Contracts are very common in our daily life. People are always engaged in contracts even if they are not realising it. Buying goods and services, paying for bus tickets, installing an app on your phone, everywhere there is a contract, but we are not realising it.
According to the Indian Contract Act 1872 a contract is “An agreement which is enforceable by law is a contract”. All agreements are not contracts. The agreement which fulfils the essentials of the contract is enforceable. The one of the basic elements which a valid contract should satisfy is free consent of the parties. The consent of the parties is a very essential element of a valid contract. Mere consent is not enough for a valid contract. The consent given by the contracting parties should be free and genuine. According to Indian Contract Act free consent is Consent that is free from Coercion, Undue Influence, Fraud, Misrepresentation or Mistake. The parties must have to understand and give consent in the same sence and for the same subject matter. This is the principle of Consensus-Ad-Idem.
For example : Example: Arun agrees to sell his car to Basil. A owns five cars and wants to sell his BMW car. Basil thinks he is buying his BENZ car. Here, there is no meeting of minds or consensus-ad-idem.
Definition of coercion
According to the Indian Contracts Act, 1872, coercion is defined as: “Coercion’ is the committing, or threatening to commit, any act 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.”
Techniques involved in the section
First, committing or threatening to commit any act which is forbidden by Indian Penal Code. Secondly, unlawful detaining or threatening to detain any property with the intention of forcing a person to enter into an agreement.
The definition itself states that coercion can be caused by committing or threatening any act which is prohibited by the Indian penal code with the intention to get a consent of another party to make a contract.
Explanation of section 15
“It is immaterial whether the INDIAN PENAL CODE is or is not in force in the place where the coercion is employed”. Therefore if the coercion is taking place beyond the limit of IPC then it is not considerable.
Need for the amendment of section 15
The definition only includes acts forbidden by the Indian penal code. The law commission of India has suggested in its report that there is a need for amendment in section 15 of the Indian Contract Act. They recommended including other panels also instead of IPC. The recommendation is as under;-
“The proper function of the Indian Penal Code is to create offences and not merely to forbid. A penal Code forbids only what it declares punishable. There are laws other than the Indian Penal Code performing the same function. We suggest that the words “any act forbidden by the Indian Penal Code” should be deleted and a wider expression be substituted therefor so that penal laws other than the Indian Penal Code may also be included. The explanation should also be amended to the same effect.”
Unlawful detention of property
The definition also states about the unlawful detention of property or threatening to detention. If the detention is not illegal then it will not be coercion.
To the prejudice of a person
The coercion is applied to the prejudice of any person. A coercive act need not necessarily be directed at the contracting party; it is sufficient that it affects any individual, and intends to put that individual under pressure to enter into an agreement. The best example for this is the case Ranganayakamma v. Alwar Setti.
Threat but not coercion
There are some threats which cannot be treated as coercion. If students threaten to strike before the school authority for their education rights, if a wife threatens to sue her husband for her rights or statutory compulsion will not includes in coercion.
In the case of Workmen of Appin Tea Estate v. Industrial Tribunal case, After a strike threat, a bonus request from the workers was accepted. The question that arose was, whether such a decision between the workers’ union and the INDIAN TEA ASSOCIATION could be invalidated as it was coerced. It was held that as a result of the doctrine of collective bargaining under the INDUSTRIAL DISPUTES ACT, the workers’ demand could be backed by a strike threat. There was no coercion involved in invoking such a threat, nor was there any threat to commit an offence under the Indian penal code, and as a result, the agreement could be enforced.
Burden of proof
It is difficult to prove the coercion because pure probability or fear is not a threat. The burden is heavier for the person defending the coercion. The person facing the coercion must prove the intensity of the risk which was prohibited by law and the compulsion made him enter into a contract which he would not otherwise have.
References
Coercion under section 15 of Indian Contract Act | Law column
Free Consent under the Indian Contract Act, 1872: Everything you need to know – Law Circa
Importance of Free Consent under Contract Law in India
In Ranganayakamma Vs Alwar Setti 1889 the question before the Madras High Court | Course Hero
Contract- 1, Dr. R.K. Bangia, pp 140,141,142,143,144.
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