(a) Consent means that promisor and promisee must agree

to the same thing, and in the same sense, and at the

same time
(i.e. there must be ‘consensus-ad-idem’); and

(b) Consent must be free

Free consent means that consent must not be obtained by

any one or more of the following:

(i) By Coercion
(ii) By Undue Influence
(iii) By Fraud
(iv) By Misrepresentation, and/or
(v) By Mistake

Otherwise, such contract would be voidable (not void), at

the option of that party, whose consent was so obtained
 1. Coercion

comprises
(a) Committing, or threatening to commit, any act (against
Promissor or any other person) (by Promissee or any
other person) forbidden by Indian Penal Code (IPC), or

(b) Unlawfully detaining, or threatening to detain (Promissor

or any other person) (by Promissee or any other person)

(c) Threat to commit suicide is a crime, hence coercive.

Amount paid or things delivered, under coercion,
must be paid / delivered back

(a)Aggrieved party can set the contract aside, or

(b)He can insist on the performance of the contract

 2. Undue Influence

Possible where one party dominates the mind and will of

the other, by using such position to obtain unfair advantage.
e.g. Doctor and patient, Parent and child, Guardian and
ward, Lawyer and client, Spiritual Guru and disciple, Trustee
and beneficiary. But, the charge of undue influence could be
refuted.      
Undue influence cannot be presumed in the cases of:

 Husband and wife

 Master and servant
 Landlord and tenant, and
 Creditor and debtor

In such relationships, the aggrieved party has to prove

undue influence

But, in a prima facie case of undue influence, the alleged

party has to prove his innocence

The contract, induced by undue influence, is voidable, at the

option of the aggrieved party, and the same two remedial
options available in the case of coercion apply here also.
Such agreement could be set-aside in part, if aggrieved
party, had received some benefits

Charging a higher rate of interest, in itself, may not be

sufficient

If rate of interest is exorbitantly high, Court may fix a

reasonably lower rate

The onus of proof of no use of undue influence is on the

creditor

More than ordinary care is required in case of

pardanashin lady
 3. Fraud

(I) (a) The representation must be made

(b) It must be false, and
(c) It must be made knowingly, too

 A mere silence would not amount to fraud

 But it will
(a) Where relationship between the parties is of a
fiduciary nature (like father and son or
daughter, guardian and ward)

(b) Because, such relationships require utmost good

faith (like in the contract of insurance)
 Further, ‘silence is fraudulent’, where ‘silence’, in
itself, is ‘equivalent to speech’

 Besides, suppression of some relevant truth

(II) The representation must pertain to a fact

(III) The false statement must have been made:

(a) Knowingly, (i.e. with knowledge of it being

false)
(b) Without belief in its truth; and
(c) Recklessly, without verify the truth

(IV)With intention to induce other party to act thereupon

(V) The statement must actually deceive

(VI)Some loss must be suffered by the party by the fraud

Remedies Available to the Defrauded (Deceived) Party
(i) To avoid the performance of the contract, or

(ii) To insist performance, with the required changes, or

(iii) To claim damages for the fraud

Some Exceptions

(a) When the party had the means to verify and discover the
truth

(b) When the party had taken some benefit under the
contract, or he had affirmed the contract in some way or
the other
 4. Misrepresentation

Though it also involves false statement, Element of

fraudulent intention is not involved, i.e. misrepresentation is
innocent and the person honestly believed it to be true.
Three Categories of Misrepresentation

(1) The positive assertion, of that which is not true,

though he believes it to be true

(2) Any breach of duty, without an intention to deceive,

gives an advantage to the person committing it

(3) Causing, however innocently, a party to make a

mistake as to the substance of a thing, which
happens to be the subject matter of the agreement
Remedies Available to the Affected Party

 To avoid performance of the contract, so made

 But, not allowed, if the affected party had the means

of finding out the truth, by ordinary diligence
[The contract, obtained by fraud, can be avoided even in
such cases]

 To insist performance of contract, with some required

changes
Remedies Available to the Affected Party

 Unlike cases of fraud, claiming damages is not available

in such cases

 Except:

(a) In the cases of breach of warranty of authority of an

agent; and

(b) In the cases of Negligent Representation

 5. Mistake

 Mistake pertains to an erroneous belief of something

 Two types of Mistake

(i) Mistake of Fact (Bilateral and Unilateral), and

(ii) Mistake of Law

(I) (1) Bilateral Mistake

 When both parties are under the mistake of fact, essential to the
agreement. Such agreement is void; not just voidable
 Such mistakes may be regarding its:
(a) Existence; e.g. cow under the deal was already dead

(b) Identity; e.g. the car under sale was different than buyer
thought

(c) Title; e.g. both parties wrongly believed that seller had valid
title

(d)Quantity; e.g. the quantity, ordered by buyer, and thought by

seller, differed

(e) Price; e.g. Both parties have different notions about price of
goods.
But a wrong estimate about the price
does not amount to a bilateral mistake
(II) (2) Unilateral Mistake

 When only one of the parties commits mistake

 Contracts so made are valid, and not voidable

Three Exceptions where contract is voidable

 Where the unilateral mistake pertains to:

 Nature of the Contract (and not its terms)

 Quality of the Contract, and
 Identity of the Person, with whom the contract is being made

 Mistake of Law (of own country, or of some foreign country)

 ‘Ignorance of law is no excuse’ is applicable only in cases of

home country

 Accordingly, it is not applicable in the case of mistake of law of

some foreign country.
Such contract is treated only as a mistake of fact, and not of
law