This document discusses various aspects of contractual performance and defenses against enforcement of contracts such as misrepresentation, undue influence, and coercion. It defines key terms and concepts: 1) It outlines the essential elements of a valid enforceable contract and defenses that can make consent not freely given such as coercion, undue influence, fraud, or misrepresentation. 2) It explains the concepts of coercion, undue influence, and misrepresentation in contracts - noting how coercion involves unlawful threats while undue influence relies on abusing a position of power. 3) It discusses consequences of defenses like a contract being voidable if consent was not freely given, with the burden of proof on the party trying to avoid the contract

1. Contractual Performance,
Misrepresentation, Undue
Influence, Coercion
Jose

2. A Valid Enforceable Contract
1) Mutual Agreement
2) Consideration
3) Capacity
4) Legality
5) Genuineness of Assent
6) Writing

3. Free Consent
To make a contract valid, not only consent is necessary, even it should
also be free. In law of contract consent is said to be free if it is not
caused by any of the following: -
• Coercion
• Undue influence
• Fraud
• Misrepresentation
• Mistake
There is a distinction in between consent and free consent. If consent is
affect or taken by one of the above express elements than it will be not
deemed as free consent.

4. Duress, coercion and undue influence
• It is one of the basic principles of contract law that persons cannot
have contracts forced upon them.

5. Duress
• Duress is the application of unlawful force, or the threat of force, that
causes a person to do something that he or she would not otherwise
have done.
• Exercising a Legal Right does not Create a Claim of Duress
• It is not duress to exercise a legal option.

6. Coercion
• Coercion is a mental threat, compulsion, or force making a person act
against free will.

7. Undue Influence
• A defense of undue influence often comes about in situations where one
person enjoys a position of trust with the plaintiff and then uses that
position to deceive the plaintiff into entering a contract.
• Undue influence is the improper use of any power possessed over the mind
of the contracting party.
A contract is said to be affected by undue influence when:-
• The relations subsisting between the parties are such that one of the
parties is in a position to dominate the will of the other.
• Unfair persuasion – careful examination of terms of contract. Uses that
position to obtain unfair advantages over the other.

8. • “The doctrine of undue influence under the common law was evolved by
the courts in England for granting protection against transactions procured
by exercise of insidious forms of influence spiritual and temporal. The
doctrine applies to acts of bounty as well as to other transactions in which
one party by exercising his position of dominance obtains an unfair
advantage over another. The Indian enactment is founded substantially on
the rules of English Common law. The first Sub-section of Section 16 lays
down the principle in general terms. By sub-section (2) a presumption
arises that a person shall be deemed to be in a position to dominate the
will of another if the conditions set out therein are fulfilled. Sub-section (3)
lays down the conditions for raising a rebut table presumption that a
transaction is procured by the exercise of undue influence. The reason for
the rule in the third sub-section is that a person who has obtained an
advantage over another by dominating his will, may also remain in a
position to suppress the requisite evidence in support of the plea of undue
influence.”
The adoption of English law: the case of Ladli Parshad Vs. Karnal
Distillery Co., (1963)

9. Hot Debate
• Your friend buys a PDA for $250.00, including a foldout keyboard and
a portable printer.
• The keyboard and printer were shown with the PDA in the ad but
noted as optional equipment.

10. • In her excitement, your friend signs the credit card sales
receipt, which is not itemized She fails to note that the two
items add an extra $198 to the price.
• When the bill for the total purchase price of $448 plus sales
tax arrives, your friend objects.

11. State 2 reasons why it would be fair to allow your friend to
withdraw from the contract.
• Your friend’s obvious excitement left her unfocused and the
salesperson did not point out the optional equipment would add to
the cost.
• The bill was not itemized to show these facts.

12. State 2 reasons why it would be fair for your friend to be
bound to the contract.
• The doctrine of -- (let the
buyer beware) does not place a positive duty on the sales personnel
to make sure each consumer understands all parts of the transaction.
• The goods were marked as optional equipment which implies
additional cost.

13. Conclusion to the hot debate
• A unilateral mistake of failure to read a contract still renders the
contract valid.

14. Undue Influence
3. In following three cases law presumes a person to be in a position to
dominate the will of the other:-
 Where one person holds a real authority over the other(Master or
servant, parent and child)
 Where he stands in a fiduciary relationship(religious guru and disciple,
trustee and beneficiary, doctor and patient, lawyer and client)
 Where one person makes a contract with a person whose mental capacity
is temporarily or permanently affected by reason of age, illness or mental
or bodily distress.

15. Undue Influence
Case
• Doctor and obese patient
• Exercise (Riding a bicycle)
• Doctor is selling his bike

16. Burden of proof
• To prove that the contract has been affected by
undue influence, all the three essentials discussed
above must be proved in the order in which they are
written.
• When the first two points are proved in a contract,
the burden of proving the use of the dominant
position to obtain the unfair advantages will lie on
the party in a position to dominate the will of the
other.

17. Effect of Undue Influence
• An agreement caused by undue influence shall be voidable
• At the option of the party whose consent has been so obtained.

18. • Section 19-A declares 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. For example, A’s son has forged B’s name to a
promissory note. B, under threat of prosecuting A’s son, obtains a bond from
A, for the amount of the forged note. If B sues on this bond, the court may
set the bond aside.
• Because of undue influence one party to the contract may take an undue
advantage under the contract, or the party entitled to avoid the contract may
have already received some benefit under the contract. The court in cases has
been empowered to set aside the contract either absolutely or upon such
terms and conditions as the Court may deem just. Second para to Section 19-A
incorporates the following provision in this regard :
• “Any such contract may be set aside either absolutely, or, if the party who was
entitled to avoid it has received any benefit there under, upon such terms and
conditions as to the Court may seem just”
• For example, a , a money-lender, advances Rs. 100 to B, an agriculturalist,
and, by undue influence, induces B to execute a bond for Rs. 200 with interest
at 6 per cent per month. The court may set the bond aside, ordering B to
repay Rs.100 with interest as may seem just.
Effect of undue influence

19. In order to constitute undue influence it is necessary that :
1) 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.
2) such a person uses his dominant position to obtain an unfair advantage
over the other.
It is manifest that both the conditions have ordinarily to be established by
the person seeking to avoid the transaction : he has to prove that the other
party to the transaction was in a position to dominate his will and that the
other party had obtained an unfair advantage by using that position.
Person in dominant position and obtaining of unfair advantage
Sometimes one of the parties to the contract may be in such a dominant
position in relation to the other that he has peculiar opportunity of
exercising that position to the prejudice of the other party. If the dominant
party takes an undue advantage of his position in procuring a contract to the
detriment of the other contracting party, the contract is voidable at the
option of the party whose will is so dominated.
Essentials of undue influence

20. • (1) where he holds a real or apparent authority over the other,
or,
• (2) where he stands in a fiduciary relation to the other,
or,
• (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.
In the following cases a person is deemed to be in a
position to dominate the will of another –

21. Coercion
1. Coercion is the committing or threatening to
commit any act which is Unlawful or Threatening
to detain any property, of any person, with the
Intention of causing any person to enter into an
agreement.
2. Examples: - After giving a good beating to A,
B makes him to agree to sign a promissory note
for Rs 1000.

22. • In Ranganayakamma Vs. Alwar Setti (1889) the question before the Madras
High Court was regarding the validity of the adoption of a boy by a widow, aged
13 years. On the death of her husband, the husband’s dead body was not
allowed to be removed from her house by the relatives of the adopted boy until
she adopted the boy. It was held that the adoption was not binding on the
widow.
• In Chikkam Ammiraju Vs. Chikkam Seshama (1918) the question before the
Madras High Court was that whether coercion could be caused by a threat to
commit suicide. In this case a Hindu by a threat of suicide induced his wife and
son to execute a release deed in favour of his brother in respect of certain
properties claimed as their own by the wife and the son. The question before
the court was whether a threat to commit suicide could be considered to be an
act forbidden by the Indian Penal Code. It was held by Wallis, C.J. and Seshagiri
Ayyar, J. that a threat to commit suicide amounted to coercion within the
meaning of Section 15 of the Indian Contract Act and therefore the release
deed was voidable.

23. Threat to strike is no coercion
• In Workmen of Appin Tea Estate Vs. Industrial Tribunal (1966) the
demand of the workers for bonus was accepted after a threat of
strike. The question which had arisen was, whether such a decision
between the Union of the workers and the Indian Tea Association
could be declared void on the ground that there was coercion. It was
held that because of the doctrine of collective bargaining under the
Industrial Dispute Act the demand of the workers could be backed by
a threat of strike. Such a threat was neither a threat to commit an
offence under the Penal Code, nor was it unlawful detaining or
threatening to detain any property and hence it did not amount to
coercion, and as such the agreement was valid.

24. Types of Coercion
• Threat to commit Suicide:-
An attempt to commit suicide is an offence and it is also type of
coercion.
• Threat to file a suit.
• Threat to act some unlawful acts.
• Threat to detain property of any person.

25. Essentials of Coercion
• The act must have been done with an Intention of causing any
person to enter into an agreement.
• Coercion can be applied either by a party to the contract or even by
a stranger.
• It may be applied against a party to the contract or any other
person.

26. Effect of Coercion
•When the consent of a party to an agreement is
obtained by coercion, the contract becomes
voidable at the option of the party, whose consent is
so obtained.
•The burden of proving that the consent was
obtained by coercion shall be upon the party who
wants to set aside the contract on the plea of
coercion.

27. Difference between Coercion & Undue Influence
• Mode of obtaining consent: - In both coercion and undue influence the
consent of the aggrieved party is not free. But in the case of coercion the
consent of the aggrieved party is taken by committing or threatening to
commit an illegal act. While in undue influence the consent of the aggrieved
party is obtained by dominating the party by taking an unfair advantage of his
position.
• Type of force: - in case of coercion physical force is exercised while in undue
influence, morel force is used.
• Existence of relationship: - in case of coercion, relationship between the
promisor and the promise is not necessary. While in case of undue influence,
some sort of relationship must exist between the two parties to the contract.

28. Misrepresentation
• 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.(unwarranted statement)1
• An breach of duty which,w/o an intent to deceive gives advantage to
the person committing it by misleading another to his prejudice or to
the prejudice of anyone claiming under him
• Causing however innocently,a party to an agreement to make a
mistake as to the substance of thing which is the subject matter of
the agreement 3(inducing mistake about subject matter)

29. What is Misrepresentation?
For a statement to be treated as misrepresentation,
three elements are required
• Untrue statement of fact ( existing / past)
Active concealment – attempting to cover the truth
Silence
• Materiality
• Reasonable reliance

30. Food Lion vs. Prime Time
• Reporters for the ABC news show “Prime Time” went undercover
with fake identities in Food Lion stores posing as store workers.
• They were acting on a tip from former workers that Food Lion had
been washing spoiled meat in bleach and then selling it.

31. Food Lion vs. Prime Time
• The reporters allegedly found facts to substantiate that the story was
true.
• However, a No. Carolina judge found ABC news guilty of
misrepresentation and trespassing and fined them $315,000 in
punitive damages (a jury had originally assessed $5.5 mil. In punitive
damages against ABC but the judge reduced it)

32. Food Lion vs. Prime Time
• Should reporters be able to use misrepresentation on employment
applications and contracts to get to the truth of the matter?

33. Fraud and Misrepresentation
• Fraud: Any kind of trickery used to cheat another of money or
property.
Two Types of Frauds Involved in Contracts
• In most jurisdictions, there are two types of frauds: fraud in the
execution of a contract and fraud in the inducement of a contract.

34. Innocent Misrepresentation
Innocent misrepresentation occurs when a party to a contract
does not know that a statement he or she made is untrue.

35. Fraudulent Misrepresentation
Fraudulent misrepresentation occurs when a party to a contract knows
that a statement he or she made is untrue.

36. Consequences of misrepresentation:
The party aggrieved or wronged can:
• Avoid the agreement or
• Insist that the contract be performed & that he be put in the position
in which he would have been if the representation made had been
true.4

37. Although the claim for damages are not entertained under
misrepresentation but under certain cases right to claim
damages arises even in case of misrepresentation :
• A-Breach of warrant of authority of an agent
• B-Negligent representation
• However if the party whose consent was caused by misrepresentation
had the means of discovering the truth with ordinary diligence, he has
no remedy

38. Performance
Each enforceable promise in a valid enforceable contract
creates a duty that must be discharged by performance,
breach, agreement, or law.
Two types of promises:
Absolute Promises
Conditioned Promises
Duty

39. Types of Performance of Contract
Type of Performance Legal Consequence
Complete Performance The contract is discharged.
Substantial Performance
(minor breach)
The non-breaching party may recover damages caused by the breach.
Inferior Performance
(material breach)
The non-breaching party may either:
(1) Rescind the contract and recover restitution, or
(2) Affirm the contract and recover damages.
Henry R. Cheeseman

40. Complete Performance
• When a party performs exactly as agreed, there is no question as to
whether the
contract has been performed. When a party's performance is perfect,
it is said to be complete.

41. Substantial Performance
• Generally, performance that provides a party with the important and
essential benefits of a contract, in spite of any omission or deviation
from the terms, is substantial performance.
* Good faith is required
* Willfully failing to comply is a breach of the
contract.

42. Substantial Performance
• Because substantial performance is not perfect, the other party is
entitled to damages to compensate for the failure to comply with the
contract.
• The measure of the damages is
• the cost to bring the object of the contract into compliance with its terms, if
that cost is reasonable.
• If the cost is unreasonable, the measure of damages is the difference in value
between the performance that was rendered and complete performance.

43. Material Breach of Contract
• A breach of contract is the nonperformance of a contractual duty. The
breach is
material when performance is not at least substantial

44. Performance to the Satisfaction of a Party
When the subject matter of contract is personal, a
contract to be performed to the satisfaction of one of
the parties is conditioned, and performance must
actually satisfy that party.
Contracts that involve mechanical fitness, utility, or
marketability need only be performed to the
satisfaction of a reasonable person.

45. Performance to the Satisfaction of a Third Party
Courts are divided.
A few courts require the personal satisfaction
of the third party.
A majority of courts require the work to be
satisfactory to a reasonable person.

46. Anticipatory Repudiation
• An anticipatory repudiation occurs when one of the parties refuses to
carry out his or her contractual obligations before either party to the
contract has a duty to perform
• The repudiation can discharge the nonbreaching party from
performance.

47. Anticipatory Repudiation
• There are two reasons for allowing the
• nonbreaching party to treat an anticipatory repudiation as a present,
material breach:
• 1.The nonbreaching party should not be required to remain ready
and willing to perform when the other party has already repudiated
the contract.
• 2.The nonbreaching party should have the opportunity to seek a
similar contract
• elsewhere.

48. Time for Performance
• If no time for performance is stated in the contract, a reasonable time
is implied.
• If a specific time is stated, the parties must usually perform by that
time.
• Unless time is expressly stated to be vital, however, a delay in
performance will not destroy the performing party's right to payment.
• When it is construed to be "of the essence," the parties must perform
within the stated time period. The time element becomes a
condition.

49. Conditions
In some situations, performance is contingent
on the occurrence or nonoccurrence of a
certain event.
A condition is a possible future event, the
occurrence or nonoccurrence of which will
trigger the performance of a legal obligation
or terminate an existing obligation under a contract.

50. Conditions
• Three types of conditions can be present in contracts:
• conditions precedent,
conditions subsequent, and
concurrent conditions.
Conditions are also classified as express or implied.

51. Condition Precedent
• A condition that must be fulfilled before a party's performance can be
required is called a condition precedent.
• Example: Real estate contracts frequently are conditioned on the
buyer's ability to obtain financing.

52. Condition Subsequent
• A condition subsequent is a condition which operates to terminate a
party's absolute promise to perform.
• Example: A law firm hires a recent law school graduate and newly
licensed attorney. Their contract provides that the firm's obligation to
continue employment is discharged if the employee fails to maintain
her license to practice law.

53. Concurrent Conditions
• Concurrent conditions occur when each party's absolute duty to
perform is conditioned on the other party's absolute duty to perform.
Concurrent conditions occur only when the parties expressly or
impliedly are to perform their respective duties simultaneously.
Example: Buyer promises to pay for goods when they redelivered

54. Express and Implied Conditions
• Express conditions are provided for by the parties' agreement. An
express condition is usually prefaced by the word if, provided, after,
or when.
• Conditions implied in fact are understood to be part of the
agreement, but they are not found in the express language of the
agreement. The court infers them from the promises.

55. Rescission and Restitution
Rescission
• An action to rescind (undo) the
contract
• Available if there has been a material
breach of contract, fraud, duress,
undue influence, or mistake
Restitution
• Returning of goods or property
received from the other party to
rescind a contract
• If the actual goods or property is not
available, a cash equivalent must be
made

56. Discharge of Performance
• A party’s duty to perform under a contract may be discharged by:
• Mutual agreement of the parties
• Impossibility of performance
• Operation of the law

57. Discharge by Agreement
• The parties to a contract may mutually agree to discharge or end their
contractual duties:
• Mutual Rescission
• Substituted Contract
• Accord and Satisfaction

58. Discharge by Impossibility
• Under certain circumstances, the nonperformance of contractual
duties is excused:
• Impossibility of Performance
• Commercial Impracticability
• Objective impossibility may discharge a duty
• Death or disablement
• Party to a personal contract dies or becomes disabled
• Destruction of Subject Matter
• Must be the specific subject matter
• Intervening Illegality

59. Force Majeure Clauses
• The parties may agree in their contract that certain events will excuse
nonperformance of the contract
• These clauses are called force majeure clauses:
• e.g., Natural disasters
• e.g., Labor strikes
• e.g., Shortages of raw materials

60. Whose Satisfaction?
Performance of personal contracts can be specified to be to the
satisfaction of a party.
Performance of contracts dealing with mechanical fitness or utility
must only be satisfactory to a reasonable person.

61. • Damages for breach:
• Compensatory – usually the expectation interest, the direct damages
• Consequential – indirect damages that were foreseeable by breaching
party
• Incidental – small costs caused by the breach
Contract Remedies

62. • Equitable Remedies
• Reliance interest – through promissory estoppel, no contract
required
• Restitution- “make whole again”, where one party is would
get a benefit they do not deserve.
• Specific Performance – where $ will not do justice, real
property or unique personal property
• Injunction – Stop the party from doing something
• Reformation – rewrite the contract
• Rescission – undue or cancel the contract as if it never
happened (usually includes restitution above)
Contract Remedies

63. References
1. Cheeseman, H. R. (2006). Essentials of Business and Online Commerce Law:
Contracts; Third Party Rights, Performance, Breach, and Remedies. (1st Ed.).
Pearson Prentice-Hall.