Contract

 A binding agreement between two or more parties

for performing, or refraining from performing,
some specified act(s) in exchange for lawful
consideration.
 The contract, to be valid must contain some
ingredients. One of the most important element is
the free consent of parties.
 CONSENT

According to section 13 two or more

persons are said to consent when they
agree upon the same thing in the same
sense. This means that there should be
perfect identity of mind. consensus ad
idem) regarding the subject matter of the
contract.
 free consent
A Consent is said to be free when it is not
caused by the following: -
Coercion (sec 15).
Undue Influence (sec 16).
Fraud (sec 17).
Misrepresentation (sec 18).
Mistake (sec 14).
 Flaw in Consent
Flaw in Consent

Coercion Undue Influence Misrepresentation Mistake

(sec15) (sec 17,18) (sec 20,21)
Coercion Undue (sec 16)
Influence Misrepresentation Mistake
(sec15) (sec 16) (sec 17,18) (sec 20,21)

Innocent or
Fraudulent or Willful Mistake of Fact Mistake of Law
(sec
Unintentional
Innocent or
Fraudulent or 17)
Willful (sec
Mistake 20)
of Fact (sec
Mistake 21)
of Law
(sec 18)
Unintentional
(sec 17) (sec 20) (sec 21)
(sec 18)
 Coercion

SECTION 15 – Coercion is committing or

threatening to commit any act forbidden by the
Indian Penal code, or the unlawful detaining or
threatening to detain any property to the
prejudice of any person, whatsoever with the
intension of causing any person to enter into an
agreement .
Effect of Coercion - Section 19

When the consent of a party to an agreement is

obtained by coercion, the contract becomes
voidable at the option of the party ,whose
consent is so obtained.
The burden of proving that the consent was
obtained through coercion shall be upon the
party who wants to set aside the contract on
the plea of contract.
 Example: -
An agent refused to hand over the account
books of business to the new agent unless the
principle released him for all liabilities. The
principal had to give a release deed as ,
demanded. Held , the release deed was given
under coercion and was voidable at the option
of the principle (MUTHTA Vs MUTHU
KARUPPA, (1925) 50 Mad. 786
 UNDUE INFLUENCE - Section16

Undue influence is the improper use of any power

possessed over the mind of the contracting party.
According to section 16, a contract is said to be
affected by undue influence when:
 The relations subsisting between the parties are

such that one of the parties is in a position to

dominate the will of other.
 Uses that position to obtain an unfair advantage

over the other.

Example of Undue Influence

By operation you just execute a deed of giving your

Whole property to me
 Difference between
coercion and undue influence

Coercion Undue Influence

The consent of the aggrieved party is The consent of the aggrieved party is
taken by committing or threatening to obtained by dominating the party by
commit an act forbidden by Indian taking an unfair advantage of his
Penal Code. position.

Physical force is exercised. Moral force is used in undue

Fraud (SANDEEP)
Section 17
 Meaning of Fraud

Misrepresentation of facts may be

intentional or innocent. Intentional
misrepresentation has been termed as
Fraud and innocent misrepresentation
has been termed simply as
‘misrepresentation’
in the contract act.
 Misrepresentation

Misrepresentation is a false representation

made innocently without any intention of
deceiving the other party .It may include two
things:
 Wrong statement of a material fact not known

to be false
 Non-disclosure of facts where there is a legal

duty to disclose without intention to deceive.

 Difference between Fraud and
Misrepresentation

Misrepresentation Fraud
There is no intention to In fraud the false statement
deceive or to gain any is made deliberately with a
undue advantage. clear intention of
deceiving the other party.
It makes the other In fraud the injured party
contract only voidable at besides avoiding the
the option of the party contract may also claim
whose consent has been the damages.
so caused.
MISTAKE
 Mistake of Law

Mistake of law is further divided into

three categories: -
 Mistake of Indian law

 Mistake of Foreign law

 Mistake as to Private rights of the parties

 Mistake of Fact

Mistake of fact can be categorized into: -

 Bilateral mistake

 Unilateral mistake
 Example: -
H bought oats from S a sample of which had been
shown to H. H erroneously thought that oats were
old. The oats were however New. Held, H could
not avoid the contract. [Smith v. Hughes, (1871) L.
R. 6 Q. B. 597].
Role play
 A NRI couple wants to come to India
and sell their property.
 They fly from New York to Chennai.

 The play starts here.

Husband wants to sell wife’s IPod!
He also knew that this IPod was not working…
A horse for contract!
The Stable On Fire…
 ROLE PLAY
 Case A • Undue
Influence
 Case B • Mistake
 Case C • Coercion
 Case D • Fraud
Questions
Can we ask some???
 MCQs
1. According to the Indian Contract Act, free consent is not
the product of: -
a) Coercion

b) Undue Violence

c) Fraud

d) Misrepresentation

I. a, b & c
II. b, c & d

III. a, c & d

IV. a, b & d
 MCQS
2. Match it up: -
Fraud Moral force is used.

Coercion No intention to deceive.

Misrepresentation Consent of aggrieved party taken by committing an act.

Undue Influence Injured party besides avoiding the contract may also claim the
damages.
 MCQS
Q.3: Which of the following is not a type of mistake
of law?
a) Mistake of Foreign Law

b) Mistake of Indian Law

c) Mistake as to Public rights of the party

d) Mistake as to Private rights of the party

 MCQs
Q.4: When the consent of a party to an agreement is
obtained by coercion, the contract becomes
Voidable at the option of the party whose
__________
consent is so obtained.
 MCQs
Q.5: The various elements of free consent fall under
14 to section ______.
section _____ 18
 Subjective
1. Explain free consent and elucidate with an
example.
2. Describe the flaws of Free Consent.
3. Distinguish between Fraud & Misrepresentation.
4. Differentiate between Undue Influence and
Coercion.
 Caselet
An unconscious man is brought to an emergency
department in vascular collapse. He had been thrown off
a motorcycle and ruptured his spleen. The surgeon
recommended emergency surgery and blood transfusion,
but no next of kin was readily available to give consent.
An old wrinkled card in his wallet indicates the patient
is a Jehovah's Witness and should never receive blood,
but there is a diagonal line drawn across that part of the
card. Which of the following is best?
 Caselet
A. All interventions require informed consent, so in this case
the surgeon should not operate.
B. Because this is an emergency, no con sent for operation or
blood transfusion is necessary, as long as you get two sup
porting doctor signatures.
C. If the man's spouse can be located and she gives consent
for transfusion, then it's okay.
D. Operate on the patient, but respect his disavowal of blood
even if it means death.
E. If the patient desperately needs a lifesaving blood
transfusion, it should be given, because his wishes are not
entirely clear.
 Caselet
Answer: E - Some of the other choices have merit, but
the best answer is E. This is because of the dire nature
of the patient's condition, the critical and immediate
need for blood, and most of all, the reasonable belief
that the line across the wrinkled card represents a
revocation of an earlier refusal of blood. Some may
view D as the better option, and it is arguably the
legally "safe" approach. However, a life hangs in the
balance, and a doctor's first duty is to the patient.
 THE COURT IS
ADJOURNED TO NEXT
GROUP!!!