FREE CONSENT Unit 4
CONSENT
Sec 10- Essentials
Sec 13- Consensus ad idem- agree upon same thing in the same sense
Sec 14- what is not free consent
Sec 15- coercion
Sec 16- undue influence
Sec 17- fraud
Sec 18- misrepresentation
Sec 20, 21 and 22- mistake
EXAMPLES
A threatens to harm B if B doesn’t agree. B agrees to the terms of the contract
A is a doctor of B, an elderly and sick person. B agrees to pay unreasonable amount
for A’s services
A persuades her mother, an illiterate person, to sign on a blank paper claiming it for
drafting a rent agreement but instead drafts a sale agreement
A sells the Taj Mahal to B, claiming it to be a farm house owned by A.
A Laptop worth of 25,000 is available for sale at 5,000.
Website posting incorrect price of products and later cancel the order.
COERCION- SEC 15
Ingredients: forcing to consent by
A) causing threat to commit acts forbidden by IPC
B) unlawful detaining or threat to detain any property
Eg. Threatening to go to court- Askari Mirza vs Bibi Jai Kishore
Threatening to file a false case
Chikham Amiraju vs Chikham Seshamma- threat to commit suicide for sale of
property
UNDUE INFLUENCE- SEC 16
(1) Meaning of undue influence
Person in position to dominate the will of other
(2) dominate the will is possible
A) person holds real or apparent authority/ fiduciary relation
B) other person is mentally incapable due to age, illness or mental or bodily distress
(3) burden of proof – on the person who is in a position to dominate the will of the
other
CASE LAWS
Clause 1
Manu Singh vs Umadat Pandey- Gifting of property for going to heaven
William vs Bayley- Bank manager obtains mortgage by threatening prosecution against son
Clause 2- Police officer and accused, employer and employee
Lawyer and client, doctor and patient, spiritual advisor and devotee
Moody vs Cox- fiduciary relation and expectation of truth
Clause 3- Presumption of undue influence
Ladli Prasad vs Karnal Distillery- If defendant can dominate the will of plaintiff
Smt. Takri Devi vs Smt. Rama Dogra- property gifted to lawyer
PRESUMPTION OF UNDUE
INFLUENCE
1. Unconscionable bargain
Raghunath Prasad vs Saraju Prasad
1) dominant position must be established, undue influence and onus follow
2) persons of equal footing- no presumption
3) Hard bargains- not a ground in itself
Held: Money lender was not in a position to dominate his will. It was only a hard
bargain
UNDUE INFLUENCE
Subhas Chandra Das vs Ganga Prasad
Grandfather gifting property to grandson four years before his death
Held: No undue influence
Lakshmi Amma vs Talengal Narayana Bhatta
Deed executed in nursing home by old lady
Held: undue influence
UNDUE INFLUENCE
2. Economic Duress- Inequality of Bargaining Power
Exploitation of the needy
Promoda Nath vs Kinoo Mollalli-landlord and tenant
COERCION AND UNDUE
INFLUENCE
Coercion- force used for obtaining consent
Undue influence- moral pressure used to obtain consent
Remedy- Contract is voidable at the option of the person giving consent
Sec 19- Party avoiding the contract must restore any benefit obtained
Sec 19A- contract set aside absolutely or subject to terms and conditions
FRAUD
Sec 17- Essentials
1) A false statement of fact by a person who himself does not believe it to be true
2) There must be wrongful intention i.e an intention to deceive and induce the other
party to enter into the contract
Intentional misrepresentation is the essence
Statement by the party to the contract
No fraud if the person making the statement believes it to be true.
CASE LAWS
Derry vs Peek
Rex vs Kyslant
Attempt to deceive is not fraud
Horstall vs Thomas
MERE SILENCE AND FRAUD
Explanation to Sec 17
Caveat Emptor- Buyer beware
Exceptions:
1. Duty to speak- London Assurance Co. vs Mensal
2. Silence equivalent to speech- Illustration (c)
3. If person speaks then duty arises to disclose the whole truth- Bimla Devi vs Shankar Lal
Shri Krishna vs Kurukshetra University- discovery of truth by ordinary diligence
MISREPRESENTATION
Consent given under misrepresentation- Voidable contracts
Sec 18
Essentials:
1. person makes a false statement believing it to be true
2. There is no intention to deceive the other party
3. Misrepresentation has induced the other party to consent
MISREPRESENTATION
Types of Misrepresentations
1. Unwarranted statements- Derry vs Peek
2. Breach of duty-
3. Inducing mistake about subject-matter
FRAUD VS
MISREPRESENTATION
1. Knowledge of the fact
2. The consenting party can sue for damages for tort of deceit in case of fraud
3. The consenting party cannot avoid the contract if discovery of truth was possible
in case of misrepresentation
In case of fraud discovery of truth is not a defence unless fraud is committed through
silence.
RIGHT OF RESCISSION OF
CONTRACT
Contracts which lack free consent are voidable except where consent is given due to
mistake.
Sec 19- coercion, misrepresentation and fraud
Sec 19A- Undue Influence
Illustrations to the section
RIGHT OF RECESSION
Limitations
1. Consenting party affirms the contract. Long vs Lloyd
2. Lapse of time. Leaf vs International Galleries
3. Third party acting in good faith acquires the right in the subject matter
Exception:
In case of misrepresentation- discovery of fact- Illustration (b)
Kamal Kant vs Prakash Devi
MISTAKE
Consent obtained by mistake- void contracts
Sec 13- No meeting of mind
Sec 20- Mistake as to matter of fact essential for the contract
Essentials
A) Both parties are mistaken
B) Mistake is about a fact
C) Fact is essential for the agreement
MISTAKE AS TO IDENTITY OF
THE PARTIES
Boulton vs Jones
Jaggan Nath vs Secretatry of State of India
Cundy Vs Lindsay
Philips vs Brooks
Ingram vs Little
MISTAKE AS TO SUBJECT
MATTER
Subject matter ceases to exist-
Illustration (b)
Parties have different subject
matters in mind
Tarsem Singh vs Sukhminder
Singh- mistake about unit of
measuring land
MISTAKE ABOUT NATURE OF
PROMISE
Plea of Non est factum- Mind did not go with the pen,
Eg Gift deed and power of attorney- Bala Devi vs Shanti
Mazumdar
Ningawwa vs Byrappa Hirekurabar- Difference between
mistake relating to character of a document and mistake
relating to contents- Former is void and latter is voidable
LIMITATIONS
Mistake operates to avoid an agreement provided
1. Mistake of both the parties
Sec 22- unilateral mistake does not make the contract void
2. Erroneous opinion- not a mistake
3. Mistake of fact and not of law- Sec 21
Rolyanpur Time Work vs State of Bihar- effect of registration
Questions and clarifications in class
APPLICATIONS
Mr. X had appointed Ms. Y as his lawyer for a property dispute. Mr X won the case
but Ms. Y refuses to hand over the property documents unless Mr X agrees to
appoint her as his in house counsel for the next 10 years. Mr X agrees but after later
wants to cancel the contract on the basis of lack of free consent.
Decide
APPLICATION
A poor widow, who was in great need of money to establish her right to
maintenance, was persuaded by a money lender, to agree to pay 100% rate of
interest. She wants to avoid the contract.
Argue on behalf of the poor widow.
APPLICATION
A is a business tycoon and B is a collector in Bangalore. They both are best friends.
A wants the assistant collector of Bangalore to contract with A for purchasing certain
good manufactured by A’s company. B persuaded the assistant collector to grant the
tender to A.
The Assistant collector later wants to cancel the tender. Advice
APPLICATION
Mr. A sold his auto, worth of 1.70 K for 50 K , to Mr. B, as he was in need of money
to pay for the medical expenses of his son, who had met with an accident. Mr A has
now applied for cancellation of the sale agreement on the ground that his consent
was not free.
Decide
APPLICATION
A is selling his Audi A4 (worth of 50 lakhs), to B for Rs 10 Lakhs. A is aware that
the car has a slight defect with the breaks and the engine. However, A does not
disclose the same to B. B purchases the car and finds out that the breaks and engine
is defective. B wants to cancel to contract for lack of free consent.
Argue on behalf of A
THEORY
Explain the principle of non est factum and comment on its rationality when applied
in reference to a document executed by a well educated person
