Section 10 of the Indian Contract Act 1872 explains:-What agreements are contracts. It lays down 5 essentials for an agreement to be a contract.
These essentials are
· Free consent of Parties
· Competency of Parties
· Lawful consideration
· Lawful Object
· Not expressly declared to be void
This article aims to focus on the element of free consent and to distinguish it from Consent. Both consent and free consent are defined in the Indian Contract Act 1872 in Section 13 and Section 14 respectively. Section 15 to 18 and Section 20 to 22 describe the conditions in which Consent is not equivalent to free consent. Section 19 lays down the fate of an agreement which is made without the free consent of one of the parties.
CONSENT- Section 13 of the Indian Contract Act defines it as “two or more persons are said to consent when they agree upon the same thing in the same sense.”Consent is Consensus-ad-idem which denotes meeting of the minds on the same thing in the same sense.
ILLUSTRATION- A and B are two parties to a contract. A owns 3 cars of different brands-X, Y and Z. A offers to sell B a car. B accepts the offer. A has thought of selling his car of brand X to B but B thinks he has agreed to buy the car of brand Y. Therefore Consensus-ad-idem is absent here.
On the contrary, had A offered to sell to B his car of brand X and had B accepted the offer to buy A’s car of brand X, this would amount to consent, as there is meeting of the mind on the same thing in the same sense.
FREE CONSENT-Section 14 of the Indian Contract Act 1872 mentions consent caused by the following is not equivalent to free consent:-
· Coercion
· Undue influence
· Fraud
· Misrepresentation
· Mistake
COERCION-is defined in Section 15 of the Indian Contract Act 1872.It is an act of
· Committing or threatening to commit any act forbidden by Indian Penal Code(45 of 1860).It is immaterial if IPC is or is not in force in the place where coercion is employed
· Unlawful detaining
· Threatening to detain any property
To the prejudice of any person such that it causes that person to enter into an agreement.
CASE LAW: - Chikam Amiraju v. Chikam Seshamma, 1917 Madras HC
A Hindu husband threatened his wife and his son of committing suicide and induced them to execute a sale deed in favour of his brother. Later the validity of the deed was challenged by his wife and son on the ground that consent was caused by coercion and therefore consent was not free which made the contract voidable at the option of the wife and son. It was held that the sale deed is not valid.
UNDUE INFLUENCE- is defined in Section 16 of the Indian Contract Act 1872.The essential elements include:-
· A relation subsisting between parties such that one party is in a position to dominate the will of the other
· The party in position to dominate obtains an unfair advantage over the other by using that position
In the following conditions a person is deemed to be in a position to dominate the will of another
· Has a real or apparent authority over the other or stands in a fiduciary relation to the other
· Makes a contract with a person whose mental capacity is temporarily or permanently affected
The burden of proving that the contract is not induced by undue influence lies on the party who is in a position to dominate the will of another such that the transaction appears on the face of it or on the basis of evidence produced, to be unconscionable.
Section 19 A provides power to the court to set aside contract induced by undue influence.
CASE LAW: - Mannu singh v. Umadat Pandey (1888-1890)12 ALL 523
A spiritual leader persuaded his devotee to gift him the entire property in order to get benefits in the next world. The court held that this gift deed lacked free consent as the consent was a result of undue influence and thus set aside the gift deed.
FRAUD - is defined in Section 16 of the Indian Contract Act 1872.It includes act committed by a party to a contract or with his connivance or by his agent with
· An intent to deceive another party
Or
· To induce the other party to enter into a contract
It includes:-
· A fact suggested by a party as being true when the party itself does not believe it to be true
· Active concealment of a fact
· A promise made without the intention of performing it
· Any act fitted to deceive
· Any act or omission specially declared to be fraudulent by law
CASE LAW: - Edgington v. Fitzmaurice
The plaintiff advanced 1500 pounds to the defendants who were directors of a company. To raise funds the directors claimed that they had acquired a property and would also use the funds for alterations, purchase horses and vans to ensure supply of cheap fish .On the contrary, the real object of the directors was to acquire funds to pay off the liabilities of the company and could not complete the purchase advertised.
In this case the defendants were held liable for an act fitted to deceive, which is a fraud.
MISREPRESENTATION- Is defined in Section 18 of the Indian Contract Act 1872.It includes
· A positive assertion made by a person believing it to be true.
· A breach of duty without intent to deceive which gains an advantage to the person committing it.
· Making a mistake as to the substance of the subject of the agreement, however innocently.
CASE LAW: - Dick Bentley Production v. Harold Smith (Motors) Ltd (1965)2 All ER 188
The plaintiff purchased a car sold on the basis of the claim that it was driven only 20,000 miles after its reconditioning, which meant it was in a good state. Whereas it was actually driven for 100,000 miles and also after purchase, faults developed soon in the car. The defendant asserted of making an innocent representation, which amounts to misrepresentation.
MISTAKE- Sections 20, 21 and 22 mention about the consequences of mistake in an agreement.
· Section 20-states that an agreement is void if both parties are under a mistake related to an essential fact to the agreement.
· Section 21-states that a mistake of law in force in India does not make a contract voidable
· Section 22-states that only one party being under a mistake of fact does not make the contract voidable
CASE LAW: - Cundy v. Lindsay (1878) 3 App Cas 458 HL
It was held that an agreement based on a mistake of identity of the parties rendered the agreement void.
EFFECT OF CONSENT NOT BEING FREE: - Section 19 of the Indian Contract Act 1872, states
· Consent caused by:- Coercion, Fraud, Misrepresentation is voidable at the option of the party whose consent is so caused
· In case of fraud or misrepresentation, the party whose consent was so caused can insist on the contract being performed as if the representations made were true.
CONCLUSION
The Indian Contract Act mentions free consent as an essential element of a contract. It is to ensure that a party is not forced or taken undue advantage of through a contract. Even if an agreement is thus formed, the fate of the agreement is decided at the option of the parties whose consent was so caused.
This article is written by Sheetal Potale of ILS Law college, Pune.