Business Law CIA -1 (Individual Component)

BBH632

Submitted to: - Dr. Anirudh Venkatesh

By 2023288 Jaiditya Sud

From the Group consisting of:

2023207 Aditya Bhatt

2023234 Shyam Natarajan

2023241 Varun Santosh

2023242 Vinay Rajeev

2023243 Virag Sancheti

2023288 Jaiditya Sud

Free Consent Under the Indian Contract Act, 1872

Free Consent is defined in Section 13 of the Indian Contract Act as "it is when two or more
parties agree upon the same item and in the same sense." Therefore, something that both
parties can agree on is required. Let's imagine, for illustration, that A consents to sell B his
automobile. A wants to sell his Maruti because he has three other vehicles. B believes he is
getting a new Honda. A and B haven't agreed on the same item in this instance in the same
way. Since there is no consent, there is also no contract.

Now Section 14 of the Act provides a definition of free consent. According to the clause,
permission is deemed freely given provided it is neither influenced nor caused by any of the
following:

1. Coercion (Section 15)

Coercion is the use of force to compel someone to sign a contract. Therefore, it is not
free consent since force or threats were used to compel the individual who was being
coerced. Coercion is defined in Section 15 of the Act as

 Engaging in conduct that is prohibited by the IPC's laws, threatening to engage in

such conduct, or
 unlawfully detaining or threatening to detain property with the goal of pressuring
a third party to sign into a contract

2. Undue Influence (Section 16)

The meaning of "undue influence" is found in Section 16 of the Act. According to

this, there is undue influence when the two parties' relationships are such that one
 party is in a position to dominate the other party and utilises this power to gain an
unfair advantage for the other party.

The passage goes on to discuss two other ways the individual might abuse his
authority:

 when someone has actual or even just seeming control over another individual.
Alternatively, if he has a fiduciary duty to the other party.
 He enters into a legal agreement with a person whose mental state has been
hampered by old age, disease, or suffering. The mental illness may be either
transient or persistent.

3. Fraud (Section 17) \sFactors Impairing Free Consent: Fraud

Fraud is defined as one party's dishonesty, or when that party knowingly makes false
representations. Therefore, it is considered fraudulent when a misrepresentation is
made carelessly without checking to see if it is real or with full awareness that it is
false. It utterly impedes informed consent.

Therefore, in accordance with Section 17, a person that induces another to enter into
an agreement by making assertions that are false

 suggesting a fact that is not true, and he does not believe it to be true
 the active concealment of facts
 a promise made without any intention of performing it
 any other such act fitted to deceive

4. Misrepresentation (Section 18)

A party making a misleading, inaccurate, wrong, etc. representation is also considered

to be making a misrepresentation. The deception in this instance, however, is innocent
—that is, it is not malicious. The person making the claim thinks it is accurate. There
are three kinds of misrepresentation.
  A person asserts something positively and believes it to be true.
 By deceiving another, the person who violates a responsibility gains an
advantage. But there was no deceitful intent involved in the duty violation.
 when one party incorrectly informs the other side of the contract's subject
matter. However, this is being done unintentionally and innocently.

5. Mistake:

One of the parties is said to have consented to the contract by error when this occurred
as a result of a miscommunication. Without the misunderstanding, the parties would
not have agreed to the terms of the agreement. There are two kinds of contract law
errors:

 Mistake of Law

A party commits a mistake of law when they don't comprehend the rules of the
law. Now, the party could be perplexed as to whether domestic law or
international law is applicable. The contract cannot be avoided if domestic
legislation is incorrect. The defence that the party doesn't understand the
legislation in his native country is inadmissible. He could be pardoned,
nevertheless, if the blunder sprang from a misinterpretation of the legal system
of another nation.

 Mistake of Fact

Factual errors occur when there is a misunderstanding between the parties on

the nature of the agreement or its provisions. There may be a
misunderstanding on the side of either party or both.

Free Consent as an essential of a contract

A contract must have free consent in order to be enforceable. Free consent is crucial, and this
cannot be emphasised enough. The parties' consent to the contract must be freely given and
given voluntarily. The contract's consent must be granted voluntarily and without any
coercion or illusions. It is crucial that the parties' consent is granted freely because this might
jeopardise the contract's legality. The agreement may be declared void if the assent was
gained or incited via force, undue influence, fraud, deception, or error.
Contract Summary

I. Introduction

 Contract finalized based on plinth area rate

 Contractor to follow instructions and specifications given by architects and
consultants
 Total project cost is Rs. 22,04,460
 Contract completion period is 150 days

II. General Specification

 Sand, water, concrete, cement mortar, bricks, steel, formwork and plastering
specifications outlined

III. Work Included

 Provision for future expansion, filling, brick work, RCC work, plaster work, plinth
filling

IV. Work Not Included

 Modifications, legal expenses, site development

V. Financial Terms

 Contract rate is Rs. 331 per sq.ft. of plinth area

 Cement and Steel to be provided by owner, charged to contractor at specific rates
 Contractor permits 1% of running bills to be deducted by owner
 Contractor to provide Performance Guarantee and EMD

VI. Payment Terms

 Payment made on measurement of completed work and approval from

architect/consultant
 Final payment made after successful completion of contract and rectification of
defects.
This contract outlines the general terms and specifications for the construction of a club
house in Balaghat, Madhya Pradesh, India, by Shreeji Wainganga Infrastructure. The contract
is based on a plinth area rate and specifies that the contractor must follow all instructions and
specifications provided by the architect and other consultants.

The contract rate is 331 INR per square foot of plinth area, with a total project cost of
22,04,460 INR (based on a total slab area of 6660 square feet). The completion period for the
project is 150 days.

The General Specifications section outlines specific requirements for materials used in the
construction, such as sand, fine aggregates, water, concrete, cement mortar, brick work, steel,
formwork, and plastering.

The Work Includes section lists tasks that are included in the contract, such as extra bar
provisions, filling work, brick work, RCC work, plaster work, and plinth filling.

The Work Not Included in Rate Calculation section lists tasks and expenses that are not
included in the contract, such as alterations, local body clearance expenses, and site
development work.

The Financial Terms section outlines the payment and billing processes, including that the
owner will provide cement and steel but charge the contractor for usage. It also includes
provisions for deducting 1% of running bills and a 2% security deposit. The final settlement
will be based on the actual cost incurred.

This summarizes the key subparts of the contract.

Does the contract fulfil Free Consent?

 Coercion: Coercion is when a party is forced to enter into a contract against their will
through the use of threats or physical force. In this construction contract, coercion can
occur if a contractor is forced to sign a contract by the use of threats, such as threats to
damage their equipment or harm their reputation. This would render the contract void
as consent was not freely given.
  Undue Influence: Undue influence occurs when one party takes advantage of their
position of power over another party to obtain their agreement to a contract. For
example, in this construction contract, if the property owner uses their position of
power over the contractor to make them agree to unreasonable terms, this would be
considered undue influence.

 Fraud: Fraud occurs when one party deliberately makes false representations to
another party in order to induce them to enter into a contract. In this construction
contract, fraud can occur if a contractor deliberately conceals important information
or provides false information about their qualifications, experience, or materials used.

 Misrepresentation: Misrepresentation occurs when a party makes a false statement

that is material to the contract, but without any intent to deceive. This can occur in the
construction contract if a contractor provides incorrect information about their
qualifications, experience, or the materials they will use, leading the other party to
believe that the contract terms are different from what they actually are.

 Mistake: A mistake occurs when both parties to a contract are under a common
misapprehension about a material fact, which leads them to believe that the contract
terms are different from what they actually are. In this construction contract, a
mistake can occur if both parties misunderstand the scope of work to be performed or
the cost of materials. If a mistake is made, the contract may be voidable if the mistake
goes to the root of the contract.

After perusing through the contract, it can be seen that all the specifications, terms and
conditions mentioned in the contract appear to be genuine, specific and most importantly
based on prior discussion. The costing, material acquisition, etc. is done strictly according to
the client’s need and specifications. The terms of the contract seem fair enough for both the
parties that have entered into the contract. Hence, it can be deduced that there was no kind of
leverage that one party had over the other that it used to draft the contract in its favour.
Therefore, the contract appears to be genuine, and it can be said that there is no involvement
of coercion, undue influence, fraud, misrepresentation or mistake. However, it must be noted
and duly considered that this conclusion is based solely on the perusal and understanding of
the contract and no external research or study has been done about either of the two parties,
i.e., Director of Shanti Suman Infrastructure SSI & Director of Shreeji Wainganga
Infrastructure Reg. Partnership firm, nor their situation, position and equation with each
other.