Free Consent and Its

Vitiating Factors

- Varun Malik
Asst. Professor of Law
NALSAR University of Law
WHAT AGREEMENTS ARE CONTRACTS
Section 10. What agreements are contracts.—All agreements are
contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.
FREE CONSENT AND VITIATING FACTORS
• Section 13. “Consent” defined.—Two or more persons are said to consent when
they agree upon the same thing in the same sense.

• Section 14. “Free consent” defined.—Consent is said to be free when it is not

caused by—
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of sections 20, 21 and 22.
COERCION
Section 15. “Coercion” defined.—“Coercion” is the committing, or threatening to
commit, any act forbidden by the Indian Penal Code (45 of 1860) 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.
Explanation.—It is immaterial whether the Indian Penal Code (45 of 1860) is or is
not in force in the place where the coercion is employed.
Illustration
A, on board an English ship on the high seas, causes B to enter into an agreement
by an act amounting to criminal intimidation under the Indian Penal Code. (45 of
1860). A afterwards sues B for breach of contract at Calcutta.
A has employed coercion, although his act is not an offence by the law of England,
and although section 506 of the Indian Penal Code (45 of 1860) was not in force at
the time when or place where the act was done.
Cases/ Illustrations
• Astley v. Reynolds [1731]
UNDUE INFLUENCE
16. “Undue influence” defined.—(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.
CASES/ ILLUSTRATIONS
• POSITION OF DOMINANCE
• Williams v. Bayley [1866, HoL]
• Mannu Singh v. Umadat Pande [1888, All.]
• Moody v. Cox [1917, CoA]
• Subhash Chandra Das Mushib v. Ganga Prasad Das Mushib [1967, SC]
• INEQUALITY OF BARGAINING POWER
• Lloyds Bank v. Bundy [1975, QB]
• ECONOMIC DURESS LEADING TO POSITION OF DOMINANCE
• Atlas Express Ltd. v. Kafco Ltd [1989, CoA]
• Also See, Universal Tankships Inc. v. Int. Transport Workers’ Federation [1982,
HoL]
POWER TO SET ASIDE CONTRACT INDUCED BY
UNDUE INFLUENCE
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.
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 to the Court may seem just.
FRAUD
17. “Fraud” defined.—“Fraud” means and includes any of the following acts committed by a party to a contract, or
with his connivance, or by his agent , with intent to deceive another party thereto of 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.
Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into a
contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is
the duty of the person keeping silence to speak , or unless his silence is, in itself, equivalent to speech.
CASES/ ILLUSTRATIONS
• Derry v. Peek (1889, HoL)
• Mithoo lal Nayak v. LIC [1962, SC]
• DDA v. Skipper Constructions (2000, SC)
• Keats v. Earl of Cadogen
DUTY TO SPEAK (Explanation to the section)
• Ubberima Fides
• Insurance Contracts
• Prospectus of a company
• Fiduciary Relations
• Where silence equivalent to speech
• Half Truth
• Change in Circumstances
MISREPRESENTATION
SECTION 18. “Misrepresentation” defined.—“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 an
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.
CASES/ ILLUSTRATIONS ON
MISREPRESENTATION
• UNWARRANTED STATEMENTS [18 (1)]
• Oceanic Steam Navigation Co. v. Soonderdas Dharamsey [1890, Bom.]
• Chuan Bee Realty Pte. Ltd. v. Teo Chee Yeow [1996, Singapore]

• BREACH OF DUTY WITHOUT INTENT TO DECEIVE [18 (2)]

• Thake v. Maurice [1986, CoA]
• Eyre v. Measday [1986, CoA]

• INNOCENTLY INDUCING MISTAKE ABOUT THE SUBJECT MATTER [18 (3)]

• Ferrand v. Lazarous [2002, EWHC]
• R v. Kylsant [1932, CoA]
• MISREPRESENTATION MUST BE OF MATERIAL FACT

• EXPRESSIONS OF OPINION AND MISREPRESENTATION

• Smith v. Land and House Property Corpn. [1884, CoA]
• Bisset v. Wilkinson [1927, PC]

• CHANGE IN CIRCUMSTANCES
REPRESENTATIONS AND WARRANTIES CLAUSE
REMEDY OF RESTITUTION IN CASES OF
VOIDABLE AGREEMENTS
Section 64. Consequences of rescission of voidable contract.—When a
person at whose option a contract is voidable rescinds it, the other
party thereto need not perform any promise therein contained in
which he is promisor. The party rescinding avoidable contract shall, if
he have received any benefit thereunder from another party to such
contract, restore such benefit, so far as may be, to the person from
whom it was received
MISTAKE
20. 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.
Explanation.—An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement,
is not to be deemed a mistake as to a matter of fact.

21. 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.

22. 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.
KINDS OF MISTAKE
• Mistake of Identity Phillip vs Brook
Lewis vs Avery
Ingram vs Little
Shogun Finance Ltd vs Hudson
• Mistake of Subject Matter
• Couturier v. Hastie [1856, HoL]
• Raffles v. Wichelhaus [1864, HoL]
• Seikh Bros Ltd. v. Ochner [1957, PC]

• Mistake regarding Nature of Promise

REMEDY OF RESTITUTION IN CASES OF VOID
AGREEMENTS

65. Obligation of person who has received advantage under void agreement, or contract that becomes void.—When an agreement is
discovered to be void, or when a contract becomes void, any person who has received any advantage under such
agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received
it.
THANK YOU