What is Free Consent under the Indian Contract Act?
Meaning of Free Consent under the Indian Contract Act: – When both the parties agree to a thing in the same sense of mind, then the agreement is considered to be done with free consent. One of the essentials of a valid contract mentioned in section 10, is that the parties should enter into the contract with their free consent. It is not a free consent when it is said to be given under influence, coercion, fraud, misrepresentation or mistake.
In the Indian Contract Act, the definition of Consent is given in Section 13, which states that “it is when two or more persons agree upon the same thing and in the same sense”. So the two people must agree to something in the same sense as well.
For Example: – ‘A’ agrees to sell his house to ‘B’. ‘A’ owns three houses and wants to sell his which is located in haridwar. ‘B’ thinks he is buying A’s Delhi house. Here ‘A’ and ‘B’ have not agreed upon the same thing in the same sense. Therefore, there is no consent and no contract afterwards.
Free Consent is mandatory to make an agreement a valid contract. The importance of free consent cannot be stressed enough. Such consent must be free and voluntary in nature, without any sort of pressure. If the consent to the agreement was obtained or induced by coercion, undue influence, fraud, misrepresentation or mistake, then it has the potential to make the agreement void.
According to Section 14 of Indian Contract Act, it is said to be free consent when it is not caused by: –
- Coercion as defined in Section 15; or
- Undue Influence as defined in Section 16;
- Fraud as defined in Section 17;
- Misrepresentation, as defined in Section 18;
- Mistake, under Sections 20, 21 and 22.
If consent of one party is not free then it is not a valid contract. When the consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is voidable at the option of the party whose consent is not free. Even if the consent taken is caused by the mistake, the agreement is void.
What are the factors affecting free consent under the Contract Act?
The factors affecting Free Consent Under the Indian Contract Act, 1872 are as follows: –
- Coercion: – Coercion means forcing a person to enter into a contract. Therefore, force or threats are used to obtain the consent of the party, it is not free consent. Section 15 of the Indian Contract Act, 1872 states that coercion is committing or threatening to commit, any act is forbidden by the Indian Penal Code (45 of 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.
- For example: – ‘A’ has threatened to hurt ‘B’ if he does not sell his house to ‘A’ for Rs. 5 lakh. Here too, if ‘B’ sells the house to ‘A’, it will not be a valid contract as B’s consent was obtained by coercion.
- Now the effect of coercion is that it makes the contract voidable. This means the contract is voidable at the option of the party whose consent was not free. So the aggravated party will decide whether to perform the contract or to avoid the contract. So in the above example, if B still wishes, the contract can go ahead.
- Undue Influence: – When the relationship between the two parties is such that one party is in a position to dominate the other party, and uses such influence to gain an unfair advantage from the other party then it will be undue influence. Section 16 of the Indian Contract Act, 1872 contains the definition of undue influence. For example: – ‘A’ sold his gold watch for only Rs. 500/- to his teacher ‘B’, where ‘B’ promised to give good grades to ‘A’. Here A’s consent is not freely given, he was under the influence of his teacher.
- The section also describes how a person can abuse his authority in the following two ways: –
- When one person holds real or clear authority over another person or if he is in a fiduciary (trustee) relationship with another person.
- He makes a contract with a person whose mental capacity is affected by age, illness or crisis. Unsoundness of mind can be temporary or permanent.
- Examples of fiduciary relationship are: –
- Solicitor and client;
- Trustee and trust;
- Spiritual adviser and devotee;
- Medical attendant and patient;
- Parent and child;
- Husband and wife;
- Master and servant;
- Guardian and ward.
- Fraud: – Fraud means cheat by one party, that is, when one of the parties intentionally makes a false statement, it is said to be fraudulent. According to Section 17 of the Indian Contract Act, the other party has been given rights to claim for the deceived amounts as well as to revoke the entire contract and can make modifications where he got damaged. ‘Fraud’ means and includes any of the following acts committed by a party to a contract: –
- The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
- The active concealment of a fact by one having knowledge or belief of the fact;
- A promise made without any intention of performing it;
- Any other act fitted to deceive;
- Any such act or omission as the law specially declares to be fraudulent.
- For example: – ‘A’ purchased a horse from ‘B’ and he has claimed that the horse can be used on the farm. It turns out that the horse is lame and ‘A’ cannot use it in his field. Here ‘B’ deliberately betrayed ‘A’ and this would be fraudulent. It is not a free consent.
- One factor to consider is that the aggravated party should suffer from some actual loss due to the fraud. There is no fraud without damages. Also, the false statement must be a fact, not an opinion. In the above example if B had said his horse is better than C’s this would be an opinion, not a fact. And it would not amount to fraud.
- Misrepresentation: – Misrepresentation occurs when a party makes a representation that is wrong, inaccurate, incorrect, etc. The difference here is the misrepresentation could be innocent, i.e., not intentional. According to Section 18 of the Indian Contract Act, the misrepresentation is nothing but showing the false information at the beginning of the contract itself. The party making the statement believes that the statement as true.
- Misrepresentation can be of three types: –
- A person makes a positive claim believing it to be true.
- The person violating any duty gives one advantage by misleading the other but breach of duty is without the intention of deceiving anyone.
- When one party causes the other party to make a mistake as the subject of the contract but this is done innocently and not intentionally.
- Mistake (Section 20): – When the consent of parties to the contract is caused by mistake, it is not free consent which is needed for the validity of the contract. One or both the parties may be working under some misunderstanding or misappropriation of some fact relating to the agreement. For example: – ‘A’ agrees to buy a certain horse from ‘B’. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.
- There are two forms of mistake under Indian contract law: –
- Mistake of fact,
- Mistake of law.
- If such a misunderstanding or misapprehension had not been there, probably they would not have entered into the agreement. Such Contracts are said to have been caused by mistake.
What is the importance of free consent in contract?
The Importance of free consent in contract are given below: –
- The contract made out of free consent protects the validity and enforceability of an agreement.
- It provides a protecting shield to the parties from coercion, undue influence, misrepresentation, fraud, and mistake
- It provides the parties to withstand their autonomous power to frame their running policy or principle.
- The principle of consensus-ad-idem is followed.
What is the difference between Consent and Free Consent?
| S.No. | Basis | Consent | Free Consent |
|---|---|---|---|
| 1. | Meaning | When both the parties agree to a thing in the same sense of mind or unison of mind, then the agreement is considered to be done with consent. | When an agreement is done with consent and is free from coercion, fraud, misrepresentation, undue influence, and mistake. Then the agreement is considered to be done with free consent. |
| 2. | Essentials | Both parties must be entering into the agreement in the same sense of mind.Both parties must be entering into the agreement should be agreeing to the same thing. | Consent should be free from Coercion, fraud, misrepresentation, undue influence and mistake |
| 3. | Voidability | When there is a lack of consent, the contract would be void. | When there is no free consent, then the voidability of the contract depends on the option of the aggrieved party. |
Case laws
- Raffles vs. Wichelhaus
- Facts of the case: – Two parties, ‘A’ and ‘B’, entered into a contract for the sale of 125 cotton bales by a ship called “Peerless” from Bombay. There were two ships of the same name, and while Party ‘A’ was thinking of one ship, Party ‘B’ was thinking of another ship.
- Judgment of the case: – The court held that there was no meeting of mind by both parties. Therefore the contract was invalid.
- Ranganayakamma vs. Alwar Sett
- In the case of Ranganayakamma vs. Alwar Sett, where the widow was prohibited from removing the corpse of her husband until she consented for the adoption. The court said that her consent was not free and it was coerced. It is clear that coercion is committing or threatening to commit any act which is contrary to law.
- Lingo Bhimrao Naik vs. Dattatrya Shripad Jamadagni AIR 1938 Bom 97
- A mother was alleged to use undue influence on his adopted son when he reached the age of majority to ratify the gift deeds regarding non-watan property made to her daughters and caused obstruction in letting him consult his natural father. The court held that the adoptive mother used her position of authority to dominate his son gain an unfair advantage in getting the gift deeds ratified. Also, as the adoptive son was unaware of his legal rights, the matter was set aside