1. FREE CONSENT

2. CONSENT CONSENT  When consent to an agreement is caused by coercion, undue influence, misrepresentation or fraud, there is ‘no free consent’ and the contract is voidable at the option of the party whose consent was so caused. But when consent is caused by ‘bilateral mistake’ as to a matter of fact essential to the agreement, the agreement is void. In such a ease there is ‘no consent’ at all.  Section 13 of the Contract Act defines the term consent, ‘Two or more persons are said to consent when they agree upon the same thing in the same sense.’Thus, consent involves identity of minds or consensus ad-idem i.e., agreeing upon the same thing in the same sense. If, for whatever reason, there is no consensus ad- idem among the contracting parties, there is no real consent and hence no valid contract. FREE CONSENT FREE CONSENT  According to Section 10, ‘free consent’ of all the parties to an agreement is one of the essential elements of a valid contract.  Section 14 free consent, ‘Consent is said to be free’ when it is not caused by — 1. Coercion, as defined in Section 15, or 2. Undue influence, as defined in Section 16, or 3. Misrepresentation, as defined in Section 18, or 4. Fraud, as defined in Section 17, or 5. Mistake, subject to the provisions of Sections, 20,21 and 22.’

3. COERCION COERCION  Section 15 of the Contract Act defines ‘coercion’ as ‘the committing or threatening to commit, any act forbidden by the Indian Penal Code, 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.’  The Act constituting coercion may be directed at any person, and even from a stranger to the contract. Examples of Coercion:  Threat to commit suicide.  Point of pistol  Threat of imprisonment Effect of Coercion  A contract brought about by coercion is voidable at the option aggrieved party i.e. party may 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. Burden of proof  The burden of proof that coercion was used lies on the party who wants to set aside the contract on the plea of coercion.

4. UNDUE INFLUENCE UNDUE INFLUENCE  Section 16(1) defines the term ‘undue influence’ as, ‘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.’  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; or  (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.; or  (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. . Presumption of undue influence is also there, in case of a contract by or with a ‘pardanashin woman’. Effect of Undue Influence  ‘When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit there under, upon such terms and conditions as the court may seem just’

5. MISREPRESENTATION MISREPRESENTATION  A representation when wrongly made, either innocently or intentionally, is termed a misrepresentation. Misrepresentation may be either innocent or intentional or deliberate with an intent to deceive the other party. In law, for the former kind the term’ misrepresentation’ and for the latter the term ‘fraud’ is used.  According to Section 18, ‘misrepresentation’ means and includes:  (a) 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; or  (b) 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; or  (c) 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. 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.

6. FRAUD FRAUD  The term ‘fraud’ includes all acts committed by a person with an intention to deceive another person. According to Section 17, ‘fraud means and includes any of the following acts committed by a party to a contract’, or with his connivance, or by his agent, with intent to deceive or to induce another party thereto or his agent, to enter into the contract.  There is fraud in the following cases:  1. The representation that a fact is true when it is not true by one who does not believe it to be true.  2. The active concealment of a fact by a person who has knowledge or belief of the fact.  3. A promise made without any intention of executing it.  4. Any other act fitted to deceive.  5. Any such actor omission as the law specially declares to be fraudulent. Effect of Fraud  1. He can rescind the contract, i.e., he can avoid the performance of the contract; being voidable at his option.  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.  3. The aggrieved party can also sue for damages, if any.  Fraud is a ‘civil wrong’ hence compensationis payable.

7. MISTAKE MISTAKE  Mistake may be defined as an erroneous belief concerning something. It may be of two kinds: 1. Mistake of law 2. Mistake of fact Mistake of law may be of two types:  1. Mistake of law of the country  2. Mistake of foreign law I. Mistake of law of the country or mistake of law.  Everyone is deemed to be conversant with the law of his country, and hence the maxim ‘ignorance of law is no excuse’ and it does not give right to the parties to void the contract. Stating the effect of mistake as to law, Section 21 declares that ‘a contract is not voidable because it was caused by a mistake as to any law in force in India’. Accordingly, no relief can be granted on the ground of mistake of law of the country. 2. Mistake of foreign law.  Mistake of foreign law stands on the same footing as the ‘mistake of fact’.  Here the agreement is void in case of ‘bilateral mistake’ only,

8. Mistake of fact may be of two types: 1. Bilateral mistake 2. Unilateral mistake 1. Bilateral mistake.  Where the parties to an agreement misunderstood each other and are at cross purposes, there is a bilateral mistake. In fact in such cases, there is no agreement at all, there being entire absence of consent. In case of bilateral mistake of essential fact, the agreement is void ab-initio. Section 20 provides that ‘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. Unilateral mistake  Section 22 provides that ‘a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact’.  In the following two cases, where the consent is given by a party under a mistake which is as fundamental as goes to the root of the agreement and has the effect of nullifying consent, no contract will arise even though there is a unilateral mistake only:  A.) Mistake as to the identity of person contracted with, where such identity is important.  B.) Mistake as to the nature and character of a written document.  It should be borne in mind that in the aforesaid type of mistake, even if one party’s consent is induced by misrepresentation of another, the contract is not merely voidable but is entirely void and the third party would acquire no rights.