For a contract to be valid, it is necessary that the parties provide free consent to be terms. If the contract were not with free consent, the contract would be voidable by the other party whose consent was not taken or was not free. Consent is said to be free only when it is not entered by means of-
- Coercion
- Undue Influence
- Fraud
- Misrepresentation and
- Mistake
Coercion (Section 15 and Section 72)
Coercion refers to any of the following:-
1). Threatening to commit any act prohibited by the Indian Penal Code
2). Detaining not as per law or even threatening to detain any property, with mere the intention of constraining an individual to enter into an agreement.
→ Case study: Ranganayaamma vs. Alwar Setty
A girl aged 13 lost her husband and she was forced to adopt a boy by her in laws. They denied the dead body from being removed for cremation until her she agrees to adopt a boy. The adoption of the boy was kept aside by the court as the consent for the same was obtained by way of Coercion.
Undue Influence (Section 16)
When there is a special relationship between the parties, in such a way, that one person has the ability to influence the other by persuading them and is able to dominate his/her will to get undue advantage, and then he/she is said to have exercised undue influence. Normally Undue influence happens when an individual has authority/power over the other, is in a fiduciary relationship or is a caregiver for a person who is handicapped. Undue influence is also called moral coercion.
Fraud (Section 17 and 19)
Fraud is a misrepresentation done intentionally to deceive a person and force him/her to enter into a contract. The following states where Fraud may happen:-
- Any false advice given by one party to another who does not believe it to be true.
- Hiding of a fact by one party although having knowledge about the same.
- False Promises made with no intention to abide by it.
- Any deceitful act.
- Any act which is not as per law or any omission, which is specifically stated to be fraudulent as per law.
As there is active concealment of facts, the contract is voidable even though the party has the ways and means to identify the truth with ordinary diligence.
→ Case Study:-Peek vs. Gurney
The outline of the organization did not refer to the presence of any document revealing liabilities. This brought about the organization seeming, by all accounts, to be doing great. In the event that the report was uncovered, it would have changed the impression about the organization. The court decided that the non-divulgence added up to misrepresentation and any individual who bought shares on the confidence of this plan could void the contract.
Misrepresentation (Section18-19)
Misrepresentation can be stated as common simple misrepresentation while fraud is known as fraudulent misrepresentation. However, the falsity or inaccuracy is not due to any desire or defrauds the other party. Such happens because of a statement, which is made innocently. The party making such statement believes that to be true. Such can be avoided by the party subject to such misrepresentation.
Mistake (Sections 20-21)
Mistake may be characterized as a wrong conviction from the parties to the contract concerning something relating to the contract. A mistake of fact is pardoned yet a mistake of law is reprehensible.
