Idea of Free Consent under Indian Contract

Author: Sourish Saha, Research Associate

Free consent may be defined as the consent, which is said to be free when it is not caused by coercion (Section 15), undue influence (Section 16), fraud (Section 17), or misrepresentation (Section 18) of the Indian Contract Act, 1872. “Free” consent is said to be so caused when it would not have been given but for the existence of such coercion, fraud, undue influence, misrepresentation or mistake ((Section 14, The Indian Contract Act, 1872. (India).)). Consent is however, agreeing to the same thing in the same sense ((Section 13, ibid.)). The parties to a contract must agree to enter into a contract without any restraint which means that they should not be coerced or be under any kind of undue influence, misrepresentation, fraud or mistake while entering into a contract. When a person has the capacity to force another to do or not do something and the other person cannot resist that the first person is said to have undue influence over the second. When consent is given it must specifically relate to the offer. No law should clearly ban contract of that particular nature ((T.R Desai, The Indian Contract Act and Sale of Goods Act.)).

A young Hindu widow was forced to adopt a boy of a relative under a threat that her husband’s corpse would not be allowed to be removed unless she adopted the boy as her son. The question is whether the adoption is valid or not. In the given case, the adoption is not binding on her since her consent is not free but induced by coercion and threat. Hence, the adoption is void and not valid ((Ranganyakamma v. Alwar Setti ILR 13 Mad 214)).

Component of Consent in Voidable Contract

In a voidable contract, a valid contract can be rescinded at the choice of a party whose consent to the contract was obtained by coercion, mistake, undue influence, fraud or misrepresentation. Such contracts remain valid until they are cancelled by the party who was the victim of any of the conditions mentioned above. However, in case of a void contract, it ceases to be enforceable by law it because of the occurrence of certain subsequent events such as impossibility, repudiation or illegality or of a voidable contract ((J. Beatson, Anson’s Law of Contract, 28th edition, 2002.)).

The Contract Act lays down that if the consent was caused by misrepresentation or fraudulently, or by silence within the meaning of section 17 of the Act, then such a contract is not voidable if the party whose consent was caused had the means of discovering the truth with ordinary diligence.

COERCION

According to Section 15 of the Indian Contract Act, 1872 defines coercion. It is the committing or threatening to carry out any act forbidden by the Indian Penal Code. This also includes unlawful detaining or threatening to detain either property or person to the prejudice of the aggrieved with an intention to compel the person to enter into an agreement. If a husband threatened to suicide unless wife handed over the property to his brother, the court in such cases held that it was coercion ((Chikham Amiraju v. Chikham Seshamma (1917) 41 Mad 33)). Threatening a criminal prosecution if the threat is to file false charges has been held by the Court to be coercion ((Askari Mirza v. Bibi Jai Kishori (1912) 16 IC 344.)).

UNDUE INFLUENCE

If the consent of a party to the contract has been obtained by what the Act defines in Section 16, the consent is not free consent which is needed for the validity of a contract and if the consent has been caused by undue influence then such a contract is voidable at the option of the plaintiff. Section 16 of the Act defines undue influence. Spiritual guru convinced the plaintiff who was also his devotee, to gift his property to the guru. The Court saw that the Guru had the ability to dominate the will of the plaintiff, therefore it was held to be undue influence. This happens to be a fiduciary relationship where undue influence could play a role ((Mannu Singh v. Umadat Pandey (1890).)). The plaintiff entered into a contract to mortgage his house with the bank manager because the bank manager used his position of superiority to influence his will. Such a contract was held voidable ((Williams v. Bayley (1866) LR 1 HL 200, See also Andrew Burrows, A Casebook on Contract. (2nd Edition))).

FRAUD

When the consent of a party to the contract has been obtained by fraud, such a kind of consent is not said to be free consent.  In such a case the contract is voidable at the option of the party whose consent has been so obtained.  Section 17 defines fraud. There should be active concealment of facts, or there should be a suggestion of fact that the person believes it to be true, or that there should be a promise made with an intention not to fulfil it and also that any act which is prescribed under law to be specifically fraudulent may be termed as fraud. Active concealment was adjudicated by the Court when a dealer concealed his previous employment under government to get dealership of a tender. The apex Court allowed the contract to be terminated ((B R Chaudhary vs IOC 2004)). Making a promise without the intention to perform was also held to be fraud ((DDA vs Skipper Construction Company 1996(4) SCC 622)). The Court also held it to be a case of fraud when a Husband got his illiterate wife to sign papers saying that he was mortgaging her two lands but actually he mortgaged four ((Ningawwa vs Byrappa 1968 AIR 956)).

MISREPRESENTATION

It may be defined as making a statement in a manner that is unwarranted by the information of the person making it which results in any breach of duty which without an intention to deceive, gains an advantage causing, innocently another party to commit a mistake as to the subject of the agreement. Husband was not informed of the risks and failure rate of vasectomy before the operation resulting in the wife becoming pregnant and the hospital was held guilty of misrepresentation. The Court also ordered the hospital to pay damages for all the pains and expenses of delivery ((Thake vs Maurice [1986] QB 644)). Inducing mistake about subject matter was held to be misrepresentation. A car dealer put a notice on a car that the mileage is incorrect even though he knew that the reading was grossly incorrect and therefore the plaintiff’s consent was held to be not free as it was a misrepresented to him ((Farrand vs Lazarus (2002) 166 JP 227 )).

Mistake

The Term mistake has not been defined under Indian Contract Act. Simply means an erroneous belief about something. Section 20-22 deals with mistake. 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 ((Section 20)). A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact ((Section 21)). 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 ((Section 22)).

To make an agreement void on account of mistake, mistake must be common or mutual. A contract will not be void merely because of unilateral mistake.

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