September 30, 2022

Free Consent under Contract law

This article is written by Farheen Ansari, a student of BBA LLB at Delhi Metropolitan Education.

           

The word ‘consent’ is defined in Section 13 of the Indian Contract Act, 1872 which states that consent is said to be given when two or more persons agree upon something in the same sense. And it is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation, and mistake.

Section 13 of the Indian Contract Act, 1872 defines ‘Free consent’ it states that consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation, and mistake.

ELEMENTS OF FREE CONSENT: –

  • It should be free from coercion.
  • It shouldn’t be under pressure or undue influence.
  • It should be done without any fraud.
  • It shouldn’t be done through misrepresentation.
  • It shouldn’t be made by mistake.

IMPORTANCE OF FREE CONSENT: –

  • A Contract that is made by free consent protects validity and enforceability.
  • It works as a protecting shelter to the parties against coercion, undue influence, fraud, misrepresentation, and mistake.
  • The legal maxim “consensus-ad-idem” is followed.

MISTAKE IN FREE CONSENT 

When a mistake occurs it makes the contract void. Two types of mistakes occur in a contract. The two types of contract are 

  • Unilateral Mistake
  • Bilateral Mistake
  1. UNILATERAL MISTAKE 

When one party is mistaken in an agreement then it is said to be a unilateral mistake.

  1. BILATERAL MISTAKE 

Bilateral mistake contains two types mistakes

  1. MUTUAL MISTAKE

A mutual mistake is a mistake when both the parties misunderstood each other and a mutual mistake shows that there is a breach of the principle of ‘consensus-ad-idem’ in the contract and the contract is said to void.

  1. Common Mistake 

When a contract exists out of common mistake then it’s a void contract.  This type of mistake is influenced by both parties but this mistake is not the result of a mutual mistake, it arises individually.

EXAMPLE OF FREE CONSENT: – 

“A” agrees to sell his land to “B”. “A” has 10 lands in different places and he wanted to sell the land in the west direction but “B” wanted the land in the east part. In this case, it is seen that there is no meeting of minds and the principle of consensus-ad-idem is violated. Thus the agreement would be considered void.

In the case of Solle v Butcher, it was seen that both the parties entered into the contract of lease of Flat. Both the parties believed that the identity of the flat has changed thus the maximum rent which was GBP 140 per annum has also changed. But later the court held that there was no change of identity thus, it was held that there was a mutual mistake of fact and thus the contract was declared to be void.

ELEMENTS VITIATING FREE CONSENT

  1. COERCION (Section 15)

In simple words, coercion means forcing or threatening someone to do something.

Section 15 of Indian Contract Act, 1872 defines ‘Coercion’ it means committing or threatening to commit, any act is forbidden by Indian Penal Code, or any unlawful detaining and threatening to detain property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

EXAMPLE: ‘A’ went out for a long drive ‘B’ a stranger comes and puts his gun on the head of ‘A’ and asks him to give all his material. Here consent given ‘A’ is under coercion.

In Ammiraju v. Seshamma the court held that coercion may aim against any person, stranger and also against a good for example unlawful detention.

 EFFECT OF COERCION 

When an agreement is made out of coercion then the contract is considered as voidable as the consent has been gained by threatening. The aggrieved party has the right whether they want to enforce the contract or to cancel the contract.

  1. UNDUE INFLUENCE (Section 16)

Section 16 of the Indian Contract Act, 1872 defines the relationship between two parties and one of them has the position to dominate the will of the other party or uses unfair means to obtain the consent then it will be undue influence.

EXAMPLE: – ‘D’ a student sold his mobile phone to ‘E’ his cousin and ‘E’ promise him that he will take him on the trip. So, here consent given by ‘D’ is undue influence by his cousin.

SALIENT FEATURES 

  • Either party that enters into the contract should be in a state of mind to dominate another.
  • The parties who dominate should have taken undue advantage.

PARTIES THAT CAN BE AFFECTED BY UNDUE INFLUENCE

  • Real and apparent authority
  • Fiduciary relationship
  • Parent and child
  • Adult child and parent
  • Husband and wife
  • Lawyer and client
  • Doctor and patient
  • Trustee and beneficiary
  • Creditor and debtor
  • Landlord and tenant
  • A person whose mental capacity is low
  • Old age
  • Tender age

EFFECTS OF UNDUE INFLUENCE 

When an agreement is made out of undue influence then it can be considered as void if the party whose consent is taken by undue influence.

BURDEN OF PROOF 

  • It is important to prove that the person who has dominated the party has actually taken undue advantage and it should also be proved that the person was in a state to dominate.
  • A transfer of gift from one relative to another doesn’t means undue influence.

In the case of Kuna Dei v Md Abdul Latif, it was delivered that showing of the document to the pardanashin women won’t be enough to establish the burden of proof. Thus, he has to show that the women were explained clearly the facts in the document of the transaction.

  1. FRAUD (Section 17)

Section 17 of the Indian Contract Act, 1872 defines fraud as “when a party contract with another party with the intention to deceive amounts to fraud. The party may directly make the contract with the other party or it can be done with the help of an agent even.”

EXAMPLE: – ‘A’ decides to sell his oven to ‘B’. ‘A’ knew that the oven has some defect even he knew of this he sells the oven to ‘B’. So, here ‘A’ has performed a fraudulent act. 

Taylor v. Ashton case, in which the court observed that, the defendant not necessary to show that he knew the fact to be untrue, statement of untrue fact for the fraudulent purpose consider as a legal and moral fraud.

CHARACTERISTICS 

  • When a party conceals the fact from the other party
  • When a party promises to perform an act for the other party but has no real intention to fulfil the promise.
  • The false representation of facts has been made to enter into the contract.
  • The omission of any act which is considered to be fraudulent in the eyes of law.

EFFECTS OF FRAUD 

  • The contract made out of fraud is voidable.
  • The party deceived had the right to revoke the contract.
  • The party has the right to receive compensation for the damages caused by the fraudulent act.

DOES SILENCE AMOUNT TO FRAUD?

  • The silence does not amount to fraud but if the duty of speak exists and the person doesn’t speak then it will amount to fraud.
  • When a person aware of the fraud and still remain silent then they will be convicted of fraud.
  • When both parties enter into an agreement then one party shouldn’t rely on the other party to disclose everything it is the duty of the other party to enquire about each and everything about the agreement.
  1. MISREPRESENTATION (Section 18)

Misrepresentation means a wrong representation of an act.

Section 18 of Indian Contract Act, 1872 defines misrepresentation as “means a positive claim, not guaranteed by the information of the person who creates it, is not true, be true even if he believes. Consent obtained by misrepresentation is voidable.”

CHARACTERISTICS 

  • When either the party makes a misrepresentation of fact then it should be proved that the party himself was not aware.
  • The party must have influenced the other party to enter into a contract.
  • It should be mentioned that the false statement was of material fact and not mere words.

KINDS OF MISREPRESENTATION 

  1. NEGLIGENT MISREPRESENTATION: –

It is a type of misrepresentation which occurs due to lack of duty or carelessness. It established when there exists the duty of a representative to represent everything carefully. A person will be liable only when he neglected the duty mentioned to him.

  1. INNOCENT MISREPRESENTATION: –

When a representative doesn’t have an intention to misrepresent or lacks negligence and fraudulent intention then it’s called innocent misrepresentation. If a person enters into an innocent misrepresentation, then he has a choice to revoke the contract but he is not entitled to get compensation for damages. Here contract wouldn’t be considered void.

EFFECT OF MISREPRESENTATION

  • When the party suffers damage due to misrepresentation while entering into a contract then the party has the right to end the contract. There are two remedies available to the aggrieved party.
  • When the contract is left intact and the party is to be subjected to money damages during the suit.
  • The suit for rescission is to cease the performance of the contract that is to restore the party to the original position.
  1. MISTAKE (Section 20)

Section 20 of the Indian Contract Act, 1872 defines ‘Mistake’ it states that if the parties enter into a contract by mistake then it will be considered void.

EXAMPLE: – ‘A’ decided to sell the dresses to ‘B’ and the agreement was done but ‘B’ wasn’t aware of the fact that the dresses are semi stitched. In this case, the contract will be considered void as they both entered into the agreement by mistake.

TYPES OF MISTAKE 

There are two types of mistake

  1. MISTAKE OF LAW: – 

People should have some knowledge of the law and they should be aware that which act they should be restrained from doing and which act they should do. And when people are aware of the law and even though they made a mistake then there would be no remedy.

In the case of Ram Chandra v Ganesh Chandra, it was seen that the complainant entered into an agreement of lease of coal mining with the respondent. As per the agreement, the complainant made payment in advance to the respondent. But the Privy Council and the decision of the Calcutta High Court questioned the understanding of the law between the parties. Thus the complainant refused to continue the contract and sued the respondent for the refund. Taking precedent of Cooper v Phibbs, it was held that the complainant would be entitled with the refund paid by him

  1. MISTAKE OF FACT: –

When there is a bilateral mistake that leads to a contract void, then it will be considered as a mistake of fact not a mistake of law. This takes place due to the lack of meeting of mind, which is an important element of free consent.

CONCLUSION 

We can conclude that many factors affect the contract. To make a contract there must be free consent by both parties and each party should be loyal towards each other. Meeting of mind is very important for free consent and if there is no meeting of mind then there will be a problem as they can convert the contract in their way.