bound to restore it, or to make compensation for it, to the person
from whom he had received it.
4) 4) A person to whom money has been paid or anything delivered by
mistake must repay or return it.

REFERENCEs
 M C Kuchhal and Vivek Kuchhal , Business Law , Sixth Edition,
Vikash Publication House PVT. LTD.
 https://www.nsam.ac.in/pdf/lecture-notes/bcom/6th-
sem/Business%20Regulations.pdf
 https://monad.edu.in/img/media/uploads/free%20consent.pdf