Free Consent

(f) Free Consent

Section 13 defines consent: "Two or more persons are said to consent when they agree

upon the same thing in the same sense" — this is the legal idea of consensus ad idem

("meeting of minds"). Section 14 then defines when that consent is FREE: consent is said

to be free when it is not caused by (1) coercion, (2) undue influence, (3) fraud, (4)

misrepresentation, or (5) mistake, as defined below.

Coercion — Section 15: "the 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 whatever, with the intention of causing any person to enter into an

agreement." In short: a threat of an illegal act, or unlawful detention of property, used to

force someone into an agreement.

Undue influence — Section 16: arises "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." The Act specifically recognises a

"position to dominate the will" where a person holds real or apparent authority over the other

(e.g. employer–employee), stands in a fiduciary relationship (e.g. solicitor–client, trustee–

beneficiary), or contracts with a person whose mental capacity is temporarily or permanently

affected by age, illness, or mental/bodily distress. Where such a dominant party enters into a

transaction that appears, on its face, unconscionable, the burden shifts to that party to prove

the transaction was fair.

Misrepresentation — Section 18: a false statement made innocently — the person making it

genuinely believes it to be true — which nevertheless induces the other party to enter the

contract; it also covers a breach of duty which, without any intent to deceive, gives the person

committing it an advantage, and causing a mistake as to the substance of the subject-matter,

innocently.

Fraud — Section 17: a false statement made by a party (or their agent) knowingly,

without belief in its truth, or recklessly, without caring whether it is true or false,

with the intent to deceive the other party and induce them to enter the contract. Fraud also

includes: active concealment of a fact by a party having knowledge or belief of that fact

(note: mere passive silence about a fact — where there is no duty to speak — is generally NOT

fraud, but actively hiding or disguising a defect is); a promise made without any intention of performing it; and any other act or omission the law specially declares to be fraudulent.

Contracts of Uberrimae fidei (utmost good faith): certain classes of contracts impose an

active duty of full and honest disclosure on one or both parties, as an exception to the general

rule that "mere silence is not fraud." The standard examples taught under this unit are

contracts of insurance (the insured must disclose every material fact affecting the risk),

contracts for the allotment of company shares based on a prospectus, and contracts for the

sale of immovable property where the seller knows of a latent defect the buyer could not

discover through ordinary care. In each of these, staying silent about a material fact can, by

itself, amount to misrepresentation or fraud.

Mistake — Sections 20–22: a bilateral mistake of fact — where BOTH parties are, without

knowing it, mistaken about a matter of fact essential to the agreement — renders the agreement

void (Section 20), because there was never a genuine consensus ad idem to begin with (e.g.

both parties contract for the sale of a specific cargo of goods which, unknown to either, had

already been lost at sea). A mistake of law of the country generally gives no relief

(Section 21) — "ignorance of the law is no excuse" — though a mistake as to a foreign law is

treated exactly like a mistake of fact. A unilateral mistake — where only ONE party is

mistaken as to a matter of fact — does NOT, as a general rule, make the contract voidable

(Section 22), UNLESS that mistake was itself induced by the other party's fraud or

misrepresentation, or the mistake goes to the very identity of the person contracted with in

circumstances where identity was crucial, or to the fundamental nature of the document signed

(the non est factum principle).

Distinction between Mistake and Misrepresentation: a bilateral mistake as to an essential …