Free Consent Under the Indian Contract Act, 1872

Free Consent Under the Indian Contract Act, 1872
16 September 2020

Free Consent Under the Indian Contract Act, 1872

In order for a valid contract to persist, it is essential to ensure the free consent of the parties. There is a concept of consensus-ad-idem which implies that the parties entering into the contract must mean the same thing in the same sense. The understanding of the terms of the contract between both parties should be on the same subject matter and footing. The entire structure of the law of contract is based on the concept of consent, which is placed on the highest pedestal during any agreement. In order to validate the formation of a contract, the main ingredient would be the obtainment of genuine and free consent of the parties. Thus, the mere acquisition of consent is not enough but the consent must be obtained in a free and voluntary manner.

According to the Indian Contract Act, consent is said to be achieved in all situations except when it is caused by coercion, undue influence, fraud, misrepresentation, or mistake. These methods of obtaining consent render the agreement voidable at the instance of the aggrieved party and can invalidate the contract. However, if a mistake was a part of obtaining consent, the agreement is said to be void. The main objective of this aspect is to be fair to both parties and ensure that the judgment of either of the party was not clouded or influenced before entering into a contract. This doctrine helps in the promotion of individual autonomy and freedom to contract.

Now Free Consent has been defined in Section 14 of the Act. The section says that consent is considered free consent when it is not caused or affected by the following,

  1. Coercion
  2. Undue Influence
  3. Fraud
  4. Misrepresentation
  5. Mistake
Coercion Under Sec–15

Coercion is aimed against any person by:

  1. committing or threatening to commit any act forbidden by the Indian Penal Code 1860.
  2. Unlawful detaining or threatening to detain any property to the bias of any person.
  3. The intention of causing any person to enter into an agreement.
  4. Consent acquired by such an act amounts to coercion under the Indian Contract Act and it is voidable in nature.
Undue Influence

As per section 16, undue influence means a person dominant the will of the other by using the position to acquire an unfair advantage over the other.

There are certain relationships in which one party is in a position to dominate the will of another party. Such a relationship holding a real or apparent authority over the other or standing in a fiduciary relation to the other and makes a contract with a person whose mental capacity is temporarily or permanently strained by the reason of age, illness, or bodily distress.

The burden of proof the undue influence in the contract of a fiduciary relationship is lies in the dominant party. If the transaction is due to unconscionable the dominant party has to prove that there is no undue influence. In the case of pardanashin women, the burden of proof lies on the person who benefits from such transaction and full disclosure about the transaction to that women. For other transaction, the weaker party prove the influence. This provision can not affect the provisions of Section 111 of the Indian Evidence Act, 1872. Thus a consent by Undue influence is voidable.

Fraud Sec - 17

The term fraud means a representation of fact willfully to make another person cheat. As to the section, 17 fraud means any act committed by a party of Contract, abetting, by an agent with the intention to deceive another person or his agent or induce him to enter into a contract.

Essential ingredients of fraud are as follow:

  1. representation or assertion relating to fact,
  2. it made with the knowledge that it is false or without belief in its truth.
  3. made other parties act upon his claim
  4. the person acting is to made loss or damage.
Misrepresentation

Simply said misrepresentation is a false representation made innocently without any intention to deceive another person. It is a false statement made by a person, believes it to be true. As per section 18 of the Contract Act, 1872 Misrepresentation means a positive claim, not guaranteed by the information of the person who creates it, is not true, be true even if he believes. Consent obtained by misrepresentation is voidable.

Misrepresentation is two kinds they are:

  1. Innocent misrepresentation, in which the assertion is false but the person making it believes it is true and not know it is false so, damages cannot be claimed but the contract can be rescued.
  2. Negligence or fraudulent misrepresentation, in which breach of duty, negligence of a party makes a loss to the opposite party. it was held in the case Esso Petroleum co. Ltd v. Mardon that it is actionable and damages are claimed by the affected party.