This document discusses the concepts of free consent, coercion, undue influence and fraud under Indian contract law. It defines free consent as agreement between two parties on the same terms without coercion, undue influence, fraud or mistake. Consent is considered freely given unless it is caused by coercion, undue influence, fraud, misrepresentation or mistake. Coercion involves threatening unlawful acts while undue influence involves improperly exploiting a position of power over another. The effect is that agreements made under coercion or undue influence are voidable. Fraud involves intentional misrepresentation or concealment with the aim of deceiving another party. Contracts obtained through fraud are also voidable.

1. FREE CONSENT
By
Dr. Sridevi Krishna
Asst. Professor
VVLC

2. Section 13
• According to Section 13, ” two or more
persons are said to be consented when they
agree upon the same thing in the same sense
(Consensus-ad-idem)

3. WHEN CONSENT IS SAID TO BE FREELY
GIVEN?
• Section 14- When consent is given without
the presence of -
• Coercion
• Undue influence
• Fraud
• Misrepresentation
• Mistake

4. Coercion
• Section 15- “Coercion” is the committing, or
threatening to commit, any act forbidden by the Indian
Penal Code under(45,1860), 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.
• “A” threatens to shoot “B” if he doesn’t release him
from a debt which he owes to “B”. “B” releases “A”
under threat. Since the release has been brought about
by coercion, such release is not valid.

5. Act forbidden by the IPC
• Ranganayakamma V Alwar Setti- on the death
of her husband, the husband’s dead body was
not allowed to be removed from her house for
cremation, by the relatives of the adopted
body until she adopted the boy.
• Held- adoption was not binding on the widow
as her consent had been obtained by
coercion.

6. Chikkan Ammiraju v Chikkam Seshamma
• Whether coercion could be caused by a threat
to commit suicide.
• A person by 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.
whether threat to commit to suicide could be
considered to b e an act forbidden by the IPC?

7. Wallis C.J & Sheshagiri Ayyar
• Threat to commit suicide amounted to coercion
within the meaning of sec 15 of ICA and thus
release deed was voidable. It is an act forbiden
by ipc and it is prejudice of the person killing
himself and prejudice of his wife and son.
• Olfield.J- who dissented observed that suicide is
not an act forbidden by ipc. Attempt to commit
suicide is punishable under sec 309 of ipc. Thus
threat to commit suicide is not an act forbidden
by IPC

8. Continued..
• Thus Sec 15 has to be amended to cover such
cases also. The law commission also made
recommendation in this regard.
• 2. unlawful detaining of property- ex- if an
outgoing agent refuses to hand over the
accounts books to the new agent until the
principal executes release in his favour, it is
coercion.

9. DURESS
• The English equal of coercion is Duress. Duress has been defined as causing, or threatening
to cause, bodily violence or imprisonment, with a view to obtain the consent of the other
party to the contract.
• Duress differs from coercion on the following points:
Coercion duress
Coercion’ can be employed against
any person or property
‘duress’ can be employed only
against the other party to the
contract or the members of his
family.
Coercion’ may be employed by any
person, and not necessarily by the
promisee.
‘Duress’ can be employed only by the
party to the contract or his agent.
Coercion’ is wider in its scope and
includes unlawful detention of goods
also.
‘Duress’ on the other hand does not
include unlawful detention of goods.
Only bodily violence or imprisonment
is duress.

10. Consequences of coercion
• Section 19- When consent to an agreement is
caused by coercion, the agreement is a
contract voidable at the option of the party
whose consent was so obtained.
• In other words, the aggrieved party can have
the contract set aside or if he so desires to
insist on its performance by the other party.

11. UNDUE INFLUENCE s 16
• Undue influence consists in the improper exercise of a
power over the mind of one of the contracting parties
by the other.
• Sec. 16- 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.
• Examples (1) A having advanced money to his son B
during his minority, upon B coming of age, obtains, by
misuse of parental influence, a bond from B for greater
amount than the sum due in respect of the advance. A
employs undue influence.

12. Sec16(2) rule of presumption
• Section 16 lays down rules of presumptions as regards
persons in particular relations. It reads: 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.
• (c ) If a party is proved to be in a position to dominate the
will of another and the transaction appears, on the face of
it or on the evidence adduced, to be unconscionable, the
burden of proving that the contract was not induced by
undue influence, lies on the party who was in a position to
dominate the will of the other.

13. • Thus, the following relationships are said to
raise a presumption of undue influence: (i)
Parent and child; (ii) guardian and ward; (iii)
doctor and patient; (iv) spiritual guru and
disciple; (v) lawyer and client; (vi) trustee and
beneficiary and other similar relationships.

14. Person to be in a position to dominate
the will of another-
• Where he holds real or apparent authority
over the other or
• Where he stands in a fiduciary relation to the
other.
• Where he makes a contract with a person
whose mental capacity is temporarily or
permanently affected by reason of age, illness
or bodily distress.

15. 1. Real or apparent authority
• An employer may be deemed to be having
authority over the employees, a police or judicial
officer over the accused, income tax officer over
assesse etc.
• 2. Fiduciary relation- it is a relationship of
confidence and trust. A person who has
confidence on another , it is expected that he will
not be betrayed. When he does so the other
party has an option to avoid the contract.

16. Examples
• Solicitor and client
• Spiritual adviser and devotee
• Medical attendant and patient
• Parent and child
• Husband and wife
• Master and servant
• Principal and agent
• Guardian and ward
• Lover and beloved

17. Burden of proof
• Section 111 of Indian Evidence Act- where there is a question of
good faith of a transaction between the parties, one of whom
stands to the other in a position of active confidence, the burden of
proving good faith of the transaction is on the party who is in a
position of active confidence.
• Phillip Lukka v Franciscan Association the plaintiff was a congenital
invalid suffering from indifferent health all through his life. He had a
deep religious bend, with high regard for religious superiors and a
deep sense of obedience to priest hood. A priest, father francis,
who represented the defendant Association got his only property
gifted to the association by assuring him of the preparedness of the
association to look after him and his mother. The registration of the
gift deed was managed to be made at a far away place.
• Held – the said gift of property was vitiated by undue influence and
fraud and the plaintiff was allowed to recover back his property.

18. 3. Person in mental or bodily distress
• A person mental capacity may have been
affected on account of his old age, illness or
mental or bodily distress and there is more
possibility that such a person’s position may
be exploited and unfair advantage taken in
such a situation.

19. Undue influence in unconscionable bargains(not
reasonable)
• When one of the parties who has obtained the
benefits of a transaction is in a position to
dominate the will of the other and
• The transaction between the parties appears to
be unconscionable, the law raises a presumption
of undue influence.
• It is for the dominant party to rebut the
presumption of undue influence. If a party has
got gain at the cost of the other part, it is for him
to prove that it is not through undue influence.

20. Niko devi V Kirpa
• The plaintiff was an illiterate girl living with the
defendants ever since her child hood. The defendant
was the father’s brother’s son of the plaintiff. The
plaintiff was brought up by him and he had performed
her marriage too. He even managed all her movables
and immovable property inherited by her parents. He
divested her of her entire property by a gift deed. She
questioned the deed and claimed presence of fraud,
coercion and undue influence.
• Held- defendant was not only in a dominant position,
the transaction was unconscionable as she stood
divested of her entire property by virtue of gift deed.
Thus the deed can be avoided and cancelled.

21. CONTRACTS WITH A PARDANASHIN WOMAN
• Pardanashin woman is one who according to the custom of
her community observes complete seclusion. The Courts in
India regard such women as being especially open to undue
influence.
• When, therefore, an illiterate pardanashin woman is
alleged to have dealt with her properties and to have
executed a deed, the burden of proving that there was no
undue influence lies on the party setting up the deed.
• The law demands that the person who deals with a
pardanashin lady must show affirmatively and conclusively
that the deed was not only executed by, but was explained
to, and was really understood by the lady.
• Notice that, a lady who claims to be pardanashin must
prove complete seclusion; some degree of seclusion is not
sufficient to entitle her to get special protection.

22. Effect of undue influence
• Sec 19A- An agreement caused by undue influence is a
contract voidable at the option of the party whose
consent was obtained by undue influence. However,
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 the court deems fit.
• Example- A, a money-lender, advances Rs. 100 to B, an
agriculturist, and by undue influence, induces B to
execute a bond for Rs. 200 with interest at 6 percent
per month. The Court may set the bond aside, ordering
B to repay Rs. 100 with such interest as may seem just.

23. 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 or 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.

24. 1. False statement of fact
Mere expression of opinion is not enough to
constitute fraud.
Representation as to untrue facts may be made by
positively stating certain facts or by conduct.
Edington v Fitzmaurice a company was in great
financial difficulty and needed funds to pay some
pressing liabilities. The company raised the amount
by issue of debentures. While raising the loan, the
directors stated that the amount was needed by the
company for its development, purchasing assets
and completing buildings.
Held- directors had committed fraud.

25. •Mere silence is Fraud?

26. • To constitute a fraud there should be
representation as to certain untrue facts.
• Active concealment(ಸಕ್ರಿಯ ಮರೆಮಾಚುವಿಕೆ) has also
been considered to be equivalent to a
statement because in that case, there is a
positive effort to conceal the truth and create
untrue impression on the mind of the other.

27. Continued..
• Mere silence however, as to facts is no fraud.
• Explanation to section 17- 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.
• A contracting party is not bound to disclose each
and everything to the other.
• if he makes false statement as to the quality of
goods , it would amount to fraud.

28. Continued..
• In case of sale of goods the rule of caveat
emptor- let the buyer beware applies.
• A sells by auction, to B a horse which A knows
to be unsound and A says nothing to B about
the horse’s unsoundness. This is not fraud.

29. Shri Krishnan V Krukshetra University
Shrikrishnan
• A candidate for the LLB Part I exam, who was
short of attendance, did not mention that fact
himself in the admission form for the
examination. Neither the head of the law
department nor the university authorities made
proper scrutiny to discover the truth.
• Held-that there was no fraud by the candidate an
the university had no power to withdraw the
candidature of the candidate on that account.

30. Exceptions
• 1. Duty to speak (Contracts of Uberrima Fides-
utmost good faith) when a person has duty to
speak and he keeps silent it amounts to fraud.
• In contracts of utmost good faith(Uberrima
fide) the part in whom good faith is reposed
would make full disclosures and not keep
silent. Suppression of truth in such cases is
equivalent to suggestion of falsehood.
• Withholding of facts amounts to fraud.

31. PJ Chacko V Chairman, LIC of India
• The insured had undergone an operation for Adenoma
Thyroid, a major operation, four years prior to the date
of proposal made by him, without disclosing the fact
while obtaining the insurance policy. He took the policy
on 6th July 1987 and within 6 months on 21st Feb he
died. On the premise that the insured suppressed
material facts, the policy was repudiated by the
respondents on 10th Feb 1989.
• The SC upheld the repudiation of policy and observed
suppression was fraudulently made by the policy
holder or that he must have been aware at the time of
making the statement that the same was false.

32. Non disclosure of Marital status
• Relating to parties to marriage- amounts to fraud.
• Kiran Bala V Bhaire Prasad Srivastav- the first
marriage of the appellant Kiran bala was annulled
on the ground that she was unsound mind. She
was married to respondent, the second time. The
fact that she suffered from mental illness and
under treatment was not disclosed by her and
her parents to the groom.
• Held- it was not the duty of the bridegroom to
find out these facts, but duty of girl and her
parents to disclose these facts. Thus consent of
bridegroom was held to be obtained by fraud and
the second marriage was annulled by a decree.

33. Statutory disclosure
• Even if the disclosures are required by a
statute then it must be disclosed as there
arises a duty.
• If a grantor of license is bound to disclose to
the licensee such defects in the property
licensed which can harm the licensee or his
property and of which he is aware but the
licensee is not aware.

34. Duty to disclose changes
• If a statement is true when made, but subsequently
becomes false by the change of circumstances, there is a
duty to disclose the change, before other party acts on it. If
it is not disclosed it amounts to fraud.
• With V O’Flanagan a medical practioner Dr. O’Flanagan
started negotiation in January for the sale of his practice.
He stated that his average practice was 2000 pounds per
annum. The contract of sale of practice was signed in the
month of May and by that time the position of his practice
was changed owing to his illness and consequent absence
from practice. This was not disclosed o the purchaser and
when They took charge they found that it was non-
existent.
• They brought an action for recession of contract
• Held- the contract was cancelled as it was the duty of the
vendor to disclose the changed circumstances. Thus the
plaintiff were entitled to rescind the contract

35. 2. Silence being equivalent to speech
• Sometimes keeping silence as to certain facts
may be capable of creating an impression as
to existence of a certain situation.
• The relation of the party in certain cases
makes it obligatory on the other to tell or
disclose
• In case silence is fraud, but the other party
can discover the truth by ordinary diligence,
he cannot avoid the contract.

36. Section 19 exception
• If such contract was caused by
misrepresentation, or by silence , fraudulent
within the meaning of sec17 the contract
nevertheless is not voidable, if the party
whose consent was so caused had the means
of discovering the truth with ordinary
diligence.
• Shri krishna V kurukshethra University

37. 17(2) active concealment
• It is different from merely keeping silent. By
active concealment there is an effort to see that
the other party is not able to know the truth and
he made to believe as true which in fact is not so.
• Ex- B having discovered presence of ore in the
land of A, conceals it from revealing to A and
successfully using A’s ignorance buy the land for
less value. The contract is voidable at the option
of A

38. 17(3) promise made without an intention to perform
• When promise is made there is deemed to be
an undertaking to perform it. If no intention is
present when contract is made, it amounts to
fraud.
• Ex A takes a loan from B with out any
intention to repay or when he is insolvent or
purchases goods without any intention to
repay. It amounts to fraud

39. 17(4)
• Any other act fitted to deceive- depends on
circumstances.
• Act or omission declared to be fraudulent- 17(4)- Ex-
• section 55 of TP Act The seller is bound—(a) to
disclose to the buyer any material defect in the
property of which the seller is, and the buyer is not,
aware, and which the buyer could not with ordinary
care discover;
• The buyer is bound—(a) to disclose to the seller any
fact as to the nature or extent of the seller’s interest in
the property of which the buyer is aware, but of which
he has reason to believe that the seller is not aware,
and which materially increases the value of such
interest;

40. Akhtar Jahan Begam V Hazarilal
• Defendant sold some property to Plaintiff
stating that in the sale deed that he would be
liable to him if he suffered any loss owing to
defective title. Defendant, earlier to this
transaction had sold property to somebody
else, but did not inform it to the plaintiff.
• Held- Defendants have committed fraud.

41. Effect of False statement
• If a person’s mind has not been influenced by the
false statement when he enters into the contract,
there is no fraud.
• Attwood V Small- the seller of a mine made some
statements exaggerating the earning capacity of
the mine. The buyer instead of relying on the
statement got it verified from independent agent,
who were supposed to be competent and
experienced in judging the same.
• Held- in an action against the seller it was held
that he could not be held liable for fraud.

42. Continue..
• If a person says that the other party should
enter into contract on his own responsibility,
he cannot be held guilty.
• Ward v Hobbs- the seller of the pigs, suffering
from typhoid fever sold them telling the buyer
that he has to buy them with his own risk. The
buyer had purchased it in his own risk and
when the pigs were mixed with healthy one
the disease was conveyed to the other pigs
too.
• Held- there was no false statement on which
he relied and thus no fraud.