1. FREE CONSENT Contract is voidable at the option of the party whose consent is not free  Coercion  Undue influence : Deemed to dominate when:  real or apparent authority: doctor and patient, master and servant  fiduciary relation : solicitor and client, promoter and company  mental capacity is affected by age, illness or mental distress

2. No presumption of undue influence in case of: Creditor & debtor Husband and wife (provided she is not pardanashin) Landlord and tenant In such cases, it has to be proved. How to Rebute the presumption: Full disclosure of facts Adequate price Independent advice for the weaker party

3. MISREPRESENTATION & FRAUD: Meaning A representation, when wrongly made, either innocently or intentionally, is a misrepresentation. Misrepresentation may be – an innocent or unintentional misrepresentation or an intentional, deliberate or willful one with an intent to deceive or defraud the other party. Former is called “misrepresentation” and the latter “fraud”

4. Elements of misrepresentation Of facts, should not be merely an opinion Made before the contract is made Intention to induce, but no intention to deceive Wrong, but the person honestly believes that it is true May not be made directly to the plaintiff

5. Consequences of misrepresentation: Aggrieved party, in case of misrepresentation by the other party, can- i) avoid or rescind the contract; or ii) accept the contract subject to restoration

6. Loss of right of rescission for misrepresentation or fraud- i) After becoming aware of the misrepresentation or fraud, benefit under the contract is taken or in some other way affirms it. ii) parties cannot be restored to their original positions, e.g. where the subject-matter of the contract has been consumed or destroyed. iii) if a contract cannot be rescinded in toto, it cannot be rescinded at all. iv) if a third party has acquired rights in the subject-matter of the contract in good faith and for value.

7. FRAUD A false representation made (a) knowingly or (b) without belief in its truth, or (c) recklessly not caring whether it is true or false, with an intention to induce the other party to act upon it Concealment of a material fact or partial statement of fact in such a manner that the withholding of what is not stated makes that which is stated absolutely false.

8. Essential elements of fraud Active false representation or assertion Must relate to a fact Should not be mere opinion, commendatory or puffing expression or hearsay or flourishing description Must have induced the other party to act upon it Representation or assertion must have caused some loss

9. Consequences of Fraud Rescission Accept the contract subject to restoration of the position in which he would have been if the representation made had been true Sue for damages

10. MISTAKE Mistake is an erroneous belief about something. It may be mistake of law or a mistake of fact. – Mistake of law: contract cannot be avoided – Mistake of law of foreign country: is treated as mistake of fact (gives rise to void contract)

11. Mistake of fact Bilateral mistake As to a matter of fact essential to the agreement, if there is a bilateral mistake: agreement is void Unilateral mistake ·In general cannot be avoided ·void if mistake as to: -identity (important) -nature of contract

12. Cases of bilateral mistake Mistake as to the subject-matter vis-à-vis existence, identity, quality, quantity, title, price Mistake as to the possibility of performing -Physical impossibility -Legal impossibility