(6) Consent and Free Consent.

Consent and Free Consent.

Consent and Free Consent

Section 13 defines that two or more people are said to consent when they agree upon the same thing in the same sense. However, many a times, a consent may not reflect the true

intentions of a party. For example, one party may give consent because of being financially pressured or criminally threatened. Thus, such a consent should not make the agreement enforceable. Section 14 determines what factors can vitiate a consent and when a consent is considered free of any complication that affects the enforceability of an agreement . It states that a consent that is not obtained through coercion, undue influence, fraud, misrepresentation, or mistake subject to section 20, 21, and 22, is a free consent.

a. Coercion (Sec 15): Coercion is committing or threatening to commit any act forbidden by the Indian Penal Code, or unlawful detaining or threatening to detain the property, to the prejudice of any other person, with an intention to cause that other person to enter into an agreement. It is immaterial whether IPC is or is not in force where coercion is applied. Thus, an act that is unlawful as per IPC but not as per England law and that has been used to induce the consent, will be considered coercion.A clear example would be force someone to consent on gun point or by hurting or threatening to hurt. In Chikham Amiraju vs Chikham Seshamma Madras HC 1912 held that threatening to commit suicide is coercion. In the case of Astley vs Reynolds 1771 , the plaintiff had pledged his plate for #20 and when he went to claim it back, the defendant asked for #10 more as interest. To redeem his plate, the plaintiff paid the money but later sued to recover #10. The court allowed it. 

b. Undue Influence (Sec 16): Undue influence occurs when because of the nature of the relationship that exists between the parties, one party is able to dominate the will of the other and uses this dominance to obtain unfair advantage over the other. A person is in a dominant position when he holds a real or apparent position of authority for example manager employee, or stands in a fiduciary relationship with the other for example money lender and loanee. A person could also be in a dominant position if the mental capacity of other party is temporarily or permanently effecteddue or illness, age, or distress. The burden of proof that undue influence has not occurred is on the person who is in the dominant position, if the agreement is unconscionable otherwise it is on the party that alleges undue influence. 

Examples: 

Father (A) give some money to son (B) when B was a minor. Upon majority, A makes B execute a bond for a much larger amount.

A person (A) who is old and sick is induced into paying an unreasonably large amount of sum to his doctor (B).

A village moneylender (A) lends money to a villager (B), who is already in debt, at a very high interest. It lies on A to prove that he has not used undue influence to induce the contract.

At a time of financial crises, a bank manager gives loan to a person at a substantially higher rate. This is not considered to be undue influence but a simple business transaction.

In Mannu singh vs Umadat Pandey Allahbad HC 1890, a guru induced his devotee into giving all the devotee's property to himself. This was considered undue influence.

c. Fraud (Sec 17): When a person intentionally tries to cheat another person, it is called as fraud in a general sense.

Section 17 defines fraud precisely as such - Fraud means and includes any of the following activities done by a party or by his connivance or by his agent, with an intent to deceive another party or his agent, or as to induce the other party to enter into the contract.

1. the suggestion of a fact, of that which is not true, by the one who does not believe it to be true.

2. active concealment of a fact by one who knowledge or belief of the fact.

3. making a promise without an intention to perform.

4. any act fitted to deceive

5. any such act or omission that the law declares to be fraudulent.

Mere silence as to facts likely to affect the willingness of a person to enter into the contract is not fraud unless,

according to the circumstances of the case, it is the duty of the person keeping silence to speak or unless his silence itself is considered as speech.

Examples:

A sells a horse to B by auction without telling B that horse is unsound. This is not fraud.

B is A's daughter who has just come off age, then it is A's duty to tell B about the fact. So this is fraud.

B says to A, "if you do not deny it, I will assume that horse is sound". Here, silence is considered as speech so this is fraud.

A and B, being traders, enter into a contract. A has private pricing information that will cause B to not enter the contract.

A is not bound to inform this to B. This is not fraud.

Concealing the disease history while obtaining insurance is fraud because it is the duty of the insured to give this information to the insurer.

Derry vs Peek 1889 was not fraud, because the company honestly believed in what they said and there was no intentional misrepresentation, which is the essence of fraud.

Sri Krishan vs. Kurukshetra Univ., AIR 1976 SC the student was not found to be fraud. Even though he knew that he was short on attendance, he did not disclose it on examination form. He was let off because 'mere silence' is not fraud.

d. Misrepresentation (Sec 18): When a person makes an unwarranted statement, however innocently, which the person believes to be true, and which turns out to be false, it is misrepresentation. Any breach of duty, without an intention to deceive, that gains an advantage to the person committing it or to the person claiming under him, by misleading the other person to his prejudice or to person claiming under him, is also misrepresentation. Further, causing a party to an agreement to make a mistake regarding the subject matter of the agreement, however innocently, is also misrepresentation.

Examples:

A claimed to B that the ship being considered under an agreement was below 2800 tonnage. But in reality it turned out to be more than 3000 tonnage. It was held to be misrepresentation and B was entitled to avoid the contract.

Oceanic Steam Navigation vs Soonderdas Dharmasey. Bom HC 1980.

A land was purchased expressly for constructing duplexes. The seller claimed that he saw no permissioning problems. However, later on the permission was denied. This was held to be misrepresentation and even though the claim was innocent, the buyer was allowed to avoid the sale

Where the seller of a car stated the mileage of the car to be 20000, which turned out to be wrong, the buyer of the car was allowed to recover compensation for misrepresentation.

Section 19 declares that a contract induced due to coercion, fraud, or misrepresentation is voidable at the option or the party whose consent was obtained by coercion. An exception is that when the consent is obtained by silence fraudulent under sec 17, and when the affected party had the means of discovering the truth with ordinary diligence. In this case, the contract is not voidable. Further, if the fraud or misrepresentation did not cause the party on which they were practiced to give consent, then the contract will not be voidable.

Section 19A declares that the party whose consent was obtained by undue influence has the option to avoid the contract