1. Consent vs. Free Consent
Consent (Sec. 13): When two or more persons agree upon the same thing in the same sense (consensus ad idem).
Example: A agrees to sell his black horse to B for ₹50,000, and B agrees to buy that same horse for the same price → Consent exists.
If A intends to sell his white horse but B thinks he is buying the black horse → No real consent.
Free Consent (Sec. 14): Consent is said to be free when it is not caused by:
Coercion
Undue Influence
Fraud
Misrepresentation
Mistake
If any of these factors are present, the consent is not “free,” and the agreement may become void or voidable.
 
2. Coercion (Sec. 15)
Meaning
Coercion means compelling someone to enter into a contract through unlawful threats or physical force. The law defines it as: “Committing or threatening to commit any act forbidden by the Indian Penal Code, or unlawfully detaining or threatening to detain property, to the prejudice of any person, with the intention of causing any person to enter into an agreement.”
Key Points
Includes physical threats (violence, threat to life).
Includes threats to damage or unlawfully detain property.
It doesn’t matter whether the IPC is applicable at the place where coercion occurs—what matters is the act itself is forbidden by the IPC.
Example
A threatens to burn B’s house if B does not sell his land at half price. B agrees under pressure → Consent obtained by coercion → Contract is voidable at B’s option.
A unlawfully detains B’s car until B signs a contract. → Coercion.
👉 Legal Effect: The contract becomes voidable at the option of the aggrieved party (the one forced into the contract).
 
3. Undue Influence (Sec. 16)
Meaning
Undue influence arises when one party, due to a special relationship or position of power, dominates the will of the other and uses that position to gain an unfair advantage.
Key Points
Occurs when one party is in a position of authority, trust, or dominance.
The weaker party’s free will is suppressed.
Common in doctor–patient, lawyer–client, spiritual guru–devotee, teacher–student, guardian–ward relationships.
Examples
A wealthy landlord lends money to an illiterate tenant at an excessive interest rate, exploiting his weak position.
A spiritual guru persuades a devotee to transfer property in the guru’s name, claiming it is necessary for salvation.
👉 Legal Effect: Such contracts are voidable. Courts often direct the stronger party to prove the contract was fair and free from undue influence.
 
4. Fraud (Sec. 17)
Meaning
Fraud occurs when a party deliberately deceives another to induce them into a contract. It involves intentional falsehood or concealment.
Acts that amount to Fraud
Suggesting a fact that is false, knowing it is false.
Concealing a material fact knowingly.
Promising without any intention of performing.
Using tricks or deceptive practices.
Any act declared fraudulent by law.
Examples
A sells a horse to B, claiming it is healthy, knowing that it is lame. → Fraud.
A company publishes false financial statements to attract investors.
👉 Legal Effect: The contract becomes voidable, and the aggrieved party may also claim damages for loss suffered.
 
5. Misrepresentation (Sec. 18)
Meaning
Misrepresentation occurs when one party makes a false statement without intent to deceive, believing it to be true, but it still misleads the other party.
Types of Misrepresentation
Positive Assertion: Making a false statement honestly.
Breach of Duty: Causing another to misunderstand by neglect.
Innocent Act: Causing the other party to enter into a contract without intending to mislead.
Examples
A, while selling his horse, tells B that the horse is perfectly sound, believing it to be true, but the horse is actually unsound.
A seller unintentionally misstates the quality of goods due to lack of knowledge.
👉 Legal Effect: The contract is voidable at the option of the misled party, but damages are not generally awarded (unlike fraud).
 
6. Mistake (Secs. 20–22)
Meaning
Mistake means an erroneous belief about a fact or law at the time of agreement.
Types
Mistake of Fact
Bilateral Mistake (Sec. 20): Both parties are mistaken about an essential fact → Contract is void.
Example: A agrees to sell his cargo of goods supposed to be on a ship from Mumbai, but unknown to both parties, the ship had already sunk. → Void contract.
Unilateral Mistake (Sec. 22): Only one party is mistaken → Contract remains valid, except in cases of mistake regarding the identity of a party or nature of the contract.
Mistake of Law
Mistake about Indian law → Not an excuse (ignorance of law is no defence).
Mistake about foreign law → Treated as a mistake of fact.
👉 Legal Effect:
Bilateral mistake → Contract is void.
Unilateral mistake → Contract is valid (except rare cases).
 
7. Legal Consequences of Absence of Free Consent
Coercion, Undue Influence, Fraud, Misrepresentation: Contract is voidable at the option of the aggrieved party.
Mistake of Fact (bilateral): Contract is void.
Mistake of Law: Contract remains valid.