Any agreement between two parties that is enforceable by the law is a Contract.
Free consent in contract
Essentials of a valid contract are given under the act:
- An agreement- by the proposal by one party and acceptance by the other party
- Competency of the Parties
- Free consent
- The agreement must not be forbidden by law
Consent is a very important part of the formation of a contract. Any contract which is not made by free consent is a void contract and it will not be enforceable by law.
Meaning of free consent
When two persons or parties agree upon the same thing from their own free will is known as free consent. Section 14 of the act deals with Free Consent.
Example of free consent
Ram said to Shyam that he wants to sell his mobile phone to Shyam at the price of 10,000. Shyam agrees to buy that at the same price or consideration as Ram said. Here, Ram offers to Shyam and Shyam accepts the same with his free consent.
What is the importance of free consent?
Free consent is the essential requirement of the Valid Contract, any contract without Free Consent will lead to make the Contract Void.
What are the elements of free consent?
The elements of Free Consent are given under Section 14 of the Indian Contract Act, 1872. The section clearly said that the consent will be said to be free when it is not caused by—
- Undue influence
These five are the main elements given under the act which must not be there at the time of Consent.
Section 15 of the Indian Contract Act, 1872 defines Coercion. Using force to compel a person to enter into the contract, which he does not want to do so, is Coercion. Here, it is not the free consent of the person to make the contract.
What is Coercion?
Committing or threatening to commit any act which is forbidden by the IPC, or unlawful detaining or the person, or giving of threatens to detain any property of the person, to cause the person to agree.
The consent obtained under Coercion makes the Contract voidable. Now, it depends upon the person that he can make the contract void but the burden of proof will lay on the person whose consent was taken under Coercion.
For example – Ravinder wants to buy the house of Baldev. The actual cost of the house is 50 lakhs. Ravinder threatens Baldev and takes his house in 15 lakhs only. It is not free consent because the consent was obtained by coercion. The Baldev has the option to make the contract void because Ravinder took his consent forcefully which comes under the Coercion. Baldev has to prove the coercion that his consent was not freely given to sell the house.
What may not cause coercion?
- A threat to strike is no coercion
- Statutory compulsion is no coercion
- The threat to goods is no duress
The undue influence is given under section 16 of the act. The consent of a party for the contract which has been obtained by undue influence, will not be recognized as free consent of the part which is needed for the performance of the contract. The contract, made based on consent taken by undue influence, is voidable at the option of the party influenced by others.
What is Undue Influence?
Undue Influence is when the relationship between the parties is such a nature that one party is in the position to dominate the will of another one, and uses that position to take the unfair advantages over others.
The section also gives describes the idea that how the person can abuse his authority in the following ways,
- Where the person holds a real authority over the other person, or if the person is in a fiduciary relationship with the other person; or
- Where the person makes the contract with the person whose mental condition is not stable either temporary or permanently affected by the illness of age or illness.
For example, Amit sold his mobile for only Rs 5000, to his teacher Suresh, after his teacher promised him good grades. Here the consent of Amit, who is an adult, is not free, he was under the influence of his teacher Suresh.
The consent obtained under undue influence makes the Contract voidable. Now, it depends upon the person that he can make the contract void but the burden of proof will lay on the person whose consent was taken under Undue influence.
The fraud is given under section 17 of the act. When the consent of either party is obtained by fraud to the contract, the consent is not free. The contract, made based on consent taken by fraud, is voidable at the option of the party.
What is fraud?
Fraud means any act which is done by one party to the contract, or any agent of the party, to deceive the other party, or the agent of another party, or to induce the party to enter into the contract:
- Suggesting any fact which is not true
- the active concealment of facts
- A promise made without any intention of performing it
- Any other such act fitted to deceive
For example, Adnan bought a Horse from Bhuvan. Bhuvan claims the horse can be used for racing. But after the Contract, Adnan found that the Horse is lame and cannot use on his farm. Here Bhuvan knowingly deceived Adnan and this will amount to fraud.
There are some important points which should be taken into the consideration:
- Mere silence is not a fraud
- The aggrieved party should suffer from some loss due to the fraud
- The statement which is given by the party must be fact, not mere opinion.
Section 18 of the Indian Contract Act deals with Misrepresentation. The consent taken by the misrepresentation will not be considered as free consent. The contract will become voidable at the option of the parties.
What is Misrepresentation?
Any innocent misstatement or false, incorrect, or inaccurate statement which is given without the intention to deceive the person is Misrepresentation. The main difference between fraud and Misrepresentation is the Misrepresentation is innocent and it is not intentional.
A positive statement which, though not true, he believes to be true
Any breach of duty without the intention to deceive the party
Causing a party to an agreement to make a mistake as to the substance of the agreement, innocently
The mistake is when the consent of the parties to the contract is caused by a mistake. It is not free consent that is needed for the validity of the contract. Both parties make the contract under some misunderstanding of the fact relating to the agreement. This means there would be no agreement between the parties if they were aware of the facts.
In the case of Tarsem Singh V. Sukhminder Singh
The sale of the land was in the question, the seller intended to sell his land in the terms of Kanals whereas the buyer was intended to purchase the same in the terms of Bighas. It was held by the court that the facts were not clear to both parties. It falls under the Mistake of the parties.