City academy Law College

LL.B. (3 YEARS) IST Semester

Subject – Law of contract
Unit - III
Unit- III - Validity, Discharge and Performance of Contract Free consent, coercion, undue influence,
misrepresentation, Fraud, mistake, unlawful consideration and object, effect of void, voidable, valid,
unlawful and uncertain agreement/ contracts. Discharge of contract, performance, time and place of
performance agreement, impossibility of performance and frustration breach: anticipatory & present.

Question1- when consent said to be free? (2013,

Answer –free consent is an essential requirement of a contract.

The term consent defined under section 13 of the Indian contract act
1872 section 13 states that the two or more person said to consent when they are agree upon
the same thing in the same sense.This means conscious ad idem.
The term free consent is defined in Sec. 14 of the contract Act. It provides:- "Consent is
said to be free whenis not caused by –
1- Coercion, as defined in section 15, or
2- Undue influence, as defined in section 16, or
3- Fraud, as defined in section 17, or
4- Misrepresentation, as defined in section 18, or
5- mistake, subject to the provisions of sections 20, 21 and 22
Consent is said to be so caused when it would not have been given but for the existence of such
coercion, undue influence, fraud, misrepresentation or mistake.

Further section 19 states the effect when consent not to be free. Section 19 provides that
when consent to an agreement is caused by coercion, fraud or misrepresentation, the
agreement is a contract voidable at the option of the party whose consent was so caused.

A party to a contract whose consent was caused by fraud or misrepresentation, may, if he

thinks fit, insist that the contract shall be performed, and that he shall be put in the position in
which he would have been if the representations made had been true.

For example - A, intending to deceive B, falsely represents that five hundred maunds of indigo
are made annually at A’s factory, and thereby induces B to buy the factory. The contract is
voidable at the option of B.

Further section 19A provides that when consent to an agreement is caused by undue
influence, the agreement is a contract voidable at the option of the party whose consent was
so caused.Any such contract may be set aside either absolutely or, if the party who was
entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to
the Court may seem just.
Question 2- What do you mean by coercion? Explain with the help of decided case law and distinguish
between coercion and undue influence? (2013, 2015)

Answer- The term coercion is defined under Sec. 15 of the Indian Contract Act is provides -
Coercion" is the committing or threatening to commit, any act 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

Explanation.—it is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force
in the place where the coercion is employed.

Essential of coercion-

1-Act must be prohibited by Indian Penal Code 1860.

2-There must be unlawful detention or threat of such detention of property.
3- The above act is done with the intention of causing the other person to enter in to an
agreement.

Illustration - A threatens C that he will shoot his friend B if he does not execute house to him
here A is causing coercion on C.

Rangnayakamma V. AlwarSetti (1860), 13 Mad. 214 the term coercion has been described. In
this case, the husband of a girl of 13 years dies and the relation of the deceased did not allow
the corpse to be removed unless she adopted a child of their choice. The Madras High Court
held that since the adoption was not made by free consent and the act was prohibited under
the I.P.C., it was not binding on her.

In another case of Ammirajee V. Seshamma (1917) 41 Mad 33. A man gave a threat to his wife
and son to commit suicide if they did not execute a release bond regarding some parties which
the wife and son claims their own. By a majority of 2 to 1, the court held, the release deed was
vitated by coercion within the meaning of Section 15.

Illustration- A, on board an English ship on the high seas, causes B to enter into an agreement
by an act amounting to criminal intimidation under the Indian Penal Code (45 of 1860).A
afterwards sues B for breach of contract at Calcutta.

A has employed coercion, although his act is not an offence by the law of England, and
although section 506 of the Indian Penal Code (45 of 1860) was not in force at the time when
or place where the act was done.

Effect of Coercion- Where coercion is caused in an agreement the following results will be there-

1- It will be considered that there was no free consent of the party.

2- The suffering party will be deemed to be an aggrieved one.
3- As per section 19 the contract will be voidable one.
Difference between Coercion and Undue Influence:

Coercion Undue Influence

1. It is a physical force. 1. It is a mental force
2. Coercion is a crime. 2. But undue influence is not a crime.
3. In the coercion it is not necessary that to 3. But in the undue influence it is sure that person
take unfair advantages by the other party. would be taken unfair advantage against party.
3. It can be applied by a stranger. 3.But in undue influence there should be prior
relationship.

Question 3-Discuss about undue influence, misrepresentation, Fraud, mistake.(2021)

Answer-Undue influence – According to section 16(1) of the Indian contract 1872 – A contract is
said to be induced by "undue influence" 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.

According to section 16(2) a person is deemed to be in a position to dominate the will of another-
(a) Where he holds a real or apparent authority over the other, or where he stands in a fiduciary
relation to the other; or

(b) Where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
According to section 16(3) Where a person who is in a position to dominate the will of another, enters
into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to
be unconscionable, the burden of proving that such contract was not induced by undue influence shall
lie upon the person in a position to dominate the will of the other.

Misrepresentation (Section 18)-Misrepresentation” means and includes –

1- The positive assertion, in a manner not warranted by the information of the person
making it, of that which is not true, though he believes it to be true.
2- Any breach of duty which, without intent to deceive, gains an advantage of the person
committing it, or any one claiming under him, by misleading another to his prejudice, or
to the prejudice of any one claiming under him.
3- Causing, however innocently, a party to an agreement, to make a mistake as to the
substance of the thing which is the subject of the agreement.
Fraud – Fraud defines under section 17 of the Indian contract act 1872. ‘Fraud’ means and
includes any of the following acts committed by a party to a contract, or with his connivance,
or by his agent with intent to deceive another party thereto or his agent, or to induce him to
enter into the contract –
1- The suggestion, as a fact, of that which is not true, by one who does not believe it to be true.
 2- The active concealment of a fact by one having knowledge or belief of the fact.
3- A promise made without any intention of performing it.
4- Any other act fitted to deceive.
5- Any such act or omission as the law specially declares to be fraudulent.
Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into
a contract is not fraud, unless the circumstances of the case are such that, regard being had to
them, it is the duty of the person keeping silence to speak2, or unless his silence, is, in itself,
equivalent to speech.
Mistake- Section 20, 21 & 22 of Indian contract act relates to mistake.
According to section 20 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.
According to Explanation of section 20 an erroneous opinion as to the value of the thing which
forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of
fact.
According to section 21 contracts 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.
According to section 22 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.

Question 4-When the consideration and object of an agreement becomes unlawful? And
what is the effect of unlawful consideration and object. ( 2016,2017,2019)
Answer- Unlawful consideration and object – Section 23 of the Indian contract act 1872
related to the unlawful consideration and unlawful object. According to section 23 of the
Indian contract act, the consideration or object of an agreement is lawful, unless—

 It is forbidden by law or
 Is of such a nature that, if permitted, it would defeat the provisions of any law; or
 Is fraudulent; or
 Involves or implies, injury to the person or property of another; or
 The Court regards it as immoral, or opposed to public policy.

According to section 23 the consideration and object are unlawful in the following condition –

1- Forbidden by law
2- Defeat the provision of any law.
3- Fraudulent.
4- Injury to person or property.
5- Immoral.
6- Opposed public policy- the following are the opposed to publicy policy-
a- Trading with enemy.
b- Sale of public offices.
c- Interference in course of justice.
d- Marriage brokerage.
e- Unfair and unreasonable dealings.
 In each of these cases, the consideration or object of an agreement is said to be unlawful. Every
agreement of which the object or consideration is unlawful is void.

Illustrations –

(A) A, B and C enter into an agreement for the division among them of gains acquired or to be
acquired, by them by fraud. The agreement is void, as its object is unlawful.

Effect of unlawful consideration and object-Every agreement of which the object or consideration is
unlawful void.

Question 5- Write the definition of void agreement and which circumstances agreement may
be void? And what is the Effect of void, agreement?
Answer –According to section 2(g) of Indian contract act 1872 “an agreement not enforceable
by law is said to be void”

The following types of agreement are specifically declared void-

1- Agreements void if consideration and objects unlawful in part (section 24).

2- Agreement without consideration is void (section 25).
3- Agreement in restraint of marriage, void (section 26).
4- Agreement in restraint of trade, void (section 27)
5- Agreement in restraint of legal proceedings , void (section 28)
6- Agreement void for uncertainty (section 29)
7- Agreement by way of wager , void (section 30)
8- Agreement contingent to impossible event, void (section 36)
9- Agreement to do impossible act is void (section 56)

1- Agreements void if consideration and objects unlawful in part (section 24)- —If any part of a
single consideration for one or more objects, or any one or any part of any one of several
considerations for a single object, is unlawful, the agreement is void

2- Agreement without consideration is void (section 25) - An agreement made without

consideration is void.

3- Agreement in restraint of marriage, void (section 26) - Every agreement in restraint of the
marriage of any person, other than a minor, is void

4- Agreement in restraint of trade, void (section 27) - Every agreement by which any one is
restrained from exercising a lawful profession, trade or business of any kind, is to that extent
void.
5- Agreement in restraint of legal proceedings , void (section 28) - Every agreement,—
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect
of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time
Within which he may thus enforce his rights; or
 (b) Which extinguishes the rights of any party thereto, or discharges any party thereto, from
any liability, under or in respect of any contract on the expiry of a specified period so as to
restrict any party from enforcing his rights, is void to the extent.

6- Agreement void for uncertainty (section 29) - Agreements, the meaning of which is not certain, or
capable of being made certain, are void.

7- Agreement by way of wager , void (section 30) - Agreement by way of wager , void (section 30)

8- Agreement contingent to impossible event, void (section 36) -Contingent agreements to do

or not to do anything, if an impossible event happens, are void, whether the impossibility of
the event is known or not to the parties to the agreement at the time when it is made.

9- Agreement to do impossible act is void (section 56) - An agreement to do an act impossible in

itself is void.

Question 6- In what way a contract may be discharged? And write about performance, time and place
of performance agreement, impossibility of Performance.
Answer- Discharge of contract –A contract may be discharge in the following way –
1- By the performance of contract (section37 )
2- By the breach of contract ( section 39 )
3- By the impossibility of performance of contract (section 56 )
4- By the novation, rescission and alteration of contract (section 62 )
Performance of contract- The parties to a contract must either perform, or offer to perform,
their respective promises, unless such performance is dispensed with or excused under the
provisions of this Act, or of any other law. (Section 37)

Time and place of performance agreement –

1- When no application to be made and no time specified (Section 46) - Where, by the contract, a
promisor is to perform his promise without application by the promisee, and no time for
performance is specified, the engagement must be performed within a reasonable time.

2- No Application to be made but Time is Specified (Section 47)- When a promise is to be

performed on a certain day, and the promisor has undertaken to perform it without application
by the promisee, the promisor may perform it at any time during the usual hours of business on
such day and at the place at which the promise ought to be performed.
3- Application by the Promisee required (Section 48) - When a promise is to be performed on a
certain day, and the promisor has not undertaken to perform it without application by the
promisee, it is the duty of the promisee to apply for performance at a proper place and within
the usual hours of business.
4- No Application to be made but the Place of Performance is not Specified (Section 49) - When a
promise is to be performed without application by the promisee, and no place is fixed for the
performance of it, it is the duty of the promisor to apply to the promisee to appoint a
reasonable place for the performance of the promise, and to perform it at such a place.

5- Performance as prescribed by the Promisee (Section 50) - The performance of any promise may
be made in any manner, or at any time which the promisee prescribes or sanctions.

Impossibility of Performance - The doctrine of impossibility is a contract law concept and refers
To situations in which it is impossible for a party to a contract to perform its obligations under it.
Section 56 of the Indian Contract Act 1872 states that “an agreement to do an act impossible in
itself is void”

Question 7- What do you mean by frustration of contract? And what is the anticipatory& present
breach of contract? (2017,2019,2021, 2022)
Answer -Frustration of contract – second clause of section 56 of the Indian contract act deals with
the frustration of contract. According to second clause of section 56 of the Indian contract act A
contract to do an act which, after the contract is made, becomes impossible, or, by reason of some
event which the promisor could not prevent, unlawful, becomes void when the act becomes
impossible or unlawful.
For example - A contracts to take in cargo for B at a foreign port. A’s Government afterwards
declares war against the country in which the port is situated. The contract becomes void when war
is declared.

Grounds of frustration or impossibility –

1- Destruction of subject matter of contract.
2- Nonoccurrence of particular situation.
3- Death or incapacity of the parties.

Anticipatory and ; present- When a party to a contract renounces his liability in regard to
performance, then it is called breach of contract. Breach of contract is of two types:
1- Anticipatory Breach: Premature breach of contract is known as anticipatory breach of
contract, which occurs before the date of performance (as fined by the parties) arises.
2- Actual Breach: It occurs when after the date of performance, contract is not performed.
 Sec. 39 of the Act incorporates the principle of anticipatory breach. Where a party to a
contract has refused to perform, or has disabled himself form himself from performing, his
promise in it’s entirely, the promisee may put an end to the contract, unless he has signified,
by words or conduct, his acquiescence in its continuance.
Consequences of Breach-
1- The party who has refused to perform or has disabled himself from performing is excused
from further performance of contract.
2- It entitles the promisee (injured party) to sue immediately for damages or either to wait for
Performance.
Remedies- Injured party has following relief –
1- Prohibitory Relief
2- Declaratory Relief
3- Compensation