In Indian contract law, free consent is essential for a valid agreement. Consent is considered free when it is not influenced by coercion, undue influence, fraud, misrepresentation, or mistake. The absence of free consent renders a contract voidable at the option of the aggrieved party. This principle ensures that all parties willingly and knowingly enter into contractual obligations.
1. MEANING AND DEFINITION OF FREE CONSENT
According to Section 13 of the Indian Contract Act, 1872, “Two or more persons are said to consent when they agree upon the same thing in the same sense.” Section 14 further clarifies that consent is free when it is not caused by:
- Coercion (Section 15)
- Undue Influence (Section 16)
- Fraud (Section 17)
- Misrepresentation (Section 18)
- Mistake (Sections 20, 21, and 22)
If consent is obtained through any of these means, the contract becomes voidable at the discretion of the party whose consent was so caused.
2. COERCION
Section 15 defines coercion as committing or threatening to commit any act forbidden by the Indian Penal Code, or unlawfully detaining or threatening to detain any property, with the intention of causing any person to enter into an agreement.
For instance, if ‘A’ threatens to harm ‘B’ unless ‘B’ sells his house to ‘A’ at a nominal price, ‘B’s consent is obtained through coercion.
Key Elements of Coercion:
- Commitment or threat of an act forbidden by law.
- Unlawful detention or threat to detain property.
- Intention to compel a person into an agreement.
Effect of Coercion:
A contract induced by coercion is voidable at the option of the coerced party. The aggrieved party can choose to enforce or rescind the contract. In Chikham Ammiraju v. Chikham Seshamma (1917) 41 Mad 33, the Madras High Court held that a threat to commit suicide amounts to coercion under Section 15.
3. UNDUE INFLUENCE
Section 16 describes undue influence as a situation where one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage. This often arises in relationships where there is a fiduciary duty or a power imbalance, such as between a doctor and patient or guardian and ward.
Key Elements of Undue Influence:
- Existence of a dominant position.
- Use of that position to obtain an unfair advantage.
Presumption of Undue Influence:
The law presumes undue influence in certain relationships, including:
- Parent and child
- Guardian and ward
- Religious advisor and disciple
- Doctor and patient
Effect of Undue Influence:
Contracts formed under undue influence are voidable at the option of the influenced party. In Raghunath Prasad v. Sarju Prasad (1924) 52 IA 1, the Privy Council held that a contract between a spiritual advisor and his devotee was voidable due to undue influence.
4. FRAUD
Section 17 defines fraud as acts committed by a party to a contract with intent to deceive another party or to induce them to enter into the contract.
Acts Constituting Fraud:
- Suggesting a fact that is not true, knowing it to be false.
- Active concealment of a fact by someone with knowledge or belief of the fact.
- Making a promise without any intention of performing it.
- Any other act fitted to deceive.
- Any such act or omission as the law specifically declares to be fraudulent.
Effect of Fraud:
A contract induced by fraud is voidable at the option of the deceived party. The aggrieved party can rescind the contract and claim damages. In Derry v. Peek (1889) 14 App Cas 337, the House of Lords held that a false statement made knowingly or without belief in its truth constitutes fraud.
5. MISREPRESENTATION
Section 18 defines misrepresentation as:
- 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 by misleading another to his prejudice.
- Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Effect of Misrepresentation:
Contracts induced by misrepresentation are voidable at the option of the misled party. The aggrieved party can rescind the contract but cannot claim damages unless fraud is involved. In With v. O’Flanagan [1936] Ch 575, it was held that failure to disclose a change in circumstances that rendered a true statement false amounted to misrepresentation.
6. MISTAKE
Mistake refers to an erroneous belief about something. Under the Act, mistakes can be of two types:
- Mistake of Fact: Both parties are mistaken about a fact essential to the agreement. Such agreements are void.
- Mistake of Law: A mistake regarding Indian law does not render a contract voidable.
