This article is written by Srishti Chawla, 5th-year student, Amity Law School, Noida.
What is Free consent?
Free Consent is a vital part of a sound contract. But how does the law determine if two parties have willingly and knowingly entered into a contract? For a contract to be enforceable consensus ad idem i.e meeting of minds of all the parties involved is necessary.
According to Section 13 of the Indian Contract Act, 1872 two or more persons are said to be in consent when they agree on the same thing in the same sense (Consensus-ad-idem). This means that the two parties must have the same understanding with regards to the subject matter of the contract. If consent is gained by coercion or even mistake the contract will not be considered enforceable by law.
For Example- Ankita agrees to sell her house to Ira. Ankita owns three houses and wants to sell the house in Delhi. Ira thinks she is buying her Mumbai House. Here there is no Consensus-ad-idem between Ankita and Ira. Hence there is no consent and therefore no contract between them.
In Raffles vs Wichelhaus(1864), two parties part A and part B entered into a contract for sale for 125 bales of cotton arriving from Bombay by a ship named “Peerless”.There were two ships with the same name and while party A had one ship in mind, Party B had the other ship in mind. It was held by the court that both the parties were not ad idem and therefore the contract was void.
Consent when considered “not free”
The parties in a contract might agree upon the same thing in the same sense but mere consent is not enough, consent must also be free to complete the validity of a contract.
*When there is no consent, there can be no contract at all and the agreement will be considered void.
*When there is consent but not free consent, the contract is considered voidable at the option of the party whose free consent was not taken.
According to section 14 of the Indian Contract Act, 1872, consent is said to be free when it is not caused by-
1)Coercion– as defined in section 15
2)Undue Influence -as defined in section 16
3)Fraud – as defined in section 17
4)Misrepresentation- as defined in section 18;or
5)Mistake– subject to the provisions of section 20,21,22
If consent is given under any of the above four circumstances, the contract is considered voidable and shall be considered enforceable only at the option of the aggrieved party(section 19 of Indian contract act,1872).
If the consent is caused by a mistake of fact of both the parties, the contract shall be considered void.
Thus for the formation of a valid contract, it is essential that there should be free consent of both the parties.
These 5 ingredients of free consent are considered below in the necessary details:
According to section 15 of the Indian Contracts Act,1872 coercion is –
- Committing or threatening to commit any act forbidden by the Indian Penal code.
- The Unlawful threatening or unlawful detaining of any property to the prejudice of any person.
-With the intention of causing the other person to enter into an agreement.
It is, however, immaterial whether the Indian Penal Code is or is not in force in the place where the coercion takes place.
Illustration– Party A uses criminal intimidation as a means of entering into an agreement with B on the high seas while aboard on an English ship. Later on, A sues B for breach of contract while in Mumbai. Although this act is not an offense under the English law and section 506 of the Indian Penal Code was not in force when the act took place yet it is said that A has employed coercion.
Coercion might be employed by a party to the contract or a stranger to the contract and might be aimed at a party to the contract or a stranger to a contract but the only important thing is that the intention of the party resorting to coercion should be to cause an individual to enter a contract.
Section 72 of the Indian Contract Act, 1872 says that if anything is delivered or if any money is paid to another person while under the threat of coercion, then it is the liability of the person who has received such an item to repay or return it back to the original owner.
Illustration– A Home shifting service refused one of its clients the delivery of certain agreed goods unless they paid an illegal service charge for the goods. The client paid the charge in order to receive the items but he is entitled to recover the amount of illegal charge that was paid from the company.
The burden of proof lies on the person who he avoiding the contract i.e the person whose free consent has not been taken in order to enter into a contract.
The threat to commit suicide
Chikkam Ammiraju and Ors. v. Chikkam Seshamma and Anr(1917)
In this case, a husband threatened his wife and son to commit suicide if they did not release a sale added in favor of his younger brother. They executed the deal but later filed a plea of coercion. Since the very act of committing suicide is forbidden under the Indian Penal Code,1860.
Held that threat to commit suicide also amounts to coercion and the party who is affected by it has the right to avoid the contract.
When the relations between two parties areas such that one of the party is in a position to dominate the will of the other party and use that position to gain an unfair advantage over the other it amounts to undue influence under section 16 of the Indian Contracts Act,1872.
Therefore any influence with the help of which free and deliberate judgment is excluded is called undue influence.
According to section 16(2), a person is said to have a dominant position when-
1)He is involved in a relationship involving trust and has real authority.
2)He is involved in a contract with a person whose mental capacity is permanently or temporarily affected due to age, illness or mental or bodily distress.
Illustration– A, An old sick man is induced by B’s influence over him being his medical caretaker.B demands an unreasonable amount from A as medical treatment fees.B is said to have employed undue influence over A.
Important questions for consideration by the court for dealing with undue influence
1)Whether the contract is something that a person having a righteous mind will enter into or not.
2)Whether the person was in the right frame of mind to understand what he was doing.
3)Whether the matter was such that required legal advice or not.
4)Whether the person giving a gift had the intention of giving originating from himself and not due to the influence of others.
Lingo Bhimrao Naik v. Dattatrya Shripad Jamadagni
In this case, the mother of an adopted son was alleged to have used undue influence on her son in order to gain consent when he reached the age of majority to ratify the gift deeds made to her daughters with regards to non watan property and did not let him consult his natural father.
Held -The adoptive mother used her position of authority to dominate her son into ratifying the gift deeds nor was the son aware of his legal rights, therefore, the court set aside the matter.
Consent is not considered to be free when it has been gained by fraud. Fraud is a false representation of facts with the intention to deceive the other party. Fraud is proved when false representation has been made-
2.Without belief in its truth
- Recklessly whether it is true or not
So according to Section 17, a fraud is when one party convinces another party to enter into an agreement by-
1.Suggesting a fact that is not true or which he does not believe it to be true(Suggestio falsi)
2.Active concealment of facts while having knowledge of the fact(Suppresio veri)
3.Making a promise made without any intention of performing it.
4. Performing any other such act with the intention to deceive.
5.When the act is considered fraudulent by the court.
Section 17(1) says that to constitute fraud, there should be a statement of fact which is not true. The mere expression of opinion shall not constitute a fraud.
A man above insurable age i.e 60 years claims that he is 50 years old in order to take an insurance policy. This amounts to fraud and the insurer is entitled to avoid the policy.
Mere silence not fraud
Section 17 clearly states that mere silence does not constitute fraud. But Active concealment of facts requires efforts to conceal the truth therefore when silence amounts to active concealment of facts, it amounts to fraud.
In Bimla Bai vs Shankarlal (AIR 1959), A father called his illegitimate son, “Son” at the time of fixing his marriage. It was held that the father knowingly concealed the illegitimacy of the son with the intention of deceiving the Brides parents which amounted to fraud.
1)When there is a duty to speak, keeping silence is fraud.
2)When silence is in itself equivalent to speech, silence is considered fraud.
In KIRAN BALA vs. BHAIRE PRASAD SRIVASTAVA(1982), the first marriage of the appellant was annulled on the grounds that she was not of sound mind at the time of marriage. She was married for the second time to the respondent keeping the reason for the annulment of the first marriage a secret from the groom and his parents. It was held by the court that the consent of the groom has been attained through fraud and it annulled by a decree under the Hindu marriage act.
Misrepresentation is defined under section 18 of the Indian Contracts Act and can be divided into 3 types-
1)First is when the statement is made about a fact which is not true, though he believes it to be true.
2)Second is the type when there is a breach of duty by a person who is making the false statement and he gains some kind of advantage even though it wasn’t his intention to deceive the other party.
3)The third type is when one party acts innocently and causes the other party to make any mistake with regards to the subject matter of the agreement.
The common point between the three types is that the misrepresentation is an innocent mistake made without the intention to deceive the party.
The burden of proof lies on the party whose consent has been gained through misrepresentation and is voidable at the option of the aggrieved party although he cannot sue the other party for damages.
Ira said that her radio is in good condition and Ankita bought the radio from her because of the trust she had in Ira. After some time the radio did not work properly and Ankita thought she was misled by but Ira believed that her radio was in good condition and had no intention to deceive.
A mistake under Indian Contract Law is considered to be of two types-
1)Mistake of Fact
2)Mistake of law
Mistake of fact
When there is a misunderstanding of fact by both or one of the parties, it is considered to be a mistake of fact. The mistake of fact can be of 2 types-
Section 20 says that when both the parties do not agree on the same thing in the same sense and therefore are under a mistake of fact which is essential to the contract, they are said to have committed a Bilateral mistake. This contract is said to be void.
Ankita agrees to buy from Ira a certain cow but it turns out that the cow was dead at the time of bargain though neither party was aware of the fact. The agreement is considered to be void.
Section 22 says that if one person has made a mistake of fact, the contract will not be void or voidable and will remain a valid contract unless the mistake of fact is regarding the subject matter of the contract or the identity of the person contracted with.
In Dularia Devi v. Janardan Singh(1990), The plaintiff an illiterate woman wanted to gift her properties to her daughter. Her thumb impressions were taken on two documents which she believed were gift deeds in favor of her daughter while in reality, the second deed was in favor of the defendants who were executing the deed. Later she filed a suit for cancellation of the sale deed and it was held that the since the woman had absolutely no idea of the nature of the second document,it was considered void.
Mistake of Law
Section 21 of the Indian Contract Act,1872 is based on the maxim- Ignorantia Juris non-exusant which means ignorance of the law is no excuse. Hence it provides that a contract is not voidable because it was caused by a mistake as to any law in force in India.
1)Private Rights of Property-aA party cannot fully know the private rights of the other party, therefore it is excusable.
2)Mistake as to any foreign law is considered to be treated like a mistake of fact and is considered excusable since knowledge of foreign laws is not necessary.