The document discusses the concepts of free consent, coercion, undue influence, misrepresentation, fraud, and mistake under Indian contract law. It provides definitions and explanations of these concepts according to various sections of Indian contract law. Specifically, it explains that for consent to be considered free, it cannot be caused by coercion, undue influence, fraud, misrepresentation or mistake. It also discusses the implications and consequences of contracts entered into without free consent due to these vitiating factors.

1. FREE CONSENT
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

2. Meaning of ‘consent’ and ‘free
consent’(Secs. 13 and 14)
 Consent means acquiescence or act of assenting to an
offer. "two or more persons are said to consent when they
agree upon the same thing in the same sense.(Sec. 13)
 Free consent(Sec. 14)-consent is said to be free when it is
not caused by:
(1) coercion as defined in sec.15, or
(2) undue influence as defined in sec.16. or
(3) fraud as defined in sec. 17, or
(4) misrepresentation as defined in sec.18, or
(5) Mistake, subject to the provisions of sec. 20, 21 and 22
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

3. Coercion
 ‘Coercion’ is the committing or threatening to
commit any act forbidden by the Indian Penal
Code, 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 (Sec.15)
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

4. Effects of coercion
 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.(sec.19)
 According to Sec. 72 , a person to whom money
has been paid, or anything delivered by mistake or
under coercion, must repay or return it.
 The threat of suicide amounted to coercion within
Sec. 15 and the release deed was, therefore,
voidable.’
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

5. Undue-influence
 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.(Sec.16(1))
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

6. Contd..
 A person is deemed to be in a position to
dominate the will of another where he-
(a) Holds real or apparent authority over the other,
or
(b)stands in a fiduciary relation to the other; or
(c) makes a contract with a person whose mental
capacity is temporarily or permanently affected by
reason of age, illness or mental or bodily distress.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

7. Contd..
 Where a person, who is in a position to
dominate the will of another, enters into a
contract with him, and the transaction
appears to be unconscionable, the burden of
proving that such contract was not induced
by undue influence lies upon the person in a
position to dominate the will of the
other.(sec.16)
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

8. Contd..
 Relationships which raise presumption of under-
influence:
(1) parent and child,
(2) trustee and beneficiary,
(3) religious guru and disciple,
(4) guardian and ward,
(5) solicitor and client.
(6) doctor and patient, and
(7) fiancé and fiancée
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

9. Contd..
 No presumption of undue-influence in the
following cases:
(1) husband and wife (should not be pardanashin),
(2) landlord and tenant,
(3) creditor and debtor.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

10. Misrepresentation and fraud
 A representation ,when wrongly made, either
innocently or intentionally, is a
misrepresentation. Misrepresentation may be-
(1) an innocent or unintentional misrepresentation,
or
(2) an intentional, deliberate or willful
misrepresentation with an intent to deceive or
defraud the other party.
The former is called ‘misrepresentation’ and the
‘latter’ is called fraud.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

11. Misrepresentation
According to Sec. 18 , there is misrepresentation-
1. When a person positively asserts that a fact is true
when his information does not warrant it to be so,
though he believes it to be true.
2. When there is any breach of duty by a person which
brings an advantage to the person committing it by
misleading another to his prejudice.
3. When a party causes, however innocently, the other
party to the agreement to make a mistake as to the
substance of the thing which is the subject of the
agreement.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

12. Requirements of misrepresentation
 It must be a representation of a material fact. Mere
expression of opinion does not amount to
misrepresentation even if it turns out to be wrong.
 It must be made before the conclusion of the contract
to induce the other party to enter into the contract.
 It must be made with the intention that it should be
acted upon by the person to whom it is addressed.
 It need not be made directly to the plaintiff. A wrong
statement of facts made to a third person with the
intention of communicating it to the plantifff,also
amounts to misrepresentation
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

13. Consequences of misrepresentation
1. Avoid or rescind the contract; or
2. Accept the contract but insist that he shall be placed
in the position in which he would have been if the
representation made had been true.(Sec. 19)
Loss of right of rescission-
1. If he, after becoming aware of the misrepresentation
or fraud, takes benefit under the contract or in some
other way affirms it.
2. If restitutio in integrum of the parties is not possible.
3. If a third party has acquired rights in the subject-
matter of the contract in good faith and for value.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

14. Fraud
According to Sec. 17,’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 or
to induce a person to enter into contract.
1. The suggestion that a fact is true when it is not true and
the person making the suggestion does not believe it to
be true.
2. The active concealment of a fact by a person 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.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

15. Consequences of fraud
1. The party defrauded can rescind the contract
within reasonable time (Sec. 19, para 1).
2. He can insist on the performance of the contract
on the condition that he shall be put in the
position in which he would have been if the
representations made had been true.
3. He can sue for damages.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

16. Contract not necessarily voidable-exceptions
1. Where the consent of a party to a contract was
caused by misrepresentation or fraud and that party
could discover the truth by ordinary diligence.
2. Where a party enters into a contract in ignorance of
the misrepresentation or fraud.(expl to sec.19).
3. Where, before the contract is avoided, the interests
of third party intervene.
4. Where a party to a contract, whose consent was
caused by misrepresentation or fraud, cannot be put
in the position in which he would have been if the
representation made had been true.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

17. Silence as to facts
 Explanations to sec. 17 also lays down that mere
silence as to facts likely to affect the willingness
of a person to enter into a contract is not fraud.
 There are two statutory exceptions to the above
rule-
(1) where the circumstances of the case are such
that, regard being had to them, it is the duty of
person keeping silence to speak.
(2) where silence is, in itself, equivalent to speech.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

18. Mistake
 Mistake is erroneous belief about something.
It may be a :
(1) Mistake of law.
(2) Mistake of facts.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

19. Mistake of law
 Mistake of law of the country- The general rule
as regards mistake of law of country is that
ignorance of law is no excuse.
 Mistake of law of a foreign country is regarded
as a mistake of fact and the agreement in such
case is void.(Sec.21)
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

20. Contd..
 Example:
A owned B Rs. 10,000.B was under the impression that the debt
was time-barred . B, however , presses A to pay the amount of
the debt. A was aware that debt was not barred by the law of
limitation. A offered to pay Rs. 3000 in full settlement of B’s
claim. B accepted the offer. Thereafter, B found out that the
debt was not barred by the law of limitation. B desired to avoid
the contract. Here, the contract between A and B is founded on
the erroneous belief that A’s debt is barred by the law of
limitation. This is a mistake as to the law in force in India. B
cannot avoid the contract.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

21. Mistake of fact
Mistake of fact may be a:
1. Bilateral mistake-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.(Sec. 20)
Bilateral may relate to –
1. Subject matter- It may relate to price, quantity
,identity,quality,title of the subject matter
2. Possibility of performance- It may relate to legal and
physical impossibility of performance.
In both these cases , the agreement is void.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

22. Contd..
 Examples:
1. A, being entitled to an estate for the life of B, agrees to
sell it to C.B was dead at the time of agreement, but both
the parties were ignorant of the fact. The agreement is
void
2. A buys a painting from B at the price if Rs.20,000.Both
A and B believed it to be the work of a known artist by B
did not make any representation or warranty about it.
Later A comes to know that it was a new one and worth
only Rs. 1000.A is bound by a contract.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

23. Contd..
 Unilateral mistake-where only one of the parties
is under a mistake as to matter of fact the contract is
not voidable(Sec.22).There are however two
exceptions to this rule:
1. Identity of the person contracted with. If A
intends to enter into a contract with B, C cannot give
himself any right in respect of the contract by
accepting the offer.
2. Nature of contract. Where a person is made to enter
into a contract through the judgment of another but
through no fault of his own
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

24. Contd..
 Examples of unilateral mistake:
1. A submitted a tender to B for construction of a number of
houses .A made a mistake in calculating the cost therefore his
offer was lower than other tenderers.A’s tender was accepted.
Held, it was a binding contract although it was an erroneous
estimate bases on unilateral mistake.
2. A intends to enter into contract with B but enters into contract
with C believing him to be B.The contract is void if identity
of a person is a material factor.
3. H bought oats from S thinking that the oats were old; though
they were new, it was held that H had been shown the sample
of oats and therefore H could not avoid contract.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

25. CONSIDERATION
 When a party to an agreement promises to do something, he
must get “something “ in return. This “something” is defined
as consideration.
 “A valuable consideration in the sense of the law may consist
either in some right,interest,profit or benefit accruing to one
party, or some forbearance,detriment,loss or responsibility
given,suffere or undertaken by the other.”
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

26. Contd..
 Consideration is :
1. An act i.e., doing something
2. An abstinence or forbearance
3. A return promise
 Need for consideration –law enforces only those promises
which are made for consideration is that gratuitous or
voluntary promises are often made rashly and without due
deliberation.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

27. Legal Rules as to consideration
1. It must move at the desire of the promisor.
2. It may move from the promisee or any other person.
3. It may be an act, abstinence or forbearance or a return
promise.
4. It may be past, present or future.
5. It need not be adequate.
6. It must be real and not illusory-a)physical impossibility
b)legal impossibility c)uncertain consideration d)illusory
consideration.
7. It must be something which the promisor is not already
bound to do.
8. It must not be illegal, immoral, or opposed to public policy.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

28. “AContract without Consideration is Void”-
Exceptions
1. Love and affection- a written and registered agreement based
on natural love and affection between near relatives is
enforceable even if it is without consideration.
2. Compensation for voluntary services- A promise, to
compensate, wholly or in part, a person who has already
voluntarily done something for the promisor, is enforceable,
even though without consideration.
3. Promise to pay a time barred debt- The promise may be to
pay the whole or any part of the debt. The debt must be such
“of which the creditor might have enforced payment but for
the law for the limitation of suits.
A debt is barred by limitation if it remains unpaid or
unclaimed for a period of three years. Such a debt becomes
legally irrecoverable.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU

29. Contd..
4. Completed gift
5. Agency- no consideration is necessary to create an
agency
6. Charitable Subscription where the promisee on the
strength of the promise makes commitments,i.e., changes
his position to his detriment.
Prepared by Dr. Seema H. Kadam,Associate Prof.,TMES-MBA,GTU