FREE CONSENT

REQUIREMENTS OF
“ FREE CONSENT”

• There should be
consent
• The consent must be
free
WHAT IS CONSENT…
•Section 13 defines …
“ Two or more persons are
said to consent when they
agree upon the same thing in
the same sense”
i.e. Consensus Ad idem
FREE CONSENT
Section 14, consent is said to
be free when it is not caused
by:
•Coercion (sec 15)
•Undue – influence ( sec 16 )
•Fraud ( sec 17 )
•Misrepresentation ( section
18 )
•Mistake ( sec 20,21,22 )
 Coercion
• In simple words coercion means forcibly
compelling a person to enter into a contract.

• X threaten to kidnap Y’s son if he does not

lend rs. 50,000 to Z. Y agrees to lend the
amount to Z. Though the
coercion proceeds from X
against Y’s son, yet the
agreement is entered under
coercion.
 COERCION… Definition
• Section 15 defines coercion as follows -
“ Coercion is committing or threatening to
commit any act forbidden by the
Bangladesh 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 agreement”
 When is consent caused by
coercion…

• Committing or threatening to commit any

act forbidden by penal code of Bangladesh
– X threatens to kill Y if the latter does
not agree to sell his diamond ring for Rs.
1500. ( Threat to kill is forbidden by Panel
code )
 Case: Ranganayakamma Vs.
Alwar Settey
• A Hindu girl of 13 years, who had just lost
her husband, was forced to adopt a boy of
their choice by her relatives who refuses
to remove the dead body of her husband
unless she consented to the adoption. It
was held that the adoption was not binding
on her since her consent was obtained by
coercion. Any person who obstructed the
dead body from being removed would be
guilty of an offence under section 297 of
IPC.
• Unlawful detaining or threatening to detain
any property :
Muthua Vs. Muthu Karuppa – an agent refused
to hand over the account books of business
to the new agent sent in his place, unless the
principal released him from all liabilities &
such release had to be given before the new
agent could get the books. Held that the
release deed was voidable.
 CONSEQUENCES OR EFFECT
OF COERCION
• The contract is voidable at the option of
party whose consent was obtained by
coercion.
• Any benefit has to restored back.
• If the aggrieved party does not opt to set
aside the contract, it works as a valid
contract.
• Does threat to commit suicide amount to
coercion – Yes
Is threat to commit suicide
amount to coercion?
 Madras high court has held by a majority
judgment that even a threat to commit suicide
is coercion.
 Example: A man by giving a threat to commit
suicide induces his wife and son to execute a
deed in favour of him in respect of certain
property and they execute. Held that the
consent of the wife and son has obtained
through coercion.
 UNDUE INFLUENCE

• The strong mind overpower the weak mind

of a person & induces him to do which he
would not have done if left to his own
judgment. It is a kind of mental coercion.
• The presence of undue influence at the
time of contract has to be proved by the
party alleging that undue influence
existed.
UNDUE INFLUENCE… definition
• Section 16
“ A contract is said to be induced by undue –
influence where :
(a). The relation subsisting between the
parties are such that one of the parties is
in a position to dominate the will of the
other.
(b). He uses the position to obtain an unfair
advantage over the other.”
Example of Undue influence
 Person is deemed to be in
position to dominate the
will of another…
1. Where a person holds a real or apparent
authority over the other:-
(b) Master & servant
(c) Moneylender & borrower
(d) Police officer & accused
(e) Income tax officer & assesee
2. Where a person stands in a fiduciary
relation to the other: A relationship of
trust & confidence.
• Father & son, Advocate & client, Doctor
& patient
Case : MOODY V. Cox
X, sold a certain property to one of his
clients Y. Y filed a suit upon X claiming
that the property was over – valued &
that his consent was caused by undue
influence. The court held that since the
relationship X & Y is of client ( fiduciary)
the existence of undue influence can be
presumed.
3. Where a party to a contract is a person
of mental distress – When a person’s
mental capacity is temporarily or
permanently affected due to advance age
or mental or bodily illness.
CONSEQUENCES OF UNDUE _
INFLUENCES

•The agreement becomes

voidable at the option of the
aggrieved party.
•Aggrieved party may refund the
benefit.
•If the aggrieved party does not
opt to set aside the contract, it
works as a valid contract.
 Difference between
coercion and undue influence

Coercion Undue Influence

The consent of the aggrieved party The consent of the aggrieved party
is taken by committing or is obtained by dominating the party
threatening to commit an act by taking an unfair advantage of his
forbidden by the penal code. position.

Physical force is exercised Moral force is used in undue

influence
Relationship between the promisor Some sort of relationship must exist
and the promisee is not necessary between the two parties to the
contract
 MIS-REPRESENTATION

• The word ‘representation’ means a

statement.
• A representation which is false or
misleading is known as misrepresentation.
• It may be innocent or intentional
 Section 18 … defines
Mis- representation
• Unwarranted positive assertion – X says to
Y who intends to purchase his land that it
produces 50 quintals of wheat per acre. X
believes the statement to be true,
although he did not have sufficient
grounds for the belief. Later on, it was
found that land produces only 30 quintals
of wheat per acre. This is
mis – representation.
 ESSENTIALS OF
MIS - REPRESENTATION
• There should be a representation of facts-
not opinion or intention or mere sales talk
• Representation is untrue
• The representation induces the other
party to enter into a contract.
• The party making representation does not
intend to deceive the aggrieved party.
• The party who relied on the untrue
statement suffer from loss.
 CONSEQUENCES OF MIS-
REPRESENTATION
• The contract is voidable at the option of
aggrieved party.
• Can rescind

• Loss of recission- cant be restored, after

knowing further uses it
 FRAUD
• When any person makes to another a
statement which he does not himself
believes to be true to induce the latter to
enter into the contract, he commits a
fraud.
INTENTIONAL MIS – REPRESENTATION
AMOUNTS TO FRAUD
ELEMENTS OF FRAUD
•To constitute fraud there must
be making a false
suggestion – X says
to Y that his coat is made of
pure wool, though he knows that
it is untrue. Y purchases the
coat believing X’s statement
true. It is a fraud by X and
contract is voidable.
• Relate to material fact- not opinion
• To constitute fraud there must be an
active concealment of fact. ( Cracked Hoof
of a horse )
• Before conclusion of contract- A promise
made without any intention of performing
it.
• Other party must have relied and been
deceived
•
• Types of Misrepresentation:
• Fraudulent: A statement made with
knowledge that is untrue or without
believing it to be true or careless whether
it is true or false
• Negligent: A statement made in the belief
that it’s true but without reasonable
grounds for that belief
• Innocent:A statement made in the belief
that it’s true and with reasonable grounds
for that belief. It’s a misrepresentation
made without fault.
 WHEN DOES SILENCE
AMOUNT TO FRAUD
• Ordinarily, a mere silence does not amount
to fraud.
• Exceptions :
• In contracts of extreme good faith
(uberrimae fidei) there’s a duty to
disclose the material facts which one
knows. Non disclosure can lead to the
contract being voidable for
misrepresentation. For example-
i. Contracts of insurance
ii. Contracts in relation to sale of land
(in regard to defects in title)
iii. Prospectus inviting a subscription
for shares (in regard to statutory
matters)
iv. It is the duty of the person keeping
silence to speak – in fiduciary
relations, such as between solicitor
and client
• Silence is, in itself, equivalent to speech-
• A sells by auction to B, a horse which A
knows to be unsound. A says nothing about
the horse’s unsoundness. B says to A – ‘ if
you do not deny, I shall assume that the
horse is sound” A says nothing. Here A’s
silence is equivalent to speech.
 CONSEQUENCES OF FRAUD
• Voidable
• Can insist on performance if put in same
position.
• May claim damages
 Fraud vs Misrepresentation
1. Fraud is a deliberate misstatement of a material fact.
Misrepresentation is a bonafide representation of
misstatement believing it to be true which turns out to
be untrue.
2. Fraud is done to deceive the other party, but
Misrepresentation is not done to deceive the other
party.
3. In fraud, the aggrieved party can claim damages for
any loss sustained. On the other hand, in
misrepresentation, the aggrieved party cannot claim
damages for any loss sustained.
4. In misrepresentation, the defendant can set up a
defense that the aggrieved party had sufficient mean
to discover the truth. But in fraud, this remedy is not
available.
 MISTAKE
• When the parties do not agree on the
same thing in the same sense because of
some misunderstanding, it is known as
" MISTAKE”
TYPES OF MISTAKES
 Mistake of Law
• If the mistake is regarding Bangladeshi laws, the
rule is that the ignorance of the law is not a good
enough excuse. This means either party cannot
simply claim it was unaware of the law.
• The Contract Act says that no party shall be
allowed to claim any relief on the grounds of
ignorance of Bangladeshi law. This will also include
a wrong interpretation of any legal provisions.
• But ignorance of a foreign law is not given a similar
treatment. The parties are not expected to know
foreign legal provisions and their meaning. So a
mistake of foreign law is in fact treated as a
• mistake of fact under the Contract Act.
 Mistake of Fact
• A mistake of fact occurs when both the
parties misunderstand each other leaving
them at a crossroads. Such a mistake can be
because of an error in understanding, or
ignorance or omission etc. But a mistake is
never intentional, it is an innocent
overlooking. The contract is void if there is
a mistake of fact.These mistakes can either
be unilateral or bilateral.
 Bilateral Mistake
• When both parties of a contract are under a
mistake of fact essential to the agreement, such
a mistake is what we call a bilateral mistake. Here
both the parties have not consented to the same
thing in the same sense, which is the definition of
consent. Since there is an absence of consent
altogether the agreement is void.
• For example, A agrees to sell to B his buffalo.
But at the time of the agreement, the buffalo
had already died. Neither A nor B was aware of
this. And so there is no contract at all, i.e. the
• contract is void due to a mistake of fact.
• For example, if two people agree to buy and
sell a car, but they both mistakenly believe
that the car has a working engine, when in
fact it does not, this is a bilateral mistake.
The contract may be voidable because both
parties were mistaken about a material fact
that was essential to the agreement.
• Another example of bilateral mistake is
when two parties agree to a contract, but
they have different understandings of a key
term. For instance, if a buyer and seller
agree to a sale of "widgets," but the buyer
believes that the term refers to a specific
type of widget, while the seller believes it
refers to a different type, this is a bilateral
mistake. The contract may be voidable
because both parties were mistaken about
the meaning of a material term.
 Unilateral Mistake
•A unilateral mistake is when only one party
to the contract is under a mistake. In such a
case the contract will not be void. So the
Section 22 of the Act states that just
because one party was under a mistake of
fact the contract will not be void or
voidable. So if only one party has made a
mistake of fact the contract remains a valid
contract.
 Exception:
However, there are some exceptions to this. In
certain conditions, even a unilateral mistake of fact
can lead to a void or voidable agreement.
When Unilateral Mistake is as to the Nature of
the Contract:
In such a case the contract can be held as void. Let us
see the example of Dularia Devi v. Janardan Singh.
Here an illiterate woman put her thumb impression on
two documents thinking they were the same. She
thought the document was to gift some property to
her daughters. But the other document was a Sale
deed to defraud the women out of more of her
property. This contract was held void by the
courts
When the Mistake is regarding the Quality of
the Promise:
There was an auction being held by A to sell hemp
and tow. B thinking the auction was only for hemp,
mistakenly bid for a tow. The amount bid was on par
for hemp but very high for a tow. Hence the
contract was held as voidable.

Mistake of the Identity of the Person contracted

with: For example, when A wants to enter into a
contract with B but mistakenly enters into a
contract with C believing him to be B.
Q: A mistake of law always leads to a valid
contract. True or False?
Ans: The statement is False. A mistake of Bangladeshi law is
regarded as a valid contract since ignorance of the law is
not a good enough excuse. But a mistake of foreign law is
considered as a mistake of fact, and if such a mistake is
bilateral it will lead to a void contract.