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Sunday, November 23, 2014

Indian Contract Act: Free Consent

Free Consent
Section 13 defines consent as “Two or more persons are said to consent when they agree upon the same thing in the same sense.” Consent of the party’s means, the parties to a contract must mean the same thing in the same sense. It means ‘Consensus ad idem’. For e.g. A have 2 cars – Maruti 800 and Maruti Zen. A offers to sell the Maruti 800 while B accepts the offer thinking the car to be sold is Maruti Zen. Here there is no consent.
Free consent refers to consent which has been rendered by free will of the parties i.e. consent is voluntary. Section 10 of the Act, specifically states that a contract is valid and enforceable if it is made with the free consent of the parties.

Section 14 defines ‘Free Consent’ as – Consent is said to be free consent when it is not caused by –
(i) Coercion, as defined in Section 15, or
(ii) Undue influence, as defined in Section 16, or
(iii) Fraud as defined in Section 17, or
(iv) Misrepresentation as defined in Section 18, or

(i) Coercion: When a person is compelled to enter into a contract by the use of force by the other party or under a threat, ‘coercion’ is said to have been employed.  Section 15 of the Indian Contract Act, 1872 defines coercion as – “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.”
Coercion includes fear, physical compulsion and menace of the goods.  For e.g. A threatens to shoot B if B does not release A from the debt which he owed. B releases A under the threat. The release has been brought about by coercion and therefore voidable at the option of B.

(ii) Undue influence: Undue influence is the term used to demonstrate unfair use of one’s position or power. There is once party who is in a dominant position, while the other party is in a sub-ordinate position. The dominant party exercising its influence over the subordinate party and getting an unfair advantage. Unlike Coercion where there is physical pressure, in undue influence, there is mental pressure.
Section 16 defines as – “ Where 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 uses that position to obtain an unfair advantage over the other.” 

(iii) Fraud: Fraud means cheating. It is intentionally stating something untrue as true. Section 17 defines Fraud as “Fraud means and included any of the following acts committed by a party to a contract or with his connivance, or his agent, which intent to decided another party thereto or his agent, or to induce him to enter into a contract.”

(iv) Misrepresentation: Section18 defines misrepresentation as – “a false representation a fact made innocently or non disclosure of a material fact without any intention to deceive the other party.”The essential features of misrepresentation are
(i) Party to the contract making misrepresentation – The false statement must be by the party to the contract or by his agent or by his connivance. Further it must be addressed to the party who is misled. If not address to the party who has been misled it will not be misrepresentation.
(ii) False representation – The statement made by the party must be false, but the person making statement must honestly believe it to be true.
(iii) Representation as to fact – it is very important that the false statement made must be of material facts. A mere expression of once opinion is not statement of facts.
(iv) Object – The representation must be made with the view to inducing the other party to enter into a contract but having no intention to deceive the other.

(v) Actually acted upon – The innocent party must have actually acted on the basis of the statement which turns out to be false.