Definition of Consent [Section 13]
According to Section 13, "Two or more persons are said to have consented when they agree upon the same thing in the same sense" (Consensus ad idem). The Latin term consensus ad idem means "agreement as to the same things". Consequently, when parties to a contract make some fundamental error as to the nature of the transaction, or as to the person dealt with or as to the subject matter of the agreement, it cannot be said that they have agreed upon the same thing in the same sense. And if they do not agree in the same sense, there cannot be consent. A contract cannot arise in the absence of consent.
For example, A, a painter, agrees to paint the house of B and B agrees to pay the sum of ₹2,000 upon the satisfactory completion of the work. In this case, there is a meeting of the minds of A and B on the subject of what is to be done and at what price.
Effect of Absence of Consent
When there is no consent at all, the agreement is void, i.e., it is not enforceable at the option of either party.
For example, X has one Maruti car and one Fiat car. He wants to sell Fiat car. Y does not know that X has two cars, Y offers to buy X's Maruti car for Rs.1,00,000, X accepts the offer thinking it to be an offer for his Fiat car. Here, there is no identity of mind in respect of the subject matter. Hence, there is no consent at all and the agreement is void ab initio.
Definition of Free Consent [Section 14]
Consent is said to be so caused when it would not have been given but for the existence of such coercion, influence, misrepresentation, fraud or mistake. Section 14 says that consent is said to be "free" if it is not obtained by:
- Coercion as defined in Section 15, or
- Undue influence, as defined in Section 16, or
- Fraud, as defined in Section 17, or
- Misrepresentation as defined in Section 18, or
- Mistake, subject to the provisions of Sections 20, 21 and 22.
Free consent is a crucial element in contract law, ensuring that parties enter into agreements willingly and without coercion. There are several types of free consent recognized in legal contexts:
1) Coercion [Section 15]
"Coercion is the committing, or threatening to commit any act forbidden by the Indian 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 force in the place where the coercion is employed".
For example, X says to Y, "I shall kill your son, or I shall not return the documents of title relating to your wife's property, unless you agree to sell your house to me for Rs.5,000". Y says, "All right, I shall sell my house to you for Rs.5,000 do not kill my son or do not detain my wife's documents of title". X hat employed coercion; he cannot therefore enforce the contract. But Y can enforce the contract if he finds the contract to his benefit. An agreement induced by coercion is voidable and not void. That means it can be enforced by the party coerced, but not by the party using coercion.
Effect of Coercion [Section 19, 64, 72]
|
Effects |
Provision |
|
1) Option of aggrieved party to avoid the contract |
When consent to an agreement is obtained by coercion, the agreement is
contract voidable at the option of the party whose consent was obtained by
coercion (also called aggrieved party). [Section 19] |
|
2) Obligation of aggrieved party to restore benefit |
The party resending a voidable contract shall restore the benefit
received by him under the contract, to the person from whom the benefit was
received. [Section 64] |
|
3) Obligation of other party to repay of return |
A person to whom money has been paid or anything delivered under
coercion must repay or return it. [Section 72] |
2) 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.
- He uses the position obtains 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:
1) Where he holds a real or apparent authority over the other, for example, the relationship between master and the servant, police officer and the accused.
2) Where he stands in a fiduciary relation to the other. Fiduciary relation means a relation of mutual trust and confidence. Such a relationship is supposed to exist in the following cases: father and son, guardian and ward, solicitor and client, doctor and patient, Guru (spiritual adviser) and disciple, trustee and beneficiary, etc.
3) 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, for example, old illiterate persons.
For example, a Hindu well advanced in age, with the object of securing benefits of his soul in the next world, gave away his whole property to his guru or spiritual adviser. Undue influence was presumed.
Difference between Coercion and Undue Influence
|
Basis of Difference |
Coercion |
Undue Influence |
|
1) Relationship
|
Parties to o contract may or may not be related to each other. |
Parties
to a contract are related to each other under some sort of relationship. |
|
2) Consent
|
Consent is obtained by giving a threat of an offence or committing an
offence. |
Consent
is obtained by dominating the will.
|
|
3) Nature of Pressure |
It involves physical pressure. |
It
involves moral pressure. |
|
4) Who can Exercise |
It can be exercised even by a stranger to the contract. |
It can
be exercised only by a party to a contact and not by a stranger. |
|
5) Restoration of Benefit |
The aggrieved party has to restore the benefit received under Section
64. |
The
party avoiding the contract may or may not return the benefit under Section
19A. |
|
6) Presumption |
Coercion has to be proved by the party alleging it, in no case it is
presumed by the law. |
It may
be presumed by the law under certain circumstances. The party against whom
such presumption lies must disprove it. |
|
7) Nature of Liability |
The party committing the crime may be punishable under IPC. |
It does
not involve any criminal liability.
|
3) Fraud [Section 17]
As per the Act "Fraud" means and includes any of the following acts committed by a party to a contract, or with his involvement 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 that an act is true when it is not true by one who does not believe it to be true. Thus, a false statement intentionally made is fraud. An absence of honest belief in the truth of the statement made is essential to constitute fraud. If A represent or honestly believes his statement to be true, he cannot be liable in deceit no matter how ill-advised, stupid, or even negligent he may have been. In order to be called fraudulent representation the false statement must be made intentionally.
2) The active concealment of a fact by a person who has knowledge or belief of the act. Active concernment of a material fact is taken as much and as if the existence of such fact was expressly denied or the reverse of it expressly stated. Mere non-disclosure is not fraud, where there is no duty to disclose. Caveat Emptor or 'Buyer Beware' is the principle in all contracts of sale of goods. As a rule the seller is not bound to disclose to the buyer the faults in the goods he is selling.
3) A promise made without any Intention of performing it. If a man while entering into a contract has no intention to perform his promise, there is fraud on his part.
4) Any other act fitted to deceive. The fertility of man's invention in devising new schemes of fraud is so great that it would be difficult, if not impossible, to confine fraud within the limits of any exhaustive definition. All surprise, trick, cunning, dissembling and other unfair way that is used to cheat anyone is considered fraud. And sub-section 4 is obviously intended to cover all those cases of fraud which cannot appropriately be covered by the other sub-section.
5) Any such act or omission as the law specially declares to be fraudulent. This sub-section refers to the provisions in certain Acts which make it obligatory to disclose relevant facts. Thus, e.g., under Section 55 of the Transfer of Property Act, the seller of immovable property is bound to disclose to the buyer all material defects in the property (e.g., the roof has a crack) or in the seller's title (e.g., the property is mortgaged). An omission to make such n disclosure amounts to fraud.
4) Misrepresentation [Section 18]
The term misrepresentation means a false representation of fact made Innocently or non-disclosure of a material fact without any intention to deceive the other party. Section 18 defines the term misrepresentation as follows:
"Misrepresentation" means and includes:
- 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.
- 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 anyone claiming under him.
- Causing, however Innocently, a party is an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
Effects of Misrepresentation [Section 19]
In case of misrepresentation, the aggrieved party has two alternative courses open to him:
- He can rescind the contract, treating the contract aa voidable.
- He may affirm the contract and insist that he shall be put in the position in which be would have been, if the representation made had been true.
Misrepresentation does not entitle the aggrieved party to claim damages by way of interest or otherwise for expenses incurred.
For example,
'A' innocently in good faith tells B that his T.V. set is made in Japan. B, thereupon buys the T.V. set. However, it comes out to be an Indian make. A, is guilty of misrepresentation. B may either avoid the contract or may insist on its being carried-out. In the latter case, B may either ask for replacing the set by Japanese make set or may keep the Indian make set and claim the difference in price between that set and Japanese make set.
Difference between Fraud and Misrepresentation
|
Basis of Difference |
Fraud |
Misrepresentation |
|
1) Intention |
A wrong representation is made willfully with the intention to deceive
the other party. |
A wrong representation is made innocently, i.e., without any intention
to deceive the other party. |
|
2) Knowledge of Falsehood |
The person making the wrong statement does not believe it to be true. |
The person making the wrong statement believes it to be true. |
|
3) Right to Claim Damages |
The aggrieved party can claim damages. |
The aggrieved party cannot claim damages. |
|
4) Availability of Means to Discover the Truth |
Except where silence amount of fraud, the contact is voidable even if
the aggrieved party had the means of discovering the truth with ordinary diligence. |
The aggrieved party cannot avoid the contract if he had the means of
discovering the truth with ordinary diligence. |
5) Mistake[Section 20]
Mistake can invalidate consent if there is a misunderstanding between the parties regarding a fundamental aspect of the contract. There are two types of mistakes: mutual mistake (both parties are mistaken) and unilateral mistake (only one party is mistaken).
Types of Mistake
Mistake may be defined as an erroneous belief concerning something. It can be of following types:
1) Mistake of Law [Section 21]
Mistake of law may be of two types:
i) Mistake of Indian Law:
Everyone is deemed to be conversant with the law of his country, and hence the maxim "ignorance of law is no excuse". Mistake of law, therefore, is no excuse and it does not give right to the parties to avoid the contract. Starting the effect of mistake as to law, Section 21 declares that "a contract is not voidable because it was caused by a mistake as to any law in force in India". Accordingly, no relief can be granted on the ground of mistake of law of the country.
ii) Mistake of Foreign Law:
Mistake of foreign law stands on the same footing as the "mistake of fact". Here the agreement is void in case of "bilateral mistake" only, as explained under the subsequent heading.
2) Mistake of Fact
Mistake of fact may be of two types:
i) Bilateral Mistake:
Where the parties to an agreement misunderstood each other and are at cross purposes, there is a bilateral mistake. Here there is no real correspondence of offer and acceptance, each party obviously understanding the contract in a different way.
ii) Unilateral Mistake [Section 22]:
Where only one of the contracting parties is mistaken as to a matter of fact, the mistake is a unilateral mistake. Regarding the effect of unilateral mistake on the validity of a contract, Section 22 provides that "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 net". Accordingly, in case of unilateral mistake a contract remains valid unless the mistake is caused by misrepresentation or fraud, in which case the contract is voidable at the option of aggrieved party.