Business Law

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* Brief introduction:

According to Section 10, ‘free consent’ of all the parties to an agreement is one of the essential elements of a valid contract.

* ‘Consent’ defined:- Section 13 of the contract act 1872 defines the term ‘consent’ and lays down that “Two or more person are said to consent when they agree upon the same thing in the same sense” .

Thus, consent involves identity of minds or consensus ad-idem i.e., agreeing upon the same thing in the same sense. If for whatever reason, there is no consensus ad-idem among the contracting parties, there is no real consent and hence no valid contract.

* Example:- A, agrees to sell his Nano Car 2010 model for Rs. 80,000. B agrees to buy the same. There is a valid contract since A and B have consented to the same subject matter.

* Example:- A, who owns three Fiat Cars, offers to sell one, say, ‘car x’ to B for Rs. 60,000. B agrees to buy the car for the price thinking that A is selling ‘car y’. There is no consent and hence no contract. A and B have agreed not to the same thing but to different things.

* ‘free consent’ defined:- Section 14 lays down that “Consent is said t be ‘free’ when it is not caused by ---

1. Coercion, as defined in Section 15, or
2. Undue influence, as defined in Section 16, or
3. Fraud, as defined in Section 17, or
4. Misrepresentation, as defined in Section 18, or
5. Mistake as defined in Section 19, or

2.COERCION (Section 15)

* ‘Coercion’ defined:- Section 15 of the Indian Contract Act 1872 defines coercion as :

(i) Coercion is committing or threatening to commit, any act forbidden by Indian Penal Code or by

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Case law(Ranganayakamma V/s Alwar Shetty):- 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.

(ii) 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 .

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Case law(Muthia v/s Muthu Karuppa):- an agent refused to hand over the account books of a business to the new agent unless the Principal releases from 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.

* Threat to commit Suicide – does it amount to Coercion?

According to the Indian Penal Code suicide and threat to commit suicide is not punishable, but if an attempt is made to commit suicide it will become punishable.

The doubt arises because suicide though forbidden by the Indian Penal Code is for obvious reasons not punishable. A dead person cannot be punished. But, since Section 15 declares that committing or threatening to commit any act forbidden by the Indian Penal Code is coercion, a threat to commit suicide should obviously be so regarded (suicide being forbidden).

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Case law(Chikham Ammiraju v Seshamma):- A man threatened that he would commit suicide if his wife and son did not make a property deed in favour of his brother. The court held that a threat to commit suicide was not punishable under be Indian penal code, however it was deemed to be forbidden by it. This threat was considered to be coercion and so it was a voidable contract at the option of the aggrieved party.

* DURESS:- In the English Law, Duress is used to mean the same thing as coercion. Duress has a limited scope. It includes within its purview threatening to cause or actually causing bodily injury or imprisonment. It extends to he...
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