This is the second part of Free consent. This part will help you get a brief idea about Coercion, Undue Influence, Fraud, Misrepresentation & Mistake and its effects.
- Coercion
S.15 of the Indian Contract Act, 1872 defines Coercion:
“Coercion” is the committing, or threatening to commit, any act forbidden by the Indian Penal Code 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.
Case: Chikkam Amiraju v. ChikkamSeshama
Burden to Prove Coercion
• The burden to prove that the consent has been obtained by employing coercion lies on the party who wants to avoid contract on the ground of coercion.
Effect of Coercion
S.19 makes the provision for the effect of coercion.
It provides that if the consent to an agreement has been obtained by employing coercion, the contract will be voidable at the option of the party whose consent has been so obtained.
- Undue Influence
S.16 of the Indian Contract Act, 1872 defines Undue Influence as:
1) 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.
(2) In particular and without prejudice to the generality of the foregoing principle, 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.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Case: Manu Singh Vs. Umadat Pandey
Effect of Undue Influence
According to S.19-Aof the Indian Contract Act, 1872
“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.”
Any such contract may be set aside either absolutely or if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as the court may seem just.
- Fraud
S.17 of the Indian Contract Act, 1872 defines Fraud as:
“Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents , 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.
Case: Derry Vs. Peek
To constitute Fraud following conditions must exist:
1. Fraudulent Act
2. The fraudulent act must have been committed by a party to the contract or with his connivance or by his agent against the other party or his agent
3. Wrongful intention
4. Inducement
- Misrepresentation
S.18 of the Indian Contract Act, 1872 defines Misrepresentation as:
“Misrepresentation” means and includes(1) 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;
(2) any breach of duty which, without an intent to deceive, gains and advantage to the person committing it, or any one claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) 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.
Effects of Coercion, Undue Influence, Fraud and Misrepresentation – S.19 & S.19-A • S.19 of the Indian Contract Act, 1872:
S.19 -Voidability of agreements without free consent
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.
A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
S.19-A of the Indian Contract Act, 1872:
19A – Power to set aside contract induced by undue influence
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.
- Mistake
S.20 of the Indian Contract Act, 1872:
Agreement void where both parties are under mistake as to matter of fact. 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. An erroneous opinion as to the value of the things which forms the subject-matter of the agreement, is not be deemed a mistake as to a matter of fact.
S.21 of the Indian Contract Act, 1872
Effect of mistakes as to law
A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact.
S.22 of the Indian Contract Act, 1872:
Contract caused by mistake of one party as to matter of fact
A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.
Case: Ayekam Angahal Singh Vs. The Union of India
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