Free Consent under Indian Contract Act

Introduction:

Section 2 (h) of the Indian Contract Act, an agreement enforceable by law is a contract[1]. And hence, all agreements as mentioned above do not come under the category of contracts as they are not legally binding for the parties. For example, an agreement to buy a car may amount to a contract but a mere agreement to have food with friends is not a contract.

To make the idea of agreement understood, Section 10 gives the fundamentals of agreement as follows:

• An arrangement between the concerned parties.
• The parties should be equipped to contract
• The thought and object of agreement done would be legitimate
• There should be free ascent of both the concerned parties
• The arrangement shouldn’t be explicitly pronounced void.

Subsequently, the parties must have an understanding and be capable to contract and there must be legal thought and legitimate item with the free consent of both the concerned parties and the agreement done must not be explicitly announced void.

In case of an event that any of the previously mentioned focuses isn’t satisfied by any one of the parties, the agreement is deemed to be void abdominal muscle initio.

Important Sections

Coming up next are some of the sections of the Indian Contract Act identified to be related to free consent. The accompanying table enrolls the areas and definition they give:

Section	Definition
13	Consent
14	Free consent
15	Coercion
16	Undue influence
17	Fraud
18	Misrepresentation
20,21 &22	Mistake

In furtherance of the topic, the following is the definition of all the terms related to free consent.

Free Consent

Section 13[2] defined “Consent” as two or more than two persons who are said to give consent when there is a situation where they agree for the same thing with the same sense.

It is essential to a valid contract and section 10 of the India Contract Act provides for essentials of a valid contract. An agreement would be of free consent if it is not taken by:

• Coercion, (defined in section 15) or
• Undue influence, (defined in section 16), or
• Fraud, (defined in section 17), or
• Misrepresentation, (defined in section 18), or
• Mistake (section 20, 21, and 22 provide for provisions)

Consent is identified as free consent only if it is not obtained by fraud, misrepresentation, mistake, coercion, or any undue influence.

Coercion

Section 15 of the Act defined: “Coercion” is the completing of an act, or threatening to complete of an act forbidden by the Indian Penal Code (45 of 1860) 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.

Hence, coercion is there when:

1. act that is done is forbidden by Indian Penal Code

if any person commits that act which is accepted by the Indian Penal Code as a punishable offense, to get free consent of the other party concerned, then such consent is deemed to be pursued by coercion.

2. there is unlawful detaining of property

If the above-mentioned conditions are done and fulfilled by any of the parties concerned in the case of coercion, it makes the contract voidable.

Undue Influence

The definition of undue influence is provided in section 16 of the Indian Contract Act, 1872.

16. “Undue influence” defined.—(1) A contract is said to be brought about by “undue influence” when the relations existing between the concerned parties are in such a way that any one of the concerned parties is in a position as to dominate the will of the other party and uses it to obtain an advantage that is unfair over the other party.

A person gets a dominant position in the following instances regarding undue influence:

(a) When he has a real or apparent authority over other people, or when he is in a fiduciary relationship with the other; or

(b) When the person he gets into a contract with has a mental capacity temporarily or permanently unfit by reason of age, illness, or mental or bodily distress.

(3) When a person with whom he entered into a contract has abduced the evidence and the other party is not able to prove that the contract was done under the influence of coercion

Nothing in sub-section (2) shall affect section 111 of the Indian Evidence Act, 1872 (1 of 1872).

The doctrine of Undue Influence was created in the Court of Equity in Britain. Furthermore, receiving the English law, the Supreme Court of India observed that the doctrine of undue influence is only a regulation that gives cure if there arises an occurrence of such an impact which isn’t accurate or in those situations where one individual in a prevailing position utilizes his situation to have uncalled for advantage.

Fundamentals of doctrine of undue influence. To establish under influence, the accompanying conditions must be satisfied:

• The connection of the gatherings with the end goal that one gathering is in a situation to rule the other
• Such a position is utilized to get uncalled for an advantage over the other party.

Philip Lukka v. Franscian Affiliation[3], the property was talented by one gathering to another affected by profound mastery. The offended party’s well-being and monetary conditions were bad and since the property was the doctrine of undue influence, it was held that the blessing would be returned to the offended party.

Effect of Undue Influence

When the consent of the parties is obtained by undue influence, the contract is voidable at the option of the party whose consent was so caused[4]. For example, a money-lender, A, give in advance Rs. 100 to an agriculturist, B, and, by undue influence, B is induced to execute a bond for Rs. 200 with an interest at 6 percent. per month. The Court held to set the bond aside, with B liable to repay the Rs. 100 with an interest as may deemed to be fit.[5]

Fraud

A valid contract is made only if the essentials of a valid contract are fulfilled. If there is fraud done to obtain free consent of the concerned party to enter into a contract then, it would not be a valid contract. The following is the definition of Contract under Section 17 of the Indian Contract Act.

17. “Fraud” defined.—“Fraud” means and includes the following acts committed by a party to contract, or by his agent or connivance, with intention to deceive the other party thereto or his agent, or to make him to enter into the contract:—

(1) any suggestion given by a party to another which is not true or is not believed to be true

(2) The concealment of a fact actively by one while having knowledge or belief of the fact;

(3) A promise which is made without any intention to perform it;

(4) Any other act fitted to deceive;

(5) committing any such act which is fraudulent as per the law.

In Derry v. Peek[6], the elements which constitute fraud were described as; fraud is constituted when the representation for obtaining the consent if proved to be made knowingly, without belief in its truth or recklessly, carelessly whether it be true or false is a fraud.

Misrepresentation

Any innocent misstatement or statement that is false is known as misrepresentation.

Section 18 of the Indian Contract Act defined misrepresentation as:

 “Misrepresentation” means that the person who passes the information is not confirmed about the same himself and it is not true or he does not believe it to be true. Apart from that, any breach of duty which would amount to deception, unlawful gain. The fact misrepresented must be an important part of the agreement.

In misrepresentation, the statement given by the party is unintentionally wrong. The party does not know the intention to give a wrong statement. Here, misrepresentation and fraud are different.

Difference between Misrepresentation and Fraud

Misrepresentation	Fraud
The false statement is said by the person unintentionally.	The false statement is made with an intention to deceive the other part.
If the statement is said without intention, it is not fraud.	The false statement is made with the objective to make the other party to enter into the contract.
remedy is not available under tort for innocent misrepresentation.	Remedy is available under tort for fraud.

Mistake

If any contract has been caused by a mistake which is made by both the parties such that they both are in misunderstanding and it is such that they would not have agreed for the contract if they had the knowledge is called a mistake.

Mistake works in 2 ways:

1. When there is no consensus as idem or absence of consent
2. Mistake in a matter of fact

No consensus as idem or Absence of Consent in Mistake

Consensus as idem means the meeting of two minds. That is, there is a mistake when both the concerned parties are not having a genuine agreement. It’s important for both the concerned parties to be having a proper agreement and know the complete conditions of the contract properly and clearly without any ambiguity.

In Tarsen Singh v. Sukhminder Singh[7], the agreement between the parties was not ad idem regarding the unit of measuring land and on this basis, the court held the agreement to be void according to section 20 of the Indian Contract Act.

Mistake in Matter of Fact

it is defined in Section 20 of the Indian Contract Act defines as;

20. Agreement void where both parties are under mistake as a matter of fact[8].—Where both the concerned parties in an agreement are under influence of a mistake of fact which is important for the contract, then it is a mistake as a matter of fact.

Hence, section 20 includes:

1. Both the parties to be under mistake
2. The mistake should be a matter of fact
3. The fact regarding the same should be important to the agreement of the contract

The following sections also inform about the mistake of fact. If the mistake of fact is because of only one party in the contract, the validity of the contract is not affected until the parties want it to be declared void. Section 22 defines it as under;

22. Contract caused by a mistake of a single party as to matter of fact.—the contract would not be voidable only if there is a mistake of fact. Mistake of fact is acceptable while mistake of law is not acceptable for the same.

21. Effect of mistakes as to law.—similar to section 22 of the Act, mistake as to law is not applicable if it is under a law that is not in force when the agreement was done.

Conclusion

After discussing the above-mentioned sections of the Indian Contract Act, 1872, it is concluded that the provisions of free consent under the Indian Contract Act is one of the essentials of a contract. One has to fulfill the essential conditions given under Section 10 of the Indian Contract Act and then only, one can have a valid contract. Free consent is something that is given willing by the concerned parties in a contract and hence if it is obtained by any unlawful means, the contract would simply be void ab initio, on contrary, if there is a mistake, one can consider the contract to be valid or void as per the facts of the case.

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[1] Indian Contract Act, 1872, Act No. 9 o 1872

[2] Indian Contract Act, 1872, Act No. 9 of 1872

[3] AIR 1987 Ker 204

[4] Section 19-A, Indian Contract Act, 1872, Act no. 9 of 1872

[5] Illustration b) Section 19-A

[6] (1986-90) ALI E.R. 1.

[7] A.I.R. 1998 S.C. 1400

[8] Indian Contract Act, 1872, Act No. 9 of 1872