Indian Contract Act 1872, defines contract in Section 2(h) as – “An agreement enforceable bye law or is a contract”.
Section 13 defines consent as – “Two or more person are set to consent when they agree upon same thing in the same sense. Which means to sign a contract the parties should agree on the same thing at a same time.
According to section 14 – consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.
ELEMENTS OF FREE CONSENT –
- Section 15, Coercion – ‘Coercion’ is 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.
For example – A threaten B to kill his son, if B won’t enter into a contract to sell his house to A.
- According to section 15, When one party is able to dominate the other, then the contract made between them is said to contract made by undue influence. Their should not be undue influence to enter into a contract.
For example – An old man suffering from a serious disease is undue influenced by his doctor, to give doctor his house as a gift and then the doctor will save his life for sure.
- Section 17, defines fraud that when one person intent to deceive another then they commit fraud.
For example – Sohan sell his dog to his friend Mohan without informing him that the dog is suffering from a disease.
- According to section 18, Misrepresentation means deceiving the information which results in assertion of the other party entering into the contract and later on the party suffers a loss.
For example – Hasrish purchase a land from Suresh stating that the land produces 5 tones of wheat every year. Hence, Harish bought the land. Later on Harish found that the land produces only 3 tones of wheat every year. Here, suresh representation is misrepresentation.
- According to section 20 of Indian Contract Act 1872, Mistake is an incorrect understanding by one or more parties. In this the agreement is void
For example – A and B came into a contract that, A will sell B 10 tones of rice. Due to some natural calamities, the rice were destroyed and both the parties where not aware about this. Hence, the agreement is void.
Mistake is of two types –
- Mistake of Law – Section 21 defines mistake of law. When one have minimum knowledge about the law or when one is ignorant about the law.
For example – A believes that, he has he don’t have to come to a complete stop at a “stop” sign when there are no car at the interaction. This is mistake in law, whether there are cars or not, one must come to a complete stop.
- Mistake in Fact – According to section 22, Mistake of fact occurs when one or more parties in a contract have mistaken a term that is essential meaning of contract. Mistake of fact is different from mistake in law.
For example – When the contract states the shipment of saree is to be delivered. Here, the contract is referring about silk saree, but if one party believes it to be chiffon saree. This is mistake of fact.