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free consent of contract part 2

 FREE CONSENT IN CONTRACT 

PART-2

                                                               dharewapari@gmail.com

 

Elements Vitiating Free consent

Coercion 

  • When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, then it is said to be coercion.

  • Illustration:

“A” cause “B” to enter into an agreement which is forbidden under the Indian Penal Code. “A” had done the act when an English ship was on the high seas. The “A” sues “B” for breach of contract in Mumbai.

This agreement was considered to be void as “A” had employed coercion, though Indian Penal Code was not in force at the place where the act was done.

Effect of coercion

When the agreement made is found to be made out of coercion, then the contract would be rescinded or cancelled, due to which both parties are released from their obligation to perform their duties as per the contract.

Coercion and duress distinguished

Basis 

Coercion 

Duress 

Meaning 

When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, it is said to be coercion.

When a person is subjected to actual violence or threat of violence, it is said to be duress under Common Law.

Effect on contract

When the agreement made is found to be made out of coercion, then the contract would be rescinded or cancelled, due to which both the parties are released from their obligation to perform their duty as per the contract.

When the agreement is done by the means of duress, the chances of contract been void is less.

But if the party voluntarily acted to it, then he is bound to contract.

Detention 

Unlawful detention of object amounts to coercion.

Unlawful detention of an object does not amount to duress.

Conviction 

A person who is not in the contract or is a stranger, coercion can be employed against him also.

But in duress, it is mandatory to be the party of the contract.

Is a threat to commit suicide coercion?

  • No, a threat to commit suicide does not amount to coercion. 

  • In the case of Ammiraju v Seshamma,[2] it was seen that there was a threat by the husband to commit suicide, and he demanded his wife to release the property. It was seen that the wife was prejudiced and it can’t be forbidden by law. So here the threat to commit suicide by the husband amounts to coercion on the wife.

  • But this Section15 of the Indian Contract Act can’t provide relief in this matter in mere prejudice that a person is subjected to.

Undue influence

  • When a contract is made between two parties and one of them is in the position to dominate the will of the other party and takes unfair advantage of the position, then the contract is said to be made out of undue influence.

  • Illustration

“A” an old person appoints “B” as his attendant and “B” is his nephew as well. “B” demands a share of his property and “A” agrees to pay him. In this situation, “A”  is under the undue influence of “B”.

  • The principle of undue influence is based on the doctrine of equity.

Salient features

  • Either of the parties should be in a state to dominate over other

  • The party who dominates should have taken undue advantage of his position

Parties that can be affected by undue influence

  • Real and apparent authority

  • Fiduciary relationship

  • Parent and child

  • Adult child and parent

  • Husband and wife

  • Lawyer and client

  • Doctor and patient

  • Trustee and beneficiary

  • Creditor and debtor

  • Landlord and tenant

  • A person whose mental capacity is low

  • Old age

  • Tender age

Effect of undue Influence

  • When an agreement is caused due to the impact of undue influence, can be considered void at the opinion of the party whose consent was so caused, according to Section 19A of the Indian Contract Act.

Burden of proof

  • It is required to prove that the person dominating actually took undue advantage of the person and it should be proved that the person was in such position to dominate.

  • Mere transfer of gift from one relative to others would not amount to undue influence.

 

A transaction with parda-nashin women

  • When a woman can be viewed from the screen or is placed behind the screen i.e, veiled is called pardanashin women.

  • The protection for pardanashin women is been rooted in the principle of equity and good conscience.

  • Special laws are made for pardanashin women because they are subjected to ignorance, infirmity, illiteracy, etc and are thus easily influenced.

  • The burden of proof should be provided against the person who is transacting with pardanashin women. He has to prove that the transaction had taken place with the free will of the women and her decision was taken by her without any enforcement and she was made aware of the provisions mentioned in the document of transaction.

  • The explanation of the whole transaction won’t be enough to establish the burden of proof.

  • In the case of Tara Kumari v Chandra Mauleshwar Prasad Singh,[3] it was delivered that the essential to establish the burden of proof is that the party executing them should be a free agent and the woman should be informed, through what she is going through.

  • In the case of Kuna Dei v Md Abdul Latif[4], it was delivered that showing of the document to the pardanashin women won’t be enough to establish the burden of proof. Thus, he has to show that the women was explained clearly the facts in the document of the transaction.

The distinction between coercion and undue influence


Coercion 

Undue influence

Definition 

When a person commits or threatens to commit an act which is forbidden under the Indian Penal Code, or detains an object unlawfully or threatens to do so with the intention to force a person to enter into a contract, it is said to be coercion.

When a contract is made between two parties and one of them is in the position to dominate the will of the other party and takes unfair advantage of the position, then the contract is said to be made out of undue influence.

Relationship 

Relationship between both the party is not required.

The relationship between parties helps in establishing the burden of proof under this section.

Objective 

To force a person to enter into an unlawful contract.

To misuse the power and dominate people, taking their advantage and dominate them.

Nature of offence 

Criminal offence

Not a criminal offence

Illustration 

“A” cause “B” to enter into an agreement which is forbidden under the Indian Penal Code. “A” had done the act when an English ship was on the high seas. The “A” sues “B” for breach of contract in Mumbai.

This agreement was considered to be void as “A” had employed coercion, though the Indian Penal Code was not in force at the place where the act was done.

“A” an old person appoints “B” as his attendant and “B” is his nephew as well. “B” demands a share of his property and “A” agrees to pay him. In this situation, “A”  is under the undue influence of “B”.

 
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