* Agreement or act of assenting to an offer
* No consent no contract
Free Consent – Consent is said to free when it is not caused by
* Undue influence
Flaw in consent
When person compelled to enter into contract by use of force by other party
Coercion is the committing or threatening to commit any act forbidden by Indian Penal Code 1860 or unlawful detaining or threatening to detain any property.
Treat amounting to coercion need not come from party to contract it can even come from stranger to contract.
Threat to commit suicide – Yes it is coercion
* Undue influence
Some time party is compelled to enter into contract against his will as a result of unfair persuasion by other
This happens where special kind of relationship exists between parties such that one party in position to exercise undue influence.
One party dominates will of other.
When can one person dominate will of other
1. Where he holds real and apparent authority over other
Relationship between master and servant , doctor and patient
2. Where he stands in fiduciary relation ( relation of trust to other )
Father and son, Solicitor and client, trustee and beneficiary
* A advances money to son , B during minority , obtains upon B coming to age by misuse of parental influence , a bond from B for higher amount that money advanced to him.
A employees undue influence
* A spiritual guru induced his devotee to gift to him whole of his property in return of his promise of salvation of the devotee. Held consent was given in undue influence
Coercion | Undue Influence|
Physical in character| Moral in character|
Consent is given under the threat of offence| Consent is given by person who is so situated in relation to another that he dominates his will| It involves criminal act| No criminal act is involved|
MISREPRESENTATION AND FRAUD
* Statement of fact other party makes in the course of negotiation with view to inducing the other party to enter into a contract * It must relates to material fact to Contract
* It may be express or implied from acts and conduct
What is misrepresentation ?
* When representation wrongly made – may be
1. Innocent or unintentional – Misrepresentation
2. Intentional , deliberate or willful misrepresentation with intention to deceive the other party – Fraud
Meaning: Is false statement which person making it honestly believes to be true or which he does not know to be false.
It is also non – disclosure of a material facts or facts without any intent to deceive other party.
Case Derry v peek
A company’s prospectus contained a representation that it has statutory powers to run tramways by steam provided the consent of Govt authority was obtained. The directors have issued a prospectus stating that company has right to use steam power. They honestly believed that the permission for the same would be granted. The permission was refused. The company has then wound up.
Held – Directors are guilt of misrepresentation not fraud
Consequences of misrepresentation
Aggrieved party can
* Avoid or rescind the contract
* Accept the contract insist that shall be placed in position in which he would have been if the representation made had been true.
* False representation made knowingly , without belief in its truth, recklessly not caring whether true or false maker intend to other party to act upon it.
* Voidable at the option of the party defrauded.
* Rescind the contract within reasonable time
* Insist for performance of contract – on the condition that he shall be put in the position in which he would have been if representation made...