Section 10 of the Indian Contract Act provides that an agreement in order to be a contract, must satisfy the following conditions:
- It must be made by free consent of the parties.
- The parties must be competent to contract.
- It must be made for a lawful consideration and with a lawful object.
- It should not have been expressly declared as void by law.
Also there must be consensus ad idem or identity of minds in the sense that parties have agreed about the subject matter of the contract at the same time and in the same sense, as evidenced by offer and acceptance(Section 13). It has been observed that the agreement must import an intention to create a legal relationship between the parties, and that agreements relating to social matters are not enforceable by law.
A Contract is an agreement between private parties creating mutual obligations enforceable by law. But how should we verify whether both the parties has entered willingly or not? From here the concept of free consent emerges.
FREE CONSENT UNDER INDIAN CONTRACT ACT
Section 13 of the Indian Contract Act 1872, deal with Consent, that states “when two or more person agree upon the same thing and in the same sense”. So that two persons who are willing to enter into an agreement must agree to something in same sense.
Example:- A entered into contract with B to sell car. A owns 4 cars and is willing to sell Honda, whereas B in under fact of buying Maruti. In this case there is no consensus-ed-idem that is meeting of mind . Both the parties have agreed upon different things in the different sense . Hence there is no Consent as well as contract.
Under Section 14 of India Contract Act, 1872 the definition of Free Consent has been mentioned which states “that Consent is considered free Consent when it is not caused or affected by the following,
- 1. Coercion
- 2. Undue Influence
- 3. Fraud
- 4. Misrepresentation
- 5. Mistake
ELEMENT VITIATING FREE CONSENT UNDER INDIAN CONTRACT ACT
Under section 15 of Contract Act , forcing or compelling someone to enter into Contract without his Consent is termed to be Coercion. Threatening is used to obtain Consent and i.e. not free Consent under Indian Contract Act. Under Act, coercion is explained as:-
- Executing or Intimidating to perform any Act prohibited by law under IPC.
- Illegally impeding or Intimidating to detain any belongings with the objective of causing any person to enter into a contract.
The contract in which the Consent is obtained by coercion are voidable. Those are voidable at the option of the party whose Consent is not free. So the exacerbated party has assortment either to declare the contract valid or void. Also, if any cogitation has been made in the form of capital paid or item delivered, under Coercion it has to be reimbursed or reinstate the moment contract is declared to be void. In the cases of coercion burden of proof lies on the exacerbated party. So the aggravated party has to prove coercion and that the consent was not freely obtained.
2. Undue Influence :-
This area is covered under Section 16 of Indian Contract Act, 1872 , it states “that when the relation between two parties that one party is in position to command the desire of the other party, and uses such impact to acquire unfair benefit from the other party then it will be called undue influence.”.
Further the section deals with how an authority is abused by the person in different ways,
- At the point when an individual holds genuine or even oblivious authority over the other individuals. Or if fiduciary relationship exists between them.
- He makes an agreement with an individual whose psychological limit is influenced by age, sickness or pain. The affliction of mind can be inconsistent or enduring.
In undue influence the apparent predominant party has an intention to take benefit from the other party. In the event that impact is used to profit the other party it won’t be undue influence. But if consent is obtained under the undue influence, then the contract is voidable at the option of aggravated party. And burden of proof lies on the dominant party to prove the truancy of undue influence.
Under section 17 of Indian Contract Act a definition of fraud is mentioned as “Fraud is a committed by a party to a contract, or with his in connivance, or by his agent, with intent to deceive another party thereto or his agent, or to introduce him to enter into the contract.
So as indicated under section 17 of Indian Contract Act, a fraud is the point at which one party persuades another to ho into an understanding by offering expression that are
- Recommending a fact that isn’t valid, and he doesn’t trust it to be valid.
- The active concealment of facts
- A promise made with no intention of performing it
- Some other such act fitted to beguile.
Fraud doesn’t happen without damage , so in its cases one of the major factor is that aggravated party should suffer some actual loss due to fraud. Also the statement should not e in opinion but in fact.
Under section 18 of India Contract Act, when any representations made by party is incorrect, false, inaccurate, etc. Is termed to be misrepresented. Difference Between fraud and misrepresentation is that of intention. Misrepresentation is innocent that is unintentional. Types of misrepresentations are as:-
- An individual makes a positive declaration trusting it to be valid.
- Any breach of obligation gives the individual committing it an benefit by misdirecting other. But the breach of duty is without any intent to deceive.
- At the point when one party makes the other party to commit an error with regards to the topic of the agreement. But this is done innocently and not purposefully.
A mistake is a erroneous conviction that is honest in nature. It prompts a misconception between the two parties. Now while discussing mistake , the law distinguishing two types of mistakes.
i. A Mistake of law.
ii. A Mistake of fact.
MISTAKE OF LAW
This concept includes mistaking of the laws either it be Indian or Foreign . If the mistake is regarding Indian law then it is not excusable i.e. ignorance of law it no defense under Indian Contract Act . It means party can’t simply claim to be unaware of the law, as no relief on this ground would be allowed . This clause also include wrongful interpretation of any legal provisions.
However ignorance of foreign law is given some leeway it is not treated same. Because parties here are not supposed to know the foreign law, mistake of foreign law is considered to be mistake of fact under Indian law.
MISTAKE OF FACT
This is a mistake when both the misunderstands each other’s terms and conditions leaving each others at crossroad. Ignorance, hiatus or fallacy in understanding are some of the reasons for this mistake. This does not include intention it is innocent . Mistake of facts can be of two types that are unilateral (caused by one party) and bilateral ( caused by both the parties to the contract).
Author Details: AAYUSHI SINGH
The views of the author are personal only. (if any)