FREE CONSENT

CONSENSUS AD IDEM
It is essential to the creation of a
contract that the parties are ad idem,
i.e., they agree upon the same thing
in the same sense at the same time
and that their consent is free and
real.
 WHAT IS CONSENT ?

It means acquiescence or act of assenting to

an offer.

“Two or more persons are said to consent

when they agree upon the same thing in the
same sense” (Sec 13)
 WHAT IS FREE CONSENT ?
Under Section 14, Consent is said to be free
when it is not caused by:

Coercion as defined in Sec.15 or

Undue influence as defined in Sec.16 or
Fraud as defined in Sec.17 or
Misrepresentation as defined in Sec.18 or
Mistake, subject to the provisions of
Secs.20,21 and 22
WHEN THERE IS NO CONSENT, THERE IS NO
CONTRACT.
Salmond describes it as Error in Consensus. If there is
no consensus ad idem, there is no contract.
CASE: Bala Debi Vs S.Majumdar
An illeterate women executed a deed of gift in
favor of her nephew under the impression that
she was executing a deed authorizing her
nephew to manage her lands.
The evidence showed that the woman never
intended to execute such a deed of gift, nor was
the deed ever read or explained to her.

Held, the deed was void and inoperative

 COERCION
When a person is compelled to enter into a
contract by the use of force by the other party or
under a threat, “coercion” is said to be employed.
Coercion is the committing, or threatening to
commit, any act forbidden by the Indian Penal
Code, 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.
 COERCION INCLUDES:

•Fear
•Physical Compulsion
•Menace to goods
 CONSENT IS SAID TO BE CAUSED BY COERCION:

When it is obtained by:

1. Committing or threatening to commit any act
forbidden by the Indian Penal Code, 1860:
Case: Ranganayakamma Vs Alwar Setty
A young girl of 13 years was forced to adopt a
boy to her husband who had just died by
the relatives of the husband who
prevented the removal of his body for
cremation until she consented.
Held, the consent was not free but was
induced by coercion. Consequently the
adoption was set aside
2. Unlawful detaining or threatening to detain
any property:

CASE: Muthia Vs Muthu Karuppa

An agent refused to hand over the account

books of a business to the new agent unless
the principal released him form 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 principal
 EFFECT OF COERCION
When consent to an agreement is caused by
coercion, fraud or mispresentation, the
agreement is a contract voidable at the option of
the party whose consent was so caused (Sec.19)

Also, according to Sec.72, a person to whom

money has been paid, or anything delivered by
mistake or under coercion, must repay or return
it.
 THREAT TO COMMIT SUICIDE – DOES IT AMOUNT TO
COERCION?

CASE:Chikham Amiraju Vs. Seshamma

In this case, a person held out a threat of
committing suicide to his wife and son if they did
not execute a release in favor of his brother in
respect of certain properties.

The wife and son executed the release deed under

the threat. Held, “the threat of suicide amounted
to coercion within Sec.15 and the release deed
was, therefore voidable”
Therefore, a threat to commit suicide amounts to
coercion
 UNDUE INFLUENCE
Sometimes a party is compelled to enter into an
agreement against his/her will as a result of
unfair persuasion by the other party.

This happens when a special kind of relationship

exists between the parties, such relation where
one party is in a position to exercise undue
influence over the other.
 Definition Of Undue Influence (Sec.16(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”
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.
E.g.: Relationship between master and servant.
b. Where he stands in a fiduciary relation to the other.
E.g.: Father and Son, Solicitor and client, promoter
and company
c. Where he makes a contract with a person whose
mental capacity is temporarily or permanently
affected by reason or age, illness or mental or
bodily distress.
 CASES:
1. Mannu Singh Vs. Uma Dat Pandey:
A spiritual guru induced his devotee to gift to
him the whole of his property in return of a
promise of salvation of the devotee.
Held, the consent of the devotee was given
under undue influence.
2. Ranee Annapurna Vs Swaminath:
A poor Hindu widow was persuaded by a money-
lender to agree to pay 100% rate of interest
on money lent by him to her. She needed the
money to establish her right to maintenance.
Held, it was a case of undue influence and the
Court reduced the rate of interest to 24%
EFFECT OF UNDUE INFLUENCE
When consent to an agreement is obtained by undue
influence, the agreement is a contract voidable at the
option of the party whose consent was so obtained.
Any such contract may be set aside either absolutely or
if the party who is entitled to avoid it has received any
benefit there under, upon such terms and condition to
the court may seem just and equitable.
E.g.: A’s son has forged B’s name to a promissory note.
B under threat of prosecuting A’s son obtains a bond
from A for the amount of the forged note. If B sues on
this bond, the court may set the bond aside.
 DIFFERENCE BETWEEN COERCION AND UNDUE INFLUENCE

• The consent is given under • The consent is given by a

the threat of an offence person who is so situated in
relation to another that the
other person is in a position
to dominate his will. It is also
called consent given under
Moral Influence.
• It involves moral force or
• Coercion is mainly of a mental pressure.
physical character. It involves
mostly use of physical or
violent force. • Here the influencing party
• There must be intention of uses its position to obtain an
causing any person to enter unfair advantage over the
into an agreement. other party.
• It involves a criminal act. • No criminal act is involved.
 REPRESENTATION
•A statement of fact which one party makes in the
course of negotiations with a view to inducing the
other party to enter into a contract is known as a
representation.
•It must relate to some fact which is material to the
contract.
• It may be expressed by words spoken or written
or implied form the acts and conduct of the parties.
•A representation, when wrongly made, either
innocently or intentionally, is a misrepresentation.
 MISREPRESENTATION
Misrepresentation may be:
i. An innocent or unintentional
misrepresentation or
ii. An intentional, deliberate or willful
misrepresentation with an intent to deceive
or defraud the other party.
The former is misrepresentation and
the later is fraud.
 WHAT IS MISREPRESENTAION ?
It is a false statement which the person making it
honestly believes to be true or which he does not
know to be false. It also includes non-disclosure
of a material fact or facts without any intent to
deceive the other party.
E.g.: A while selling his refrigerator to B, tells him
that the refrigerator is in good condition. A
genuinely believes the refrigerator in good
condition, as he has no sufficient ground for the
belief otherwise.
Later, B finds the refrigerator is not in good
condition. The representation made by A is
misrepresentation.
 REQUIREMENTS OF MISREPRESENTATION
1. It must be a representation of a material fact. Mere expression of
opinion does not amount to misrepresentation even if it turns out to
be wrong.
2. It must be made before the conclusion of the contract with a view to
inducing the other party to enter into the contract.
3. It must be made with the intention that it should be acted upon by
the person to whom it is addressed.
4. It must actually have been acted upon and must have induced the
contract.
5. It must be wrong but the person who made it honestly believed it to
be true.
6. It must be made without any intention to deceive the other party.
7. It need not be made directly to the plaintiff. A wrong statement of
facts made to a third person with the intention of communicating it to
the plaintiff, also amounts to misrepresentation.
 A TYPICAL CASE OF
MISREPRESENTATION

BABU Vs. R.A.SINGH:

A told his wife within the hearing of their

daughter that the bridegroom proposed for
her was a young man. The bridegroom,
however, was over sixty years. The daughter
gave her consent to marry him believing the
statement of her father.

Held, the consent was vitiated by

misrepresentation.
CONSEQUENSES OF MISREPRESENTATION
The aggrieved party, in case of
misrepresentation by the other party, can

1. Avoid or rescind the contract or

2. Accept the contact but insist that he shall

be placed in the position in which he
would have been if the representation
made had been true.
 LOSS OF RIGHT OF RESCISSION
The aggrieved party loses the right to rescind or avoid the
contract for misrepresentation or fraud:-
1. If he, after becoming aware of the misrepresentation or
fraud, takes a benefit under the contract or in some other
way affirms it.
Case: LONG VS LLOYD
A induced B to buy his lorry on the false representation that
it was “in excellent condition”.
On discovering that lorry was in a very bad shape when B
used it, he wanted to return it to A.
A, however, agreed to bear half the cost of repairs to which
B agreed.
On a subsequent journey when the lorry completely broke
down, B wanted to rescind the contract.
Held, B could not do so as his acceptance of the offer of A to
bear half the cost of repairs impliedly amounted to final
acceptance of the sale.
2. If restitutio in integrum { restoration to the original
position} of the parties is not possible.
E.g.: where the subject-matter of the contract has
been consumed or destroyed. Further, if a contract
cannot be rescinded in total, it cannot be rescinded at
all.

3. If the third party has acquired rights in the subject-

matter of the contract in good faith and for value.
Case : Phillips Vs. Brooks
A purchases goods from B by fraud and pawns
them with C. B cannot rescind the contract on
learning of the fraud so as to be able to recover
the goods from C.
 FRAUD
Fraud exists when it is shown that –
1. A false representation has been made
Knowingly or without belief in its truth or
recklessly, not caring whether it is true or false
and the maker intended the other party to act
upon it , or
2. There is a concealment of a material fact or that
there is a partial statement of a fact in such a
manner that the withholding of what is not
stated makes that which is stated false.
 ESSENTIAL ELEMENTS OF FRAUD
1. There must be a representation or assertion and it
must be false
case : PEEK VS GURNEY
• The prospectus of a company did not refer to the
existence of a document disclosing liabilities.
• This gave the impression that the company was
prosperous.
• If the existence of the document had been
disclosed the impression would have been quite
different.
• Held, non-disclosure amounted to fraud and
anyone who purchased shares on the faith of this
prospectus could avoid the contract.
 The representation must relate to a material fact which
exists now or exists in the past:
For e.g.
a. The perfume is as good as that of X. This is a statement of
opinion
b. The perfumes have as much fragrance in them as that of
X. This is a statement of fact.
c. The perfume is the best available in the market for the
price. This is a puffing statement.

A while negotiating with B for the sale of certain goods,

tells him that the goods cost him Rs.2000. This is
statement of fact.
But, if he states that the goods are worth Rs.2000, this is
a statement of opinion.
Essentials to a fraud

•The representation must have been made before the conclusion of the contract with the
intention of inducing the other party to act upon it.
• The representation or statement must have been made with a knowledge of its falsity or
without belief in its truth or recklessly, not caring whether it is true or false.
• The other party must have been induced to act upon the representation or assertion.

Case: Smith Vs Chadwick

•A bought shares in a company on the faith of a prospectus which contained an untrue
statement that one B was a director of a Company.
•A had never heard of B and, therefore, the statement was immaterial from his point of
view.
•A’s claim for damages in this case was dismissed because the untrue statement had not
induced A to buy the shares.
The other party must have relied upon the
representation and must have been deceived:
CASE: HORSEFULL VS THOMAS
The claimant purchased a gun which had a concealed
defect. His action for misrepresentation failed as he
hadn't inspected the gun before purchasing it. Therefore
the misrepresentation did not induce him to enter the
contract as he was unaware of it.
The other party, acting on the representation or
assertion, must have subsequently suffered some loss.
Common rule in Law: THERE IS NO FRAUD WITHOUT
DAMAGE.
FRAUD WITHOUT DAMAGE OR DAMAGE WITHOUT
FRAUD does not give rise to an action on deceit.
 CONSEQUENCES OF FRAUD

A contract induced by fraud is voidable at the

option of the party defrauded. Until it is avoided, it
is valid.
 REMEDIES FOR PARTY DEFRAUDED
• He can rescind the contract till it is possible to do so
E.g.: A purchases certain goods from B by making a misrepresentation. A sells
the goods to X before B avoids the contract. B loses the right to avoid the
contract.
 He can insist on the performance on the contract on the condition that he
shall be put in the position in which he would have been if the representation
made had been true.
 He can sue for damages.
 DISTINCTION BETWEEN FRAUD AND MISREPRESENTATION

Fraud Misrepresentation
•The intention is to deceive •There is a mis-statement
the other party or concealment of a
•Fraud is deliberate or material fact essential to
willful. the contract without any
•The remedy available to intention to deceive the
other party.
the aggrieved party is not
limited to rescission alone. •Misrepresentation is
He can also claim for innocent.
damages. •The aggrieved party can
rescind the contract or sue
for restitution. There can
be no suit for damages.
 MISTAKE
It may be defined as an erroneous belief about something.

MISTAKE

MISTAKE OF LAW MISTAKE OF FACT

MISTAKE OF LAW OF COUNTRY BILATERAL MISTAKE

UNILATERAL MISTAKE
MISTAKE OF LAW OF A FOREIGN COUNTRY
 MISTAKE OF LAW
1. Mistake of law of the county:

IGNORANTIA JURIS NON EXCUSAT

Ignorance of law is no excuse, is a well settled rule of law. A party cannot be allowed
to get any relief on the ground that it had done a particular act in ignorance of
law.
A mistake of law is, therefore, no excuse, and the contract cannot be avoided.

CASE: SOLLE VS BUTCHER

http://
www.nadr.co.uk/articles/published/construction/RiskofMistakeinContract.pdf

But if a person enters into a contract by making a mistake of law through the
inducement of another, whether innocent or otherwise, the contract may be
avoided.
2. Mistake of law of a foreign country:
Such a mistake is treated as mistake of fact
and the agreement in such a case is void.
 MISTAKE OF FACT
1. Bilateral Mistake:
Where both the parties to an agreement
are under a mistake as to a matter of fact
essential to the agreement, there is a
bilateral mistake. In such case, the
agreement is void.
CONDITIONS:

A. THE MISTAKE MUST BE MUTUAL:

Both the parties should misunderstand each other and should be at cross-purposes.
E.g.: A agreed to purchase B’s motor car which was lying in B’s garage. Unknown to
either party, the car and garage were completely destroyed by a fire a day
earlier. The agreement is void.
B. THE MISTAKE MUST RELATE TO A MATTER OF FACT ESSENTIAL TO THE
AGREEMENT:

CASE: GALLOWAY VS GALLOWAY

A man and woman entered into a separation agreement under which the
man agreed to pay a weekly allowance to the woman, mistakenly believing
themselves lawfully married.

Held, the agreement was void as there was mutual mistake on a point of fact
which was material to the existence of the agreement.
 CASES WHICH FALL UNDER
BILATERAL MISTAKE
1. Mistake as to the subject-matter:
i. Mistake as to the existence of subject-matter
ii. Mistake as to the identity of the subject-matter
iii. Mistake as to the quality of the subject-matter.
iv. Mistake as to the quantity of the subject-matter
v. Mistake as to the title of the subject matter
vi. Mistake as to the price of the subject matter.

2. Mistake as to the possibility of subject matter.

i. Physical Impossibility
ii. Legal Impossibility
i. Mistake as to the existence of the
subject-matter.
Case: Couturier Vs Hastie
A agreed to sell a cargo of corn supposed
at the time of the contract to be in transit
form Salonica to the United Kingdom.
Unknown to the parties, the corn had
become fermented and had already been
sold by the master of the ship at Tunis.
Held, the agreement was void and the
buyer was not liable for the price.
2.Mistake as the identity of the subject-matter:
It usually arises where one party intends to deal
in one thing and the other intends to deal in
another.
Case: Raffles vs. Wichelhaus:
W agreed to buy from R a cargo of cotton “ to
arrive ex-Peerless from Bombay”. There are two
ships of that name sailing from Bombay, one
sailing in October and the other in December.
W meant the former ship but R meant the
latter.
Held, there was a mutual or a bilateral mistake
and there was no contract.
3. Mistake as to the quality of the subject-
matter: If the subject-matter is different from
what the parties thought it to be, agreement is
void.
CASE: NICHOLSON & VENN VS. SMITH
MARRIOTT
Table napkins were sold at an auction by a description
“With the crest of Charles I and the authentic property
of that monarch”.
In fact the napkins were Georgian.
Held, the agreement was void as there was a mistake
as to the quality of the subject-matter.
4. Mistake as the quantity of the subject-matter:
If both the parties are working under a mistake
as the quantity of the subject matter, the
agreement is void.
CASE: COX VS. PRENTICE
A Silver Bar was sold under a mistake as to its
weight. There was a difference in value between
the weight of the bar as it was and as it was
supposed to be. Held, the agreement was void.
5. Mistake as the title of the subject-matter:
If the seller is selling a thing which he is not
entitled to sell and both the parties are acting
under a mistake, the agreement is void.
Case: Cooper Vs. Phibbs
A person took a lease of a fishery which,
unknown to either party, already belonged to
him. Held, the lease was void.
6. Mistake as to the price of the subject-matter:

Case: Webster Vs. Cecil

C wrote to W offering to sell certain property for

$1250. He had earlier declined an offer from W to
buy the same property for $2000. W who knew
that this offer of $1250 was a mistake for $2250,
immediately accepted the offer.
Held, W knew perfectly well that the offer was
made by mistake and hence the agreement, in
such a case, is void on the ground of impossibility.
2. Mistake as to the possibility of
performing the contract:
Consent is nullified if both the parties
believe that an agreement is capable of
being performed when in fact this is not
the case. The agreement, in such a case, is
void on the ground of impossibility.
Impossibility may be
o Physical Impossibility
o Legal Impossibility
 UNILATERAL MISTAKE
•When in a contract only one of the parties is mistaken regarding the subject-
matter or in expressing or understanding the terms or the legal effect of the
agreement, the mistake is a unilateral mistake.
•According to Sec.22 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.
•A unilateral mistake is not allowed as a defense in avoiding a contract unless
the mistake is brought about the other party’s fraud or misrepresentation
Case: Smith Vs.Hughes
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.
 EXCEPTIONS OF UNILATERAL MISTAKE

A unilateral mistake is generally not allowed as a

defense in avoiding a contract.
But in certain cases, the consent is given by a
party under an error or mistake which is so
fundamental as goes to the root of the
agreement.

In such cases the agreement is void.

 CASES WHERE AN AGREEMENT IS VOID EVEN WHEN THERE IS
UNILATERAL MISTAKE

1. Mistake as to the identity of the

person contracted with.

2. Mistake as to nature of the contract.

 Mistake as the identity of the person
contacted with
It is a fundamental rule of the law that if one of the
parties represents himself to be some person other
than he really is, there is a mistake as to the identity
of the person contracted with.
E.g.: A intends to contract with B but finds he has
contracted with C, there is no contract is the identity
of B was a material element of the contract and C
knows it.
Likewise if A makes an offer to B, C cannot give
himself any rights in respect of the contract by
accepting the offer. If he does so, the contract will be
void.
 CASELAW :

CUNDY VS LINDSAY:
Blenkarn ordered by letter goods form Lindsay
and signed it in such a way that Lindsay
believed it come from the well-known firm of
Blenkiron and Co, .

Held, there was no contract between Lindsay

and Blenkarn as Lindsay never intended to deal
with Blenkarn, having never heard of him.
 Mistake as to the nature of the contract

IF the person enters into a contract in the mistaken

belief that he is signing a document of a different
class and character altogether, there is a mistake as
to the nature of contract and the contract is void.

CASE: FOSTER VS MACKINNON

M, an old man of poor sight, endorsed a bill of
exchange thinking that it was a guarantee.
Held, there was no contract on the ground that the
mind of the signer did not accompany the signature.