Free Consent and factors making it ‘not free’ in the Indian Contract Act, 1872

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This post is written by Anushree Tadge, 3rd year law student of ILS Law College, Pune, she tries to explain briefly what the concept of free consent is and why it is regarded as foundation stone of other Acts like Transfer of Property Act, Company Act, Family Laws etc.

Introduction to ‘Free Consent’

  • ‘Consent’ as a word is heard very often by individuals around the globe, as the feeling of ‘individuality’ is given importance more and more, consent as a provision is also evolving.   Derived from the Merriam Webster dictionary, ‘Consent’ is explained as ‘compliance in or approval of what is done or proposed by another.’
  • In simple words a voluntary agreement of one party to the proposal of others in order to reach or not reach the desired motive. Now even consents are of different types, these include implied, expressed, informed consent and unanimous consent. But, again for a person to provide consent, he/she should not be diagnosed with a mental disorder, age more than 18 years etc along with the major factor being the consent should be voluntary and not affected by any form of coercion. Fraud, undue influence.

‘Free Consent in the Indian Contract Act, 1872’

  • Section 13 of the Indian Contract Act, 1872 (hereinafter referred to as Act) defines the term ‘Consent’ as Two or more persons are said to consent when they agree upon the same thing in the same sense.
  • For example, suppose there are two parties in a contract, A and B. It was seen that there was some land and “A” put a proposal to sell. “B” after being made aware of this proposal, analysed that it was the perfect opportunity, agreed to it. In this case, both parties showed their consent.
  • The principle of consensus-ad-idem is to be followed in contractual agreements.
  • Section 14 of the Act states that Consent is said to be free if the following factors are satisfied:
  • If the consent is free from coercion.
  • If the contract is not done under any undue influence.
  • If a contract is performed without any fraud.
  • The contract should not complete with any misrepresentation.
  • The contract should not be agreed to by mistake.
  • If there is no consensus, moreover free consensus between parties is very vital for the contact to be binding and legitimate. In case there is no free consent, the voidability of the contract depends if the aggrieved party wishes to challenge the legality of the contract leading them to be ‘voidable’ in nature.

Coercion

  • According to Section 15, it is the committing or threatening to perform, any act that is forbidden by the Indian Penal Code, 1860; or (ii) the unlawful detainment or threatening to do the same of any property, to the prejudice of any particular person, with the intention of leading any individual to enter into an agreement.
  • In the famous case of Ranganayakamma Vs. Alwar Setti (1889), A Hindu Widow of 13 years, was coerced into adopting a boy under the threat of not allowing cremation of her husband’s death. Following which, the widow feared and adopted the boy. Later she even applied for cancellation of the adoption. It was held that the adoption was voidable at her option as her consent was not free it was rather obtained by coercion is an offence under Sec 297 of the Indian Penal Code.
  • Now for cases where coercion is obtained by threats like ‘filing a suit’, it will also fall under the same category, because it is explicitly stated as an offence by the Indian Penal Code. In another interesting case of Ammiraju v. Seshamma, the issue was put forth whether ‘threat to commit suicide’ was a punishable offence? The Court ruled otherwise and put forth that such kind of coercion was not punishable by the IPC,1860.

Undue Influence

  • The second factor which makes ‘consent’ of particular cases to be compromised is Undue Influence. Section 16 (i) of the Act, defines undue influence as to where if the relationship existing between the parties are of such nature that one of the parties is in a superior position or can dominate the will of the other easily and actually uses that position to obtain an unfair benefit over the other person or force him/her to act particularly in a contract is ‘Undue Influence’.
  • Section 16 (2) of the Act states that a person is deemed to be in a position to dominate the will of another where:
  • He holds a real or some apparent authority over the other person. For e.g. Master and Servant
  • There exists a fiduciary relationship based on trust and confidence for e.g. guardian and ward
  • Contract with a person experiencing mental distress/ disorder/ weak intelligence/ illiterates etc.
  • The burden of proof lies on the party at whose end the contract seems voidable, there has to be compulsory proving of the fact that there existed a relationship where one party could dominate another and the party actually used such position to obtain an unfair advantage.

Fraud

  • The third way by which consent is unfree can be explained is Fraud. The term ‘fraud’ is defined in Section 17 of the Act as follows:
  • “Fraud includes any of the acts committed by one of the parties in a contract or by anyone of his agents, with an intention to deceive the other party so as to lead him to enter into the contract:

i) the suggestion of a fact, that is not true,

ii) the active concealment i.e. hiding of a fact.

iii) making a promise without any actual intention of performing it;

iv) any other act in order to deceive; any act or omitting the law which especially shows it to be fraudulent.”

  • A very interesting point to note is that the Section 17 says “Mere silence as far as facts are concerned are likely to affect the willingness of an individual to enter into a contract is not really fraud”. Although this rule has an exception to circumstances where there is a duty to speak and if the ‘contract is made in good faith.’

Misrepresentation

  • A representation, when performed in a wrong manner, innocently or intentionally, is called ‘misrepresentation’.
  • Misrepresentation should be made innocently, absolutely believing it to be true and without any intention of deceiving the other party.
  • Misrepresentation should be pertinent to the facts of the case. A mere expression of one’s opinion is not stating of a fact. It should also be used in inducing the other party into entering the contract. Like all the other forms explained in this post, even misrepresentation is voidable at the part of the aggrieved party, he can challenge the contract to be null and void or ask for an honest performance of the same.
  • However, under few circumstances the aggrieved party loses the right to rescind the contract, these are-
  • If the truth could be discovered with ordinary diligence.
  • If the consent is not actually induced due to misrepresentation.
  • If the parties cannot be led back in such a way that they acquire their original positions.
  • Even, after coming to know about misrepresentation if the party acts in such a manner that it shows it’s an affirmation to the contract, the party, in such case will automatically lose the right to rescind.

Mistake

  • Mistake is an incorrect assumption turning into a belief concerning anything.
  • Mistakes are of two kinds- Mistake of Law and Mistake of Fact.
  • Mistake of law can be of two types further

(ii) mistake related to foreign laws

(i) mistake related to the law of the land

  • A mistake of fact can also be divided into two –

(a) bilateral mistake.

(b) unilateral mistake.

  • Bilateral mistake may relate to topics like the subject-matter where both parties are combinedly at fault.  Mistake of fact regarding subject-matter may be the existence of, the identity of, the title of, quantity of, quality of the subject-matter, or even its price. Such a mistake makes the Contract void.
  • A unilateral mistake is when only one party is at fault by virtue of the assumption that there is the same sense of subject matters in both parties. For e.g. A wants to sell a horse but B thinks it’s a pony.

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