Free Consent under the Indian

Contract Act, 1872: Everything

you need to know
4th January 2021 consentcontractcontractsfree consentlaw of
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To call a contract valid, the parties must consent to it freely and

voluntarily. The principle of consensus-ad-idem is followed meaning
the contracting parties must mean something in the same sense. 
The contracting parties must have an identical understanding in
regards to the contents of the contract.

In contract law in India, the meaning 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
the same thing in the same sense as well. Just giving consent is not
enough for a contract to be enforceable. The consent given must be
free and voluntary.

The definition of free consent is provided under Section 14 of the

Indian Contract Act is Consent that is free from Coercion, Undue
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 Influence, Fraud, Misrepresentation or Mistake. Consent is said to be
so caused when it would have been given in the absence of such
factors. The aim of this concept is to make sure that decision of the
contracting parties was clear since the contract’s inception.
Therefore consent given under coercion, undue influence, fraud,
misrepresentation or mistake has the potential to invalidate the
contract.  

For instance, Ankita agrees to sell his car to Bhavya. Ankita is the
owner of two cars and wishes to sell the Swift.  Bhavya thinks he is
purchasing the Audi. Here Ankita and Bhavya have not agreed upon
the same thing in the same sense. Therefore there is no contract for
there is no consent.

Raffles vs Wichelhaus (1964) [1], 

Two parties A and B entered into a contract for sale for 125 bales of
cotton arriving from Bombay by a ship named “Peerless”. There were
two ships with the same name and while party A had one ship in
mind, Party B had the other ship in mind. It was held by the court that
both the parties were not ad idem and therefore the contract was
void.

Real Consent and Apparent Consent

Actual consent may be expressed through words or actions, or
silence or inaction when the situation is so that the silence or
inaction is intended to give consent; it is not always essential to
communicate actual consent to the contracting party.

For example, while paying at a grocery store, the clerk at the counter
may ask you if you would like to provide your contact number so that
the grocery store can expand its marketing base. Providing your
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 contact number would be a very clear, direct way of giving the clerk
your express consent. 

Apparent consent exists when a person’s actions or words, silence or

inaction, would be understood by a reasonable person as intended to
give consent. However, a genuine but irrational belief that the other
person is consenting to a contract does not constitute apparent
consent.

For example, when a LIC agent helps a person in getting a loan

sanctioned on behalf of the company, he acts on the authority
conferred to him by the company. A reasonable person would
understand that the very nature of an agent’s job implies that
consent is given to contact the customers.

Consent when considered “not free”

The contracting parties might agree upon something in the same
sense. However, just giving consent does not suffice, consent must
also be given freely for the purpose of constituting a valid contract.

1. In the absence of consent, a contract is considered to be void.

2. When there is consent but it is not free, the contract is called to
be voidable at the will of the aggrieved party.

What invalidates a consent under the Indian

Contract Act?
As per section 14 of the Indian Contract Act, 1872, consent is said to
be free in the absence of

(1) Coercion (Section 15)

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 (2) Undue Influence (section 16)

(3) Fraud (section 17)

(4) Misrepresentation (section 18)

(5) Mistake (sections 20,21,22)

If consent is given under any of the above circumstances, the

contract is considered voidable at the will of the aggrieved party, as
in accordance with section 19 of the Indian Contract Act, 1872.

Thus to constitute a contract which is valid in nature, the important

element is free consent.

Now, a contract must have been entered into in the absence of:

1. Coercion
In accordance with the Indian Contract Act, 1872, coercion means:

“‘Coercion’ is the committing, or threatening to commit, any act is

forbidden by the Indian Penal Code (45 of 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.”

A considerable factor is that it is not always the situation that the

Indian Penal Code is applicable at the place the consent was
obtained. A very crucial part of the law is the phrase “to the prejudice
of any person whatever” which means the coercion could be
directed against the prejudice of any person and not just the party to
the contract. Interestingly, parties apart from the contracting parties
can also cause coercion. Even a third party to the contract can cause
coercion to obtain the consent, as was seen in the case of
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 Ranganayakamma v. Alwar Setti  (1889)[2] , where a widow was the
victim of coercion for she was coerced into adopting a boy, and was
not allowed to remove her husband’s corpse till the adoption was
executed.

It is upon the party whose consent was allegedly coerced to prove

that the consent so obtained from the aggrieved party was through
coercion. When consent of a party was obtained through coercion,
the contract becomes voidable at the will of the aggrieved party.

Chikkam Ammiraju and Ors. v. Chikkam Seshamma

and Anr (1917) [3], 

Madras High Court upheld that threat to commit suicide also

amounts to coercion and the aggrieved party has the right to pull out
of the contract. In the present case, the husband threatened his wife
and son that he shall commit suicide if they did not execute a sale
deed in favour of his younger brother. They executed the deed but
later filed a plea of coercion later. Since the very act of committing
suicide is forbidden under the IPC the act of the husband was found
to be illegal and the consent so obtained was found to be obtained
through coercion.

2. Undue Influence
When the situation is such that one of the contracting parties is in a
dominating position and it uses its position to gain an unjust
advantage, then the consent is said to have been a result of undue
influence.  Now, the Act of 1872 also provides instances where a
person can dominate the will of another. These instances are:

1. Where one party has an actual or implied authority over the

other party.
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 2. When one party has a relationship based on trust – a fiduciary
relationship – with the other.
3. When one party enters into a contract with another of unsound
mind.  

In the cases where undue influence is alleged, it is upon the party

which allegedly was in a position to dominate the will of the other to
prove that the consent was not obtained through undue influence.

When the situation is such that the consent was obtained through
undue influence, the contract becomes voidable on the option of the
aggrieved party.

As per section 16(2) of the Indian Contract Act 1872,

a person is said to have a dominant position when

1. The person is involved in a relationship involving trust and has

real authority.
2. The person is involved in a contract with a person whose mental
capacity is permanently or temporarily affected due to age,
illness or mental or bodily distress.

Illustration

Anant induces his colleague Ajay to transfer to his bank account a

certain amount if he wants his kids to be safe. Anant, fearing the
safety of his kids, does as instructed. Ajay is said to have employed
undue influence over Anant.

Important questions for consideration by the court

for dealing with undue influence 

1. Whether a person of righteous mind will enter into such a

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 contract.
2. Whether the person had a sound mind while entering into such
a contract.
3. Whether the matter was such that required legal advice or not.
4. Whether the person giving a gift had the intention of giving
originating from himself and not due to the influence of others.

Lingo Bhimrao Naik v. Dattatrya Shripad Jamadagni

[4] case

A mother was alleged to use undue influence on his adopted son

when he reached the age of majority to ratify the gift deeds
regarding non-watan property made to her daughters and caused
obstruction in letting him consult his natural father. The court held
that the adoptive mother used her position of authority to dominate
his son gain an unfair advantage in getting the gift deeds ratified.
Also, as the adoptive son was unaware of his legal rights, the matter
was set aside 

3. Fraud
Fraud is a fallacious representation of facts presented with the ill
intent of cheating the other party. Fraud is proved when false
representation has been made-

1.Knowingly

2.Without belief in its truth

3. Recklessly whether or not true

As per Section 17, a fraud is when one party convinces another party
to enter into an agreement by
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 1. Suggesting a false fact to be true (Suggestio falsi)

2. Actively concealing facts while having the complete knowledge of

such facts (Suppresio veri)

3.Making a promise made without any intention of performing it.

4. Performing any other such act with the intention to cheat.

5.When the court finds an act to be fraudulent.

In accordance with Section 17(1), to constitute fraud, there

should be a false statement of fact. To express an opinion does
not constitute fraud.

Just being silent about elements which can affect the willingness of
a person to enter into a contract does not amount to fraud, but if
there is a duty to speak upon the person who is keeping silent, then
it becomes a fraud. Example of such cases is contracts of utmost
good faith where full disclosure is expected.

In cases of fraud, it is upon the party who alleges fraud to prove it.
The party has to prove the circumstances which can lead to the
existence of fraud. Merely mentioning fraud while pleading is not
enough. A crucial point of consideration is that if the party who has
been the alleged victim of fraud had the opportunity or means to find
out the truth with ordinary care, then the contract is not held to be
void.

Bimla Bai vs Shankarlal (AIR 1959) [5], 

A father called his illegitimate son as “son” for the purpose of fixing
his marriage. It was held that the father knowingly hid the illegitimacy
of the son with the intention of cheating the parents of the bride
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 which amounts to fraud.

4. Misrepresentation
In accordance with section 18 of the Indian Contract Act,
misrepresentation can be divided into three types –

1. When a statement of fact is made which is false but is believed

to be true.
2. When the person making the false statement performs breach
of duty, and by doing so gains unjust advantage even though
such wasn’t the intention of the party.
3. When one contracting party behaves in an innocent manner
which leads the other party to commit mistake(s) with regards
to the contents of the contract.

The common point between the three types is that

misrepresentation is understood to be an innocent mistake done
without the intention to do so.

The burden of proof lies on the party alleging misrepresentation to

avoid the contract to prove that misrepresentation was used to
obtain the consent. When consent was obtained through
misrepresentation, it becomes voidable at the option of the
aggrieved party.

Bisset v Wilkinson [1927][6], 

The plaintiff purchased two blocks of land for the from the defendant
to practise sheep farming. During negotiations, the defendant said
that if the place was worked properly, it would carry 2,000 sheep.
The plaintiff bought the place believing that it would carry 2,000
sheep. Both parties were aware that the defendant had not carried
on sheep-farming on the land. In an action for misrepresentation, the
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 trial judge said that in the case, the statement of the defendant
regarding the carrying capacity of the land could not be taken as
anything but a mere expression of opinion and not a fact since both
parties were aware that the defendant did not practise sheep
farming. The Privy Council concurred with the view of the trial court
and held that in the absence of fraud, the purchaser does not have
the right to rescind the contract.

Illustration – Deepak said that his computer is in good condition and

Ankit bought the computer from him because of the trust he had in
Deepak. After some time the computer did not work properly and
Ankit thought she was misled but Deepak believed that his computer
was in good condition and had no intent to cheat.

5. Mistake
a. Mistake of Law

When legal provisions are the subject matter of misunderstanding

between contracting parties, it is referred to as Mistake of Law. Now,
the party can be confused regarding the law of the home land or law
of a foreign land. In the cases where any contracting party pleads no
knowledge of the laws of the home land, the contract cannot be
avoided for such an excuse is not considered to be valid. However, if
the subject matter of confusion is foreign laws, the contracting party
can be excused from the contract in the case of lack of knowledge of
such laws.

b. Mistake of Fact

When the subject matter of misapprehension are the clauses or

terms of the contract, it is said to be a mistake of fact. The
misunderstanding can be on the part of one party or both.
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 Bilateral Mistake: When a matter of fact is the subject matter of
misunderstanding for both the contracting parties, the agreement is
said to be void.                          

Unilateral Mistake: When a matter of fact is the subject matter of

misunderstanding for one of the contracting parties, the agreement
stands to be valid.  Only when the party is mistaken about the parties
to agreement or nature of the transaction, the agreement becomes
void.

Dularia Devi v. Janardan Singh(1990)[7],

The plaintiff was an illiterate woman who wanted to gift her

properties to her daughter. The defendants took her thumb prints on
two documents which she believed were documents in her
daughter’s favour, but the second document was in favour of the
defendants who were supposed to only execute the deed. She later
filed a suit for the sale deed’s cancellation and it was held that for the
woman was clueless about the second document’s nature, it was
held to be void.

Exceptions

1) Private Rights of Property- A party is thought to be unable to fully

know the private rights of the other party, therefore it is excusable.

2) Mistake as to any foreign law is considered to be treated like a

mistake of fact and is considered excusable since knowledge of
foreign laws is not necessary.

Conclusion
Free Consent is mandatory to make an agreement a valid contract.
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 The importance of free consent cannot be stressed enough. Such
consent must be free and voluntary in nature, without any sort of
pressure. If the consent to the agreement was obtained or induced
by coercion, undue influence, fraud, misrepresentation or mistake,
then it has the potential to make the agreement void.

Endnotes
[1]  (1964) 2 H&C 906

[2] (1890) ILR 13 Mad 214

[3] 1916 MWN 368

[4] AIR 1938 Bom 97

[5] AIR 1959 MP 8

[6] [1927] AC 183

[7] AIR 1990 SC 1173

Pratham Arya

Author

Pratham hails from Symbiosis Law School, Noida and spends most
of his time researching, reading and debating. His Interest areas are
law and policy. For any clarifications, feedback, and advice, you can
reach us at editor@lawcirca.com
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