FREE CONSENT

Definition of Free Consent

In the Indian Contract Act, the definition of consent is given in Section 14,
which states that “it is when two or more persons agree upon the same thing
and in the same sense”. Free consent serves as an asset in the decisions of
both parties as Free Consent emerges from the mutual trust and cooperation
of both companies. This gives rise to smooth functioning as quarrels and
disputes are reduced to a greater extent because if one party is willing to do
something, the other party will co-operate.

Example
‘A’ agrees to sell his house to ‘B’. ‘A’ owns three houses and wants to sell his
house in Haridwar. ‘B’ thinks he is buying his Delhi house. Here ‘A’ and ‘B’
have not agreed upon the same thing in the same sense. Therefore, there is
no consent and no contract afterwards.

Case Law: Raffles v. Wichelhaus

In the case of Raffles v. Wichelhaus, two parties, ‘A’ and ‘B’, entered into a
contract for the sale of 125 cotton bales by a ship named “peerless” from
Bombay. There were two ships with the same name, and while Party ‘A’ was
thinking of one ship, Party ‘B’ was thinking of the other ship. The court held
that there was no meeting of minds by both parties. Hence the contract was
invalid.
 VITIATING FACTORS AND THEIR
EFFECT

1. Coercion (Section 15)

Section 15 of the Indian Contract Act,1872 states that coercion is committing
or threatening to commit, any act is 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.

Coercion means forcing an individual to enter into a contract. When

intimidation or threats are used under pressure to gain the party’s consent,
i.e. it is not free consent.Coercion may involve the actual infliction of physical
and psychological harm in order to enhance the credibility of a threat. Then
the threat of further harm can lead to the threatened person’s cooperation or
obedience.

Example
‘A’ went out for a walk, ‘B’ approaches ‘A’ with a stranger, pulls out his gun
and asks ‘A’ to give all his possessions. The consent of ‘A’ is obtained by
coercion here.

Effect
Coercion has the effect of making the contract voidable. It implies that at the
discretion of the party whose consent was not free, the contract is voidable.
The aggravated party will, therefore, determine whether to enforce the
contract or to cancel the contract.

Unlawful Detention of property

Consent can be said to be caused by coercion if it is induced because of
illegal confining of a property, or a danger to do as such. With a specific goal
of acknowledging the child’s due fine, the legislature annexed the property
both of him and his father having a place, the instalment made by the father
at that stage bearing in mind the ultimate goal of saving the property from
being sold was kept to be made under coercion.

Burden of proof
The burden of proof lies with the party defending the coercion. The burden of
proof is heavier on him. This is because pure probability or fear is not a
threat. In order to create coercion, a person must show that there was a risk
that was prohibited by law and that forced him to enter into a contract that
he would not otherwise have.

2. Undue Influence (Section 16)

According to Section 16 of the Indian Contract Act, 1872 an influence will be
considered as Undue Influence when:

 One party to the contract is in a position of trust and controls the

other party wrongfully.
 Such a person uses his dominant position to gain an unfair
advantage over the other.
There are two key elements of undue influence-

1. The relationship- trust, confidence, authority.

2. Unfair persuasion- careful examination of the terms of the contract.

Where one party is in a fiduciary relation to the other

party
Fiduciary relationship means a relationship of trust and confidence. When a
person imposes faith and confidence on the other, he expects not to be
betrayed. If the other party betrays the confidence and trust reposed in him
and gains an undue influence.

 Solicitor and client;

 Spiritual adviser and devotee;
 Medical attendant and patient;
 Parent and child;
  Husband and wife;
 Master and servant;

Example
‘A’ sold his gold ring to his teacher ‘B’ for Rs 200 after he had been offered
good grades by his teacher. Here, A’s permission is not given freely, he was
influenced by his teacher.

Effect
The effect of undue influence makes an agreement voidable at the option of
the party whose consent was caused. Any such contract can be set aside.
Only a party to the contract can avoid or rescind the contract. This right does
not lie in the hands of the third party.

Burden of Proof
If the plaintiff wants to bring an action to stop a contract entered into on the
grounds of undue influence, two issues must be kept in mind. The law has
been stated in the Indian Evidence Act, 1872 and Indian Contract Act, 1872.
The law states that in order for a plaintiff to prove that he was under undue
influence, two things must be established

1. Not only must the defendant has a dominant position but,

2. He must use it.
It states that it’s not enough for the plaintiff to show the possibility of undue
influence that may have been exercised by the dominant party. It must be
certain that a person used his position to influence the plaintiff. A possibility
of the same is not enough for the plaintiff to avoid a contract.
  Difference between Coercion and Undue
Influence
Basic Coercion Undue Influence

Through coercion, by
Under the undue
committing an offence
Nature of influence, consent is
or threatening to
Action gained by suppressing
commit an offence,
other party’s will.
consent is gained.

Coercion is typically
physical in nature, in Undue influence is
order to obtain immoral in nature, using
Carried by
consent, it requires a mental pressure to gain
physical force of consent.
violent nature.

Coercion includes a Undue Influence requires

criminal act and is unlawful act and is not
Criminal
punishable under the punishable under the IPC
Action
IPC by a person who by a person who has
commits coercion. done undue influence

Undue influence can only

Coercion does not
be exerted if there is a
Relationship involve a party’s
relationship between
relationship.
two-party.

When coercion induces When consent to an

consent to an agreement is caused by
agreement, the undue influence, it
Agreement agreement is null and becomes null and void at
void at the option of the discretion of the
the party whose individual whose consent
consent is induced. has been so affected
3.Fraud (Section 17)
According to Section 17 of Indian Contract Act, Fraud includes any of the
following acts committed by a contracting party or its connivance or its agent
in order to deceive or induce a party or its agent to enter into the contract:

 The effective concealment of a fact by one who is aware of the fact;

 a promise made without any intention to carry it out;
 any other act fitted to deceive;
 any such act or omission as the law considers to be fraudulent.
Mere silence as to facts likely to affect a person’s willingness to enter into a
contract is not fraud unless the circumstances of the case are such that,
having regard to them, it is the obligation of the silent person to speak or
unless his or her silence is, in itself, equivalent to speech.

Example
‘A’ sells his horse to ‘B’ by auction, which ‘A’ knows to be unsound, ‘A’ tells
‘B’ nothing about the unsoundness of the horse. This is a fraud on the part of
‘A’.

Effect
 The contract arising from fraud is a null contract.
 The misled party has the right to withdraw from the contract.
 Due to the fraudulent agreement, the party is responsible for
recovering the damages.

Evidence and Burden of proof

In a large majority of cases, fraud can not be proved by concrete and
observable proof. It’s hidden in its movement by its definition. If the
evidence given is such as lead to wrongdoing, it is, therefore, appropriate
that fraud must have been committed. In most cases, the only tool for
dealing with fraud issues is circumstantial evidence. If this were not allowed,
the ends of justice would be constantly, if not invariably, defeated.
Simultaneously, fraud involvement is only to be blamed on a deliberate
wrongdoer.

4. Misrepresentation (Section 18)

As per Section 18 of the Indian Contract:

 Misrepresentation means the truth is misrepresented.

 Misrepresentation is the release of deceiving details resulting in the
presumption that the other party will enter into a deal and then
lose. Nevertheless, the information provided by the guilty party is
the result of a genuine belief in the matter. Misrepresentation is said
to be committed.
Firstly, when the deceiving person declares that no justified data is
misleading a person is some way.

Secondly, there is a breach of an obligation that has caused the bias of one
or the other. Lastly, a mistake was committed by a person because of the
misrepresentation of the act or information.

Example
‘A’ told ‘B’ that his radio is in good condition, because of the confidence he
had in ‘A’, ‘B’ bought the radio from him. The radio did not work properly
after some time, ‘B’ thought he was misled by ‘A’, but ‘A’ believed his radio
was in good condition and had no intention of deceiving him. So, here
misrepresentation is in the part of ‘A’, because he did not know that the radio
is not working properly.

Effect
If the party that has suffered as a result of the misrepresentation when
entering into a contract may choose to terminate the contract, rescind the
contract within a reasonable time under the Specific Relief Act 1963.

Burden of Proof
The burden of proof is on the defendant to show that the misrepresentation
was not rendered fraudulently by showing that “He had reasonable grounds
to believe that the evidence portrayed were valid during the time when the
contract was made.” The party making the misrepresentation carries a heavy
burden of proof.

 The distinction between fraud and

misrepresentation
Basis Fraud Misrepresentation

A fraudulent act
intentionally committed by Misrepresentation is known as the
one party to induce the representation of an innocent
Meaning
other party to enter into mistake, which persuades other
the contract is referred to parties to enter into the contract.
as fraud.

Section 17 of the Indian Section 18 of the Indian Contract

Section
Contract Act, 1872. Act, 1872

In order to
mislead the Yes No
other party

In misrepresentation, the party

In fraud, the party making
making the representation
Variation in the representation knows
considers the statement made by
extent of truth that the declaration is not
him to be valid, which later turned
true.
out to be false.

The aggrieved party is The aggrieved party has no right to

Claim
entitled to claim damages. sue for damages to the other party.

The contract is voidable If the truth can be found with

Voidable even if in usual diligence reasonable diligence, then the
the truth can be found. contract is not voidable.

4. Mistake (Section 20)

There are two forms of mistake under Indian Contract Law:

1. The mistake of Fact,

2. The Mistake of Law.

Mistake of Fact
 A mistake of fact arises when one or both of the contracting parties
have misunderstood a term that is essential to the meaning of the
contract;
 Such a mistake may be done due to confusion, negligence or
omission, etc;
 A mistake is never intentional, it is an innocent overlooking.
 Such mistakes can be either unilateral or bilateral

Bilateral Mistake (Section 21)

When both the parties to a contract are under a mistake of fact, essential to
the agreement, such a mistake is known as a bilateral mistake. Bilateral
mistakes are also sometimes referred to as mutual or common mistakes. All
the parties do not agree to the same thing and in the same way, which is the
concept of consent. Since there is no consent, the contract is null and void.

Example
‘A’, agrees to buy a cow from ‘B’, but it turns out that the cow was dead at
the time of the deal, although the fact was not known to any party. The
arrangement is considered invalid.

Unilateral Mistake (Section 22)

A unilateral mistake occurs when only one party to the contract makes a
mistake. The contract will not be void in such a case. It is specified in Section
22 of the Act that the contract will not be void just because one party made
the mistake. So if only one party has made a mistake the contract remains a
valid contract.
Example
‘A’ enters into an agreement with ‘B’ for the purchase of horse which he
assumes to be a racing horse. ‘A’ do not confirm from ‘B’. In actual a horse is
not a racing horse. ‘A’ cannot rescind the contract.

Mistake of law
The mistake may be related to the mistake of Indian laws, or it may be a
mistake of foreign laws. If the mistake applies to Indian laws, the principle is
that the law’s ignorance is not a sufficiently good excuse. This means that
either party cannot claim that it is not aware of the law.

The Contract Act states that, on the grounds of ignorance of Indian law, no
party can claim any relief. This will also include an incorrect interpretation of
any legal provisions.

However, similar treatment is not given to ignorance of foreign law.

Ignorance of foreign law provides some leeway, the parties are not expected
to know foreign law and its meaning. Therefore, under the Indian Contract
Act, an error of foreign law is actually treated as a mistake of fact.

Conclusion
Free Consent is absolutely important to make an agreement with a valid
contract. The importance of free consent cannot be stressed enough. The
Party’s consent must be free and voluntarily. It is necessary to give consent
to the contract without any pressure or delusions. It is essential that the
parties consent is free, as this may affect the contract’s validity. If the
consent has been obtained or caused by coercion, undue influence, fraud,
misrepresentation or mistake, then the aggrieved person has the right to
void the agreement.