2. CONSENT
Meaning
This is called „consensus –ad –idem‟.
Means the matching of minds.
According to sec-13 “two or more persons are said to
consent when they agree upon the same thing in the
same sense.” Thus , consent involves identity of
minds in respect of the subject matter of the
contract.
3. FREE CONSENT
Free consent is one of the essential elements of a
valid contract.
It is evidenced by section-10 which provides that all
agreements are contracts if they are made by the free
consent of the parties.
4. Contd..
A consent is said to be free when it is not caused by –
Coercion , or
Undue influence, or
Fraud , or
Misrepresentation , or
Mistake.
5. 1. COERCION
Coercion means compelling a person to enter into a
contract under a pressure or a threat.
According to sec-15, a contract is said to be caused by
coercion when it is obtained by-
1. Committing any act which is forbidden by the
Indian penal code .
2. Threatening to commit any act which is forbidden
by the Indian penal code .
6. Contd..
3. Unlawful detaining of any property .
4. Threatening to detain any property.
5. Threat to sue on the basis of falls.
6. Threat to commit suicide.
Example;
X beats y and compels him to sell his car for Rs
50000. Here y is consent has been obtained by
coercion because beating someone is an offence
under the Indian penal code.
8. 2. UNDUE INFLUENCE
The term „undue influence‟ means dominating the
will of the other person to obtain an unfair advantage
over the other .
Where the relations between the parties are such
that one of them is in a position to dominate the will
of the other.
The dominant party uses that position to obtain an
unfair advantage over the other.
9. Presumption of domination of will
1. Where one party holds a real authority over the
other.
Example
- Police officer and criminal,
- Income tax officer and assesses. etc.
-Guardian and ward.
-Trustee and beneficiary.
10. 2. Where a one party have a fiduciary relationship with
the other party.
Example
-father son relationship,
-doctor patient relationship.etc
11. 3. Where one person or a party makes a contract with
other person or party who is in mental distress.
Example
- widow,
-old person,
-father of death son.etc
12. 3. FRAUD
Meaning
The term „fraud‟ means a false representation of fact
made willfully with a view to deceive the other party.
Fraud means a committed by a party to a contract or
with his connivance, or by his agent ,with intent to
deceive another party to induce him, to enter into the
contract.
Example
X sells to y locally manufactured goods as imported
goods charging a higher price ,it amounts to fraud.
13. Essential of a fraud
The main essential rules of a fraud:
1.The fraudland act must be committed with an
intention to cheat.
2.The fraudland act must be committed with
knowledge of its falsity.
3.The fraud must have been committed only by the
party of the contract or by the his authorized agent .
4.A promise to made without any intention to perform
it.
5.Mere silence is not a fraud.
14. Consequences of a fraud
Voidable contract.
Restitution should take place.
Claim for damages also.
Punishable offence.
15. 4. MISREPRESENTATION
Meaning
Misrepresentation may be defined as an innocent
miss-statement of facts which are material for the
contract.
Or , misrepresentation is a falls
representation, which is made innocently.
16. Legal rules of misrepresentation
1.It must be a material fact.
2.The misrepresentation must be false, but the person
making it honestly believe it to be true.
3.Breach of duty: sometimes there is a time gap
between the statement of a fact and the finalization
of the contract .during this time, there may be a
change in circumstances , which may be brought to
the notice of a party by the other.
17. Example of misrepresentation:
X says to y who intends to purchase his land, “my
land produces 2 tons of rice per acre.” x believes the
statement to be true although he has no sufficient
ground for the belief .y purchases x ‟ s land believing
x ‟s statement . Later on , y finds that the land
produces only 1.5 tons of rice per acre. Here x ‟s
representation is misrepresentation.
19. MISTAKE
Meaning
Mistake is an error in the subject matter of an contract.
Mistake can be two types:
mistake
mistake of fact mistake of law
20. a. Mistake 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.
Example
A agrees to buy from B a certain horse. It turns out that the
horse was dead at the time of the bargain, though neither
party was aware of the fact. The agreement is void because
there is bilateral mistake as to the existence of subject
matter.
21. b. Mistake of law
When a party enters into a contract, without the knowledge
of law in the country, the contract is affected by such
mistake but it is not void. A contract is not voidable because
it was caused by a mistake as to any law enforce in India.
The reason here is that ignorance of law is not an excuse at
all. However if a party is induced to enter into a contract by
the mistake of law then such a contract is not valid.
22. Example
A and B make a contract grounded on the erroneous belief
that a particular debt is barred by the Indian Law of
Limitation; the contract is not voidable.
