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FREE CONSENT

1. Introduction

Dear students, welcome to the lecture series on Business Regulatory Frame Work.
As you know we are discussing the Indian Contract Act 1872. I have made it clear
in my previous lectures that an agreement is to be converted into the contract. If
we wish that agreement should be enforceable in the eye of law but an agreement
has certain essential element and they should be fulfilled to convert it into the
contract. Today we will discuss one of the essential element that is free consent.

2. Free Consent : An Introduction

Now if we look at the word free consent, it is made up of two things first is free
and then consent. First of all, I will take up the word consent for the discussion.
The meaning of the consent is that when parties enter into the contract they
should have the consent about the subject matter. In other words, we can say
when both the parties are entering into the contract, they should think about the
subject matter in a same sense.

Suppose, for example A has got two scooters, one is of white colour, another is of
green colour and A makes an offer to the B that he would like to sell a scooter
to the B in ten thousand rupees. When A is making an offer to the B, he is
having in his mind that he will be selling the white scooter. Whereas when B
gave the consent to the A to buy the scooter, he thought he will be buying the
scooter of the colour green. Now there is no consent in the mind of both the
parties because both the parties are thinking about the subject matter in a
different sense, whereas the meaning of the consent says both the parties should
agree upon the same thing, in a same sense. In Indian Contract Act Section-13
the definition of the consent is and I quote Two or more persons are set to
consent when they agree upon the same thing in the same sense. Meaning
thereby, the party should agree upon the same thing in a same sense and if
consent is lacking then contract will be void. It will not be enforceable in the eyes
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of law. It has no validity so when two parties enter into the contract they must
have the consent.

3. Concept of Free Consent

After discussing the concept of consent, now we move on to discuss the concept
of free consent. Free consent; meaning thereby, both the parties should give
the consent by the free will. No party should give the consent under the
compulsion. Section-14 of the Indian Contract Act, deals with the concept of free
consent. Free consent is caused to be in the contract if it is not obtained by the
following ways:

The first and the foremost way is the coercion. If there is coercion in consent
then it is not a free will of the parties. The rules regarding coercion are explained
in the Section-15 of the Indian Contract Act.

Second point of which is leading to the free consent is that if the consent is not
caused by the undue influence and related to this Section-16 applies. If the
consent is not caused by the fraud and the provision regarding the fraud are
discussed in the Section-17. The consent will be free if it is not taken by the
misrepresentation. We will deal with all these provisions later on one by one, and
as far as the misrepresentation is concerned, Section-18 applies.

Consent will be free if it is not obtained by mistake and related to the mistakes
the Sections are 20, 21 and 22. In the nutshell, it can be mentioned that the
consent is free, if it is not caused by these five methods and if any element is
present or by any way we are getting the consent either by coercion or by undue
influence or by fraud or by misrepresentation the consent will not be free.

When in a contract consent is not free the contract is voidable. When consent is
not there the contract is void. When consent is not free the contract is voidable.
The contract is voidable at the option of the aggrieved party. Now meaning of the
aggrieved party is the party whose will was not free, party which has given the
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consent under any these four ways; either by coercion or by undue influence or by
fraud or by misrepresentation. If the consent is obtained by these four methods
then the consent is not free and that party will be known as the aggrieved party
and that aggrieved party has got a right to go in the court of law and can declare
the contract voidable. Now in the earlier discussion I made it clear the meaning of
the voidable. The voidable meaning thereby the aggrieved party has got the
option. Whenever there is an option in a contract to declare it void or valid that
contract is voidable. So the aggrieved party can go in the court of law and can
exercise the option available to the party to declare the contract void. But if the
party desires, the party wants the contract should be applicable then it will be
applicable but the option is available with the aggrieved party whose will is not
free.

4. Coercion

Now we will discuss coercion in detail. Coercion means forcibly compelling
somebody to enter into the contract. If a party forcibly compelling somebody to
enter into the contract, law says the coercion has been exercised. Section-15 of
the Indian Contract Act defines the coercion and I quote Coercion is the
committing or threatening to commit any act forbidden by the Indian Penal
Code 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 agreement. If we analyze the definition we get three or four very
prominent points in it. Coercion means threatening somebody or compelling
somebody to enter into the contract. If we threaten somebody to damage the
property or if we threaten somebody forcibly or by threatening or we commit or
we damage the property of somebody by that method, if we compel a person to
enter into the contract that is known as coercion. So coercion say that we are
threatening to damage the property of somebody or we damage the property of
somebody or we are threatening the person physically then we say coercion has
been exercised but now we will talk about the elements of the coercion one by
one.
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The first and the foremost element is the coercion must be committing any act
forbidden by Indian Penal Code. Any act which is prohibited by Indian Penal Code,
if we take help of that act and compel a person, or threaten a person by that act
and he or she enters into the contract that is known as contract has been entered
into by the coercion. A person must be threatening to commit any act, forbidden
by Indian Penal Code. Now there are two things either we are committing an act
which is forbidden by Indian Penal Code or we are threatening to commit any act
forbidden by Indian Penal Code. There are two things we are committing an act or
we are threatening to commit an act forbidden by Indian Penal Code. Then we say
the coercion has been exercised. The third element in it is coercion must be
unlawful detaining or threatening to detain any property of other party then
coercion is set to be exercised. When one party is unlawful detaining the property
or threatening to detain the property coercion is exercised.

For example A forcibly kidnaps the son of the B and asks the B that he will kill
the son of the B if B will not execute a promissory note of rupees one lakh in his
favour. Now under this threatening B execute a promissory note of rupees one
lakh in favour of the A. Then we can say now B has given this promissory note
under coercion because A has threatened to B that he will damage or he will
kill the son of the B if he will not give a promissory note of one lakh rupees.

Next point is coercion must be done with the intention of causing the other party
to enter into the contract. This point itself explain that one party when it is
exercising the coercion on the other party the intention is to enter into the
contract, but we can analyze on this point that coercion has been exercised. We
are threatening another party or we are committing an act but there is no
intention that contract should be formulated out of it. Then it will be called that
coercion was not exercised because after exercising the coercion a contract should
emerge out of it. If contract is not emerging out of it by exercising the coercion
then the aggrieved party will not have any sufficient ground to go in the court of
law and to say that they enter into the contract on behalf of the coercion, because
of the coercion because they dont have any proof to go into the court of law,
therefore if one party is exercising the coercion that should lead to the emergence
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of the contract. The coercion may be initiated by any person. It is not necessary
that offeror, if he gives an offer to the offeree, the coercion should be exercised
by the offeror himself. Even coercion can be exercised by a stranger. If offeror
appoint somebody on his behalf to exercise the coercion and compel the other
party to enter into the contract that will be a valid ground for the aggrieved party
to go in the court of law and to declare the contract either void or voidable.
Meaning thereby, even a stranger can be involved, it is not necessary that party
himself should be directly involved while exercising the coercion.

Now next point related to the coercion is the IPC Indian Penal Code may or may
not be enforce where the coercion is exercised and the next important relevant
rule is that in coercion, if we are giving a threatening to file a suit against the
other party then it will not be called as coercion.

For example A has given a loan to the B and B promised to the A that he will
return the loan within the three months. Now after the expiry of the three months
B fails to return the loan and after repetitive requests B is not returning the
loan of the A and A threatens to the B that he will go in the court of law to
recover the loan. Now A in this case is threatening to the B to go in the court
of law. This threatening will not be included in the coercion because it is a valid
argument, it is a valid case and A is free to go in the court of law.

5. Undue Influence

Now I will take-up another element which is not leading to the free consent and
that is undue influence. Undue influence has been defined in the Section-16 of
the Indian Contract Act. A contract is set to be induced by undue influence where
the relation subsisting between the parties are such that one of the parties is in a
position to dominate the will of the other, and uses that position to obtain and
unfair advantage over the other. Now, undue influence definition has got three
very points in it.

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First is that one party should be in a position to dominate the will of another party
and after the position, the position should be used by the party and after using
the position the party should have taken the undue advantage. So there are three
things. You must have a dominating position to prove that undue influence was
exercised on you. You must have used your dominating position to prove that
undue influence was exercised and then you must have taken undue advantage out
of it. In an undue influence one party by its superior position trying to dominate
the will of another party. It is some time called as a mental coercion. In
coercion, we have studied that one party forcibly compelling the other party to
enter into the contract. There the pressure is of physical nature but in undue
influence the relation between the parties are so that one party is in a superior
position and other party is in a weaker position. So the superior party exercises,
its superior and dominating position over the weaker party and weaker party
changes its will against its desire and enters into the contract that is known as the
undue influence has been exercised. Now, this generally happens you must have
seen in day to day life that if we take the example of doctor and patient
relationship. Doctor is in a superior position. When a patient visits to the doctor
he completely feels helpless or he is in a weaker position according to undue
influence and whatever doctor says a patient has to obey the instructions. In spite
that he is unwilling to follow or he is not willing to do what the doctor is saying but
doctor is in a superior position, he is in a dominating position and if he uses that
position and take some advantages out of it the important thing is he has taken the
advantages out of it that is known as the doctor has exercised the undue influence
over the patient. Now this is relationship sometime is known as the fiduciary
relationship. There are certain relationships, which have been explained in the
law where there are fiduciary relationships between the two parties. Fiduciary
relationship means the relationship which is based on trust. Now doctor and
patient relationship is a fiduciary relationship, lawyer and the client relationship is
a fiduciary relationship. Whatever a lawyer says to the client, a client has to
follow it and we know it a lawyer is in a superior position, a client is at a weaker
position. Similarly the preacher and the follower, the relationship between
preacher and follower is based on trust and there is a fiduciary relationship and we
know whatever a preacher preaches the follower sometime unwillingly follow it.
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Similarly the parents and the child, the relationship between parents and the child
is a fiduciary relationship which is based on trust. So these are the examples,
these are the cases, where the undue influence can be exercised. So in undue
influence very prominent thing is the weaker partys mind is deviated that is why
we call it mental coercion. Weaker partys mind is deviated by the dominating
party and weaker party enters into the contract because an undue influence has
been exercised by the stronger party.

6. Essentials of Undue Influence

Now we will talk about somehow the essentials and legal rules for valid undue
influence, when we can say that undue influence was exercised? The first and the
foremost point is that one party must be in a position to dominate the will of the
other party and that I have explained the party should be in a dominating position
to impose its condition. Take the example of a doctor, take the example of a
lawyer, and take the example of a preacher. So they are in a dominating position
by using the dominating position you have taken the advantages out of it. Now
when we talk about the dominating position it means that dominating position
sometime comes to you because of the authority you have got. It can be called as
an apparent authority. The authority which is available and we are exercising the
authority over the weaker party. Had undue influence be not exercised? The
weaker party would not have entered into the contract. So we have got the
apparent authority and by exercising that apparent authority that is giving us a
dominating position. Another important point is that the dominating party uses its
superior position to obtain the undue advantage. Suppose I am a stronger party
but I am not using my position. Then it will be called that I am not exercising the
undue influence. All the three conditions of the undue influence should be
fulfilled simultaneously. The dominating position should be hold by the party. He
should exercise that dominating position and should have taken the advantage. I
am in a dominating position, as a University teacher I am in a dominating position
before the students. Students has to obey whatever I say but suppose I am not
using my dominating position then it will not be called that undue influence was
exercised. So dominating position should be used in spite of being having a
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dominating position it should be used and it should be used to take the undue
advantage out of it. The weaker party is come to the pressure on unwillingly
following the stronger partys instruction. Now these are the three very important
elements in an undue influence.

7. Effects of Undue Influence

Now we come to the effect of the undue influence. The effect is also the same.
The weaker party can go in the court of law and can declare the contract voidable.
Then when we say voidable meaning thereby the same logic will be applicable here
also, when weaker party exercises this option which was available in the coercion.
The same rule is applicable here. The weaker party has to go in the court of law
and has to prove here the burden of proof is on weaker party. Weaker party will
say that if the undue influence would not have been exercised on him the party
would not have entered into the contract. The contract emerged; contract kept
up, contract got framed, contract was enacted, contract was coined, contract was
enter into by the weaker party because stronger party dominated the will of the
weaker party and burden of proof lies on the weaker party.

8. Difference : Coercion and Undue Influence

Now I will explain you the difference between coercion and undue influence. In
both the cases consent is not free this is the similarity between the two and in
both the cases the contract is voidable but the difference is coercion is exercised
sometime by the stranger but undue influence cannot be exercised by the
stranger. The party concern party for example stronger party has to be party
which is exercising the undue influence. Coercion is of physical nature, undue
influence is of moral nature. The relation between the two parties in coercion is
immaterial but in undue influence the relation between the two parties is material
and the relation is known as the fiduciary relationship exists between the two
parties. With this I end my discussion on coercion and undue influence.
Thank you.