FREE CONSENT: COERCION, UNDUE
INFLUENCE, FRAUD,
MISREPRESENTATION AND MISTAKE
DR. JASDEEP KAUR
ASSOCIATE PROFESSOR
CHANDIGARH LAW COLLEGE
Consent
• Section 13. “Consent” defined.—Two or more persons are said
to consent when they agree upon the same thing in the same
sense.
Free Consent (Section 14)
“Free consent” defined.—Consent is said to be free when it is 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.
Coercion Defined (Section 15)
• “Coercion” defined.—“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.
Essentials of Coercion
• Act forbidden by Indian Penal Code
• Unlawful detaining of Property
To the prejudice of a person
Threat to strike or statutory compulsion is no coercion
Duress under English Law
Difference between Duress and Coercion
Case Law
• Ranganayakamma v. Alwar Setti ILR (1889) 13 Mad. 214.
• Chikkan Ammiraju v. Chikkam Seshamma ILR (1918) 41 Mad.
33.
• Andhra Sugars Ltd. V. State of A.P. AIR 1968 SC 599.
• Skeate v. Beale (1840) 11 A & E 983.
• Krishan Lal Kalra v. N.D.M.C. AIR 2001 Delhi 402.
Undue Influence (Section 16)
(1) 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.
(2) In particular and without prejudice to the generality of the foregoing principle, 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.
(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.
Essentials of Undue Influence
• Relation subsisting between the parties are such that one of
the parties is in a position to dominate the will of another
• Such a person uses his dominant position to obtain an unfair
advantage over the other.
Person in Position to Dominate the will of another
• Real or Apparent authority
• Fiduciary Relation
• Person in mental or bodily distress, Old age, Illnesss
• Unconscionable Bargain
Case Laws
• Mannu Singh v. Umadat Pande (1890) 12 All 523.
• Merci Celine D’Souza v. Ronie Fernandez AIR 1998 Kerala 280.
• Takri Devi v. Rama Dogra AIR 1984 HP 11.
• Shrimati v. Sudhakar R. Bhatkar AIR 1988 Bom. 122.
Fraud (Section 17)
• “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 of 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 speak , or unless his silence is, in itself,
equivalent to speech.
Essentials of Fraud
• False Statement of Fact (Section 17 (1))
• Active Concealment (Section 17 (2))
• Promise made without intention to perform (Section 17 (3))
• Any other act fitted to deceive; (Section 17 (4))
• Any such act or omission as the law specially declares to be
fraudulent. (Section 17 (5))
Exceptions
• Duty to Speak
• Silence equivalent to Speech
Case Laws
• Edington v. Fitzmaurice (1885) 29 Ch. D 459.
• Shri Krishan v. Kurukshetra University AIR 1976 SC 376.
• P. Sarojam v. LIC of India AIR 1986 Ker 201.
• Derry v. Peek (1884) 14 A.C. 337.
• Bindu Sharma v. RamPrakash Sharma AIR 1997 All 429.
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 an intent to deceive, gains an
advantage to 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.
Case Laws
• Derry v. Peek (1889) 14 A.C. 337.
• Nocton v. Ashburton (1914) A.C. 932.
• Sorabshah Pestonji v. Secretary of State for India AIR 1928
Bom. 17.
Voidability of agreements without free consent (Section 19)
• 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.
• Exception.—If such consent was caused by misrepresentation or by silence, fraudulent
within the meaning of section 17, the contract, nevertheless, is not voidable, if the
party whose consent was so caused had the means of discovering the truth with
ordinary diligence.
• Explanation.—A fraud or misrepresentation which did not cause the consent to a
contract of the party on whom such fraud was practised, or to whom such
misrepresentation was made, does not render a contract voidable.
Section 19 A
• Section 19 A: Power to set aside contract induced by undue
influence.—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.
Remedy in case of Flaw of Contract (Section 19 and 19 A
• Right to claim Compensation
• Right of Recession of Contract
(Car and Universal Finance Co. Ltd. V. Caldwell (1961) 1 Q.B. 525.)
Limits of Recession of Contract:
When the contract is affirmed (Long v. Lloyd (1958) 1 W.L.R. 753).
Lapse of time (Leaf v. International Galleries (1950) 2 K.B. 86).
Acquisition of right by third party
Inability to restore the goods (Wallis v. Pratt (1911) A.C. 394.)
Difference between Fraud and Misrepresentation
• 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.
• Fraud is done to deceive the other party, but Misrepresentation is not done
to deceive the other party.
• Fraud is defined in Section 17 and misrepresentation is defined in Section 18
of the Indian Contract Act, 1872.
• In fraud, the party making representation knows the truth however, in
misrepresentation, the party making representation does not know the truth.
• In case of Fraud additional remedy is available under torts.
Mistake (Section 20)
• Agreement void where both parties are under mistake as to
matter of fact.—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.
• Explanation.—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.
• Effect of mistakes as to law (Section 21): A contract 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.
• Contract caused by mistake of one party as to matter of
fact (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.
Essentials
• Mistake of both Parties
• Mistake as to matter of Fact
• Mistake essential to the agreement
Mistake as to existence of subject matter
Mistake as to possibility of the performance of the contract
Mistake as to title
Mistake as to promise
Mistake as to identity of the parties
Mistake as to existence of material facts
Case Laws
• Ayekam Angahal Singh v. Union of India AIR 1970 Manipur 16.
• Galloway v. Galloway (1914) 30 T.L.R. 531.
• Smith v. Hughes (1871) L.R. 6 Q.B. 597.
• Cooper v. Phibbs (1867) L.R. 2 H.L. 149.
• Boulton v. Jones (1857) 2 H. & N. 564.
• Phillips v. Brooks Ltd. (1919) 2 K.B. 243.
• Bell v. Lever Brothers Ltd. (1932) A.C. 161.
REFERENCES
• Narendra Kumar, The Indian Contract Act
• Mulla, Law of Contract
• R.K. Bangia, Law of Contract-I
• Bare Act
THANKS
