Free Consent as a Essential of Contract

Introduction

Section 2(h) of the Indian Contract Act, 1872, states that any agreement enforceable by law is a contract. For an agreement to become a contract there are several determinants which need to be present-

In a contract, when two or more parties agree upon the same thing in the same sense, it is considered as giving ‘consent’ and accepting the terms of the contract. Section 14 of Indian Contract Act, 1872 defines the term free consent. It states that "Consent is said to be given freely when it is not affected by the following external factors such as Coercion, Undue Influence, Fraud, Misrepresentation and Mistake.” When the consent is given under the circumstances of Coercion, Undue Influence, Fraud and Misrepresentation, it becomes voidable at the option of the party whose consent was affected. On the other side, when the consent is given under a mistake, instead of turning voidable, the contract in such a situation becomes void.

Factors Vitiating Free Consent

Ø Coercion

The consent of the party is said to be affected by coercion, if any of the party is in the position to intimidate another by doing the following acts:

• Committing or threatening to commit any act prohibited by Indian Penal Code.

If a person obtains someone’s consent by doing such acts which are unlawful and forbidden under IPC, then the consent taken for the formation of contract is not said to be given freely. In the case of Chikham Amiraju v Chikham Seshamma[1] the wife executed the release deed when her husband intimidated her that he will commit suicide if she did not execute a release deed in favour of his brother. The court held that threatening to commit suicide is a forbidden act under IPC. Hence the consent was so caused by coercion, which makes the contract between them voidable.

• Detaining or threatening to detain someone’s property unlawfully.

If a person unlawfully detain or threatens to detain someone's property in order to obtain the consent, he is said to committ coercion.

Illustration: A in order to buy the house of B intimidates him that he will detain his land if he will not agree to sell his house at a price decided by A. B under threat agrees to sell his house at the given price and signs the documents. The contract becomes voidable at the option of B as consent here was taken under coercion.

Ø Undue influence

A contract is said to be affected by Undue Influence only if the following three conditions are satisfied:

• One party should be in the position to dominate.

If the relationship between the contracting parties are such that one of the party is in the position to dominate the will of another. Relationship where Undue Influence is present: father-son, doctor-patient, teacher-student, etc.

• Use the position to dominate the will of another.

The person who is in the position to dominate the will is said to get the consent through undue influence only if he uses his dominant position against the will of another.

• Obtain an unfair advantage of another.

Only the presence of influence or dominance over another is not enough. The person should use that position to get the undue advantage in his favour while contracting.

Ø Fraud

The constructive meaning of Fraud is, “When the false representation of fact is done intentionally to get the consent of the other contracting party."

Consent is said to be taken through fraud when any of the following act is done by one of the contracting party, with the motive to entrap another:

• If one party gives his affirmation about any fact in a positive way even after knowing it to be false.
• If one party in order to get the consent of another, conceal some fact even after knowing it.
• If a person having the sole motive to obtain the consent of another makes any promise without any intention of performing it.
• If a person do any act which law expressly declared to be of fraudulent nature.

In Derry v. Peek[2], it was held that representation made with reckless indifference amount to fraud

Ø Misrepresentation

Misrepresentation means mis-statement of a fact material to the contract. In simple words we can say that misrepresentation is the assertion of inaccurate facts with the objective to make someone enter into a contract, without knowing the truth behind it. Misrepresentation includes following acts:

• When a person positively states a statement to another person and communicate it to be true and he believes it to be true, even when his information does not warrant it to be of true nature.
• If a party without having any intention to deceive another, commits any breach of duty and gains any advantage from it and misleads another to his prejudice.
• When a party makes a mistake as to the substance of the thing which is the subject matter of the agreement they entered into, even if it is done innocently.

Voidability of agreements where free consent is absent is given under Section 19 of Indian Contract Act, 1872. It asserts:

‘When consent to an agreement is caused by Coercion, Undue Influence, Fraud or Misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.’

Coercion, Undue Influence, Fraud, Misrepresentation are the factors which after vitiating the consent of contracting parties makes any contract voidable. The party whose consent was affected can now determine whether he wants to make the contract void or not. He can also insist that the contract shall be performed by both parties and have the right to ask the other party to put him in the position in which he would have been if the representations made by the other party to obtain his consent, had been true.

[Author Profile: Ankita Sharma, 1st Year BA LLB National University of Study and Research in Law, Ranchi]

[1] ILR (1918) 41 Mad 33, 36.

[2] (1889) LR 14 App Cas 337