4Free Consent
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1. Competent to Contract [Sec-11 & 12]Competent to Contract means:
Capacity - to enter into a valid contractLegal ability - to enter into a contract
Only competent persons can make a legally validcontract.
roadly speaking! t"ere are t"ree categories o#
- $ncompetent %ersons
inors'or( $n#ants '1) *21 years o# age(
%ersons o# +nso,nd ind
%ersons! t"o,g" competent! declared by La asincompetent. [dis,ali/ed to contract]
0",s!ot all d,lts o# So,nd indcan make 3alid Contracts
45amples: $nsolvent6 lien enemy6 7oreign 8iplomat6
%erson ,nder t"e in9,ence o# lco"ol6 Li#e
Convict.
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2. Consent - 8e/ned [Sec -1;]
0"e term
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7ree Consent [Sec @ 1A]
Consentis said to be #ree, "en not ca,sed by:
Coercion [Sec 15]
+nd,e in9,ence [Sec 16]
7ra,d [Sec 17]
isrepresentation[Sec 18]
istake [Sections - 20, 21 and 22] Consentis said to have been ca,sed when ito,ld not "ave been given - b,t #or t"ee5istence o# s,c" vitiating #actors - Coercion
- ,nd,e in9,ence!
- #ra,d!
- misrepresentation
or - mistake.
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Conse,ences o# Coercion:
$hen consent is ca%sed by coercion,- the contract is voidable at the
o&tion o" the
&arty whose consent was soobtained.
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2. +nd,e in9,ence: 'Sec @ 1(D"ere
- a person "o is in a position todominate t"e ill o# anot"erentersinto a contract it" "im6 and
- t"e transaction appearson t"e #ace
o# it! or on t"e evidence! to be,nconscionable!
t"e b,rden o# provingt"at s,c" contract as not ind,ced by ,nd,ein9,ences"all lie ,pon t"e person in t"eposition to dominate t"e ill o# t"e ot"er.E
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+nd,e in9,ence means: improperor,n#air ,se o#one=ss,periorstat,sin order to obtaint"econsento# aperson"o is in a eaker position.
?ere! t"e relations s,bsisting beteen t"e partiesis s,c" t"at
i# One o# t"e parties isin a position to
dominate t"e ill o# t"e ot"er, and
ii# by ,sing t"at position, obtains an ,n#air &,nd,e advantage #rom t"e ot"er.
$n t"eir relations"ip! t"e person dominating may"old 'i(a real orapparent a,t"ority, or
'ii( a,t"ority derived #rom a /d,ciaryrelations"ip. [0r,st & Con/dence based]
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+nd,e in9,ence - ,s,allyinvolves an ab,se o# t"e e5isting
relations"ip beteen t"e parties.
person "as
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$n n,ts"ell! a contract is said to beca,sed 'ind,ced(
'vitiated( by ,nd,e in9,ence "ere
'i( One party to t"e contract is in apositionto dominate t"e
ill o# t"eot"er6and
'ii( t"ereby! "e is in a position toobtain ,n#air advantage
over t"eot"er.
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1. 8ominator "olds real or apparent a,t"orityover t"e ot"er:
'(. )aster Servant*
+a assessin( cer /ssesseeoice ns&ector eron %nder c%stody
2. 8ominator stands in /d,ciary relation it"to ot"er.
0r,stand con/denceare the #o,ndation #or/d,ciary relations.
': 3ather Son+r%stee 4eneciary
Soicitor ientoctor atient
3ianc ance 4etween artners o" a 4%siness 3ir9
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. 8ominator makes a contract it" a person:contract with a &erson whose mental capacity is
temporarily or permanently aGectedby thereason o" age!illnessor 9enta or bodiy
distress
'.(.: /ttendant to criticay i &atient;%rse iterate od &atient
Conse,ences o# +nd,e $n9,ence:
$hen consent is ca%sed by %nd%e in
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7ra,d [Sec @ 1H]4ssential $ngredients o# 7ra,d:
isrepresentationo# #act relating to t"es,b>ect matter o# t"e contractby one person.
ade to anot"er person to ind,ce "imtoenter into a contract
0"eintention is to deceive or c"eatt"e ot"erinnocent party.
Suppressio veri - Suggestio falsi
%romisemadeit"o,t intention o# per#orming
it. ny ot"er act /tted to deceive.
ny s,c" act oromission "ic" la declaresto be #ra,d,lent.
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Suppressio veri.S,ppression o# t"e tr,t".
/ concealment o# tr,t", "en a party is bo,nd to
disclose it! vitiates a contract.
n the contract o# ins,rance
- =nowed(e o" the "acts is re>%ired
- to enabe the %nderwriter- to calc,late t"e c"ances
and
- to #orm a d,e estimate o# t"e risk* and,
in ins,rance contract, &erha&s 9ore than any other -the &arties are re>%ired to represent
every t"ing it" #airness.
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Suppressio veri as ellas
suggestio falsi
- is a gro,ndto rescind anagreement! or- at least not to carry
it into e5ec,tion.
+he contract is voidable.
8amagescan be claimed.
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isrepresentation$nnocent@misrepresentation as
disting,is"ed #rom 7ra,d,lent@misrepresentation.
/n innocent-misstatement o# #act to t"econtractmade by one party to ind,cet"e ot"er to enter into a contract.
0"ere is no desire o# deceiving orde#ra,d"ere.
isrepresentation9ay "a into any oneormoreo" the "oowin( t"ree ';(broadcategories:
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Conse,ences o#isrepresentation
%arty ronged can
void t"e agreement$nsistt"e contract be
per#ormed! and"e be p,t inposition in "ic""e o,ld"ave been! i# t"erepresentationmade is tr,e.
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45ceptional cases - D"eredamages are alloed
Only in some e5ceptional cases damages arealloed @ even t"o,g" it is case o# an innocentmisrepresentation.
45ample.$n t"e b,siness o# an agency,
@ i# t"e agent believes t"at "e "as a,t"ority@ to represent"isprincipal,
@ "ile"e "as no s,c" a,t"ority.
@ gent is liable to damagesbeca,se
@ "e is
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ost $mportant %oint
$# t"e %arty
"oseconsent as ca,sed- by
misrepresentation"ad meanso#discovering tr,t"
- it"ordinarydiligence!
"e "as no remedy.
i i i " d d
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8isting,is"7ra,d andisrepresentation
S.o
7ra,d. isrepresentation.
1. 3ra%d is
co99itted withan intention to
deceive whie
enterin( intocontract.
)isre&resentation is
d%e to innocence.+here is no
intention to deceive
or (ain advanta(e.
2. +ho%(h voidabe,
the &arty wron(ed
t is aso voidabe,
b%t cai9 "or
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S.o 7ra,d. isrepresentat
ion.
. +he ontract can beavoided and
da9a(es can be
cai9ed.
ontract cannotbe avoided, in
case the &arty
wron(ed has a
9eans o"
discoverin( tr%th
with ordinary
dii(ence.
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istake[Sections - 20, 21 and 22]
istake:eans
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istake -1
istake o# 7act incl,des
@ istake o# %rivate Iig"ts o# $ndivid,als@ istake o# J,ality o# %romiseand @ a mi5ed ,estion o# 7actand La
istake o# 7act may be @ ,nilateralmistake
or@ bilateral mistake.1. +nilateral istake
$here ony one party to a contractis mistaken as to t"e terms o# t"e contract.
2. ilateral istake$here bot" t"e parties to a contract are mistaken as tot"e terms o# t"e contract.
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Conse,ences o# istake o# La
mistakeas to a la in #orce in $ndiadoes notrender a contract voidable. 0"econtract is validand en#orceable at la.
Ieason:One s"o,ld not be ignorant o# la o# "island.
mistake as to la not in #orce in $ndia istreated as a mistake o# #act! and a mistakeas to s,c" a la not in #orce in $ndiao,ldrendert"e contract void.
Ieason: One need not necessarily kno la not in#orce
in $ndia i.e. 7oreign La.
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istake o# 7act +nilateral istake [Sec @ 22]
I,le-1: Contract is not voidable merely beca,se
@ it as ca,sed by one o# t"e parties to it
being ,nder a mistake as to a #act.
45ample.
$#! "ile intending to sell "o,se to #or Is.;K!KKK*- tells "im t"at t"e price o# "is "o,se is Is.1;!KKK*- and i# accepts it! t"e contract beteent"em ill be valid and en#orceable #or Is. 1;!KKK*-only. cannot arg,e t"at "e as mistaken "ile
speaking o,t t"e price correctly and t"e contractm,st be set-a-side.
0"is cannot be treatedas an erroro# mind@ consensus ad idem. 0"ere are certain
e5ceptions to t"is I,le! "ic" #ollo ne5t e.
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45ceptions to t"is r,le ,nder Section @ 22
(. D"ere t"ere is a mistake as to t"e identity o# t"epersonit" "om t"e agreement is being enteredintoandt"e ot"er party is aare o# t"e /rst party=smistake.
Ies,lt: S,c" a mistake ill de#eat consent.Iender t"e contract invalid
only "en- party "as a speci/c person in mind
it" "om t"e party intends t"at t"econtracts"o,ld be e5ec,ted.
nd! - 0"is identity m,st be material to t"eparty "en entering into t"e contract.
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45ample:
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45ceptions to t"is r,le ,nder Section @ 22
(. 0"e contract ill not be void! "ere t"emistakeis - one o# attrib,tes! and
- not one o# identity o# t"e person.
45ample:
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C(. 0"ere are also instances "ere t"e plea o#
non est factumis taken.
Non est factummeans
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ote:+he the &ea o" non est factum is a very
narrow area, and to "a within it, one s"o,ld "ave somegen,ine reason "y one did not read t"e doc,ment t"atone signed.
Ieason:+he la ,s,ally ass,mes t"at t"e person signinga doc,ment "as - read!
- ,nderstood!
and - agreed to it.
/ (ood e5ample o# agen,ine reasonis where
- the partyin >%estion is illiterate! and- t"e person "o reads t"e doc,ment to t"em
made a mistake in reading t"e doc,mento,talo,d.
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I,le-2: nerroneo,s opinion abo,tval,e o# t"eob>ect o# an agreement is - deemed not tobe a mistake as to a #act.
45ample::
- =agrees to b,y a car #rom
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Conse,ences o# istake
1. istake o# $ndian La:
@ greement is en#orceable
@ Contract is not voidable
@ $gnorance o# La is no e5c,se[Ignorantia juris non excusat].
@ greement is en#orceable as contract.
2. istake o# 7oreign La: ot$ndian La#)ista=e as to a la not in #orce in $ndia has
the sa9e eGect as a mistake o# #act [Sec @21] 0"e Contract is 3oidable or 3oid.
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8octrine o# +n>,st 4nric"ment
Iestit,tion,nder-
3oidgreements [Sec @
B] - 3oidablegreements
[Sec @ A]
Iemedy ,nder Speci/c Ielie# ct[Sec - ....]
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Section @ A as to 3oidable Contract
Section A o# t"e $ndian Contract ct reads
t",s:MD"en a person! at "ose option a contract is
voidable!rescinds it
- - 0"e ot"er party t"ereto -need notper#orm anypromise therein contained o" which he is &ro9isor.
- 0"e party
rescinding a voidable contract s"all!i# hereceived any bene/t there %nder #romanot"er partyto s%ch contract,restore s,c"bene/t! so #ar as may be! to t"e person #rom"om it as received.N
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Section @ B as to 3oid Contract
Section B o# t"e $ndian Contract ct readsas ,nder :
MD"en
- an agreement is discovered to be voidor
- "en a contract becomes void!any person "o "as received any
advantage ,nder s,c" agreement orcontract- is bo,nd to
restore it! or- to make compensation #or it!to t"e person #rom "om "e received
it.N
Iemedy ,nder Speci/c Ielie#
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Iemedy ,nder Speci/c Ielie#ct! 1)HH.
Section A1! Speci/c Ielie# ct! 1)HH reads
as "oows:MOn ad>,dging t"e cancellation o# aninstr,ment, t"e Co,rt may re,ire t"eparty to "om s,c" relie# is grantedto
make any compensation to t"e ot"er"ic" >,stice may re,ire.B
0"is section gives discretion to t"e co,rtto order compensation! depending ,pon
t"e circ,mstances o# eac" case -"ic">,stice may re,ire.B
?ence!no body can claimit as a matter o# rig"t.
8istinction beteen 1 $t is a contract
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8istinction beteen
3oid greements.
1. $t cannot be en#orced byany o# t"e parties to it.
2. $t is void ab initio i.e. #romt"e beginning.
;. $t implies an agreement"ic" does not satis#y t"ere,irements o# Sec-10i.e.
a( it is made it"o,tconsideration6
or b( by incompetentpersons6
or c( its consideration or
ob>ect is not la#,l6or d( t"e consent o# t"e
parties is not #ree
or e( it is e5pressly declared
id
3oidable Contracts.1. $t is a contract
voidable at t"e optiono# one o# t"e partiest"ereto.
2. $t does not becomevoid ,nless t"e partyat "ose option it isvoidable @ rep,diates
it.;. $t implies a contract
in "ic" t"e consento# one o# t"e partiesto it is not #ree! i.e. it"as been obtainedeit"er by
a( coercion
or b( ,nd,e in9,ence