Concept of Coercion, Undue Influence and their differences

Concept of Coercion, Undue Influence and their differences

CONSENT AND FREE CONSENT

CONSENT

One of the important factors of a valid contract is Free Consent. Under this head several important topics fall like Coercion, Undue Influence, Fraud and Misrepresentation. Now parties usually agree upon the same thing in the same sense. If they do not, then there is no contract.

Section 13 of Indian contract Act therefore lays down, that two or more person are said to consent, when they agree upon the same thing in the same sense.

PARTIES AD IDEM – Meeting of the minds of both the parties. It is essential element to create a contract that both the parties agree to same thing in the same sense. If the parties are not ad idem on the subject matter about which they are negotiating, then there is no consensus ad idem i.e, no real agreement between them. When their minds are directed to different objects it is obvious that there is no agreement. Thus if two persons enter into an apparent contract concerning a particular person or ship and it turns out that each of them misled by the similarity of name had a different person or ship in mind , no contract would exist between them.

RAFFLES VS WICHELHAUS 

A and B entered into a sale contract for 125 bales of cotton coming from Bombay by a ship called “Peerless”. There were actually two ships by this name and whilst A had one ship in mind and B thought it was the other. The court held that A and B’s minds were not meeting so the agreement is void.

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FREE CONSENT :

Now parties to a contract may agree upon the same thing in the same sense. But mere consent is not enough; consent must also be free.

Under section 14, consent is said to be free, when it is not caused by –

  1. Coercion
  2. Undue influence
  3. Fraud
  4. Misrepresentation
  5. Mistake

Where there is no consent , there can be no contract at all. Where there is consent but no free consent there is a contract which is voidable at the option of the party whose consent wasn’t free. Otherwise where there is no free consent the contract is void.

COERCION :

According to section 15, Coercion is –

  • The committing of any act forbidden by the India Penal Code or;
  • The threatening to commit any act forbidden by the Indian Penal Code; or
  • The unlawful detaining of any property to the prejudice of any person whatsoever; or
  • The unlawful threatening to detain any property to prejudice of any person whatsoever.

— with an intension of causing any person to enter into an agreement.

It is however immaterial whether the Indian Penal Code is or is not in force in the place where the coercion is employed. It may be noted that coercion may proceed from anybody – even a person who is not party to the contract. It may be directed against anybody not necessarily the other contracting party. It includes physical compulsion, fear and menace to goods.

  • Ranganyakamma vs Alwar Setti 13 Mad. 24: A Hindu Widow was forced to adopt X under the threat that her husband’s corpse would not be allowed to be removed unless she adopts X. The adoption was held voidable, as having been induced by coercion as with intention of wounding the feelings of widow, indignity was offered to corpse.
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UNDUE INFLUENCE :

Under section 16 of Indian contract act, a contract is said to be entered by undue influence in which the relationships between parties are such that one of the parties is in the position to dominate the other party according to its will and use that position to get an undue advantage.

A person is said to be in dominating position in following situation:

1. When there is Real and Apparent Authority –

When a person is having an authority over the other person in the contract then it is expected that he won’t misuse his authority to get an unfair advantage from the other party.

2. If there is a Fiduciary Relationship –

Fiduciary relationship is a relationship of trust and confidence. When a person reposes confidence in other person, it is expected that he won’t be betrayed. If a person betrays trust and gains an unfair advantage over the other party, the suffering party has a choice to avoid such a contract.

MANNU SINGH VS UMADUTT PANDE:

There was a religious Guru B, whom A used to follow. B taking undue advantage of trust and confidence told him that according to Bhagwad Gita if you name your all property on your Guru’s name, then only you will attain moksha. He did the same but the court found something fishy and upheld that Guru took undue advantage and the contract is voidable for suffering party.

3. If a person is in distress –

If the person enters into the contract with a person whose mental capacity is temporarily or permanently affected due to illness, age or mental or bodily distress. There might be a chance such a person’s position may be exploited and unfair advantage might have been taken.

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MERCIE CELINA D’SOUZA VS RENIE FERNANDEZ 

Plaintiff was not in good mental condition to enter into the contract and defendant asked the plaintiff to sign the property papers. As she was not in state to understand anything, therefore she signed. Somehow court found this fishy as there was no attestation by two witnesses which is required and went to the roots of facts and held that it’s Voidable at the option of plaintiff.

EFFECT OF UNDUE INFLUENCE –

Section 19(a) states that, when the consent of the person has been caused by undue influence the agreement is a contract voidableat the option of the suffering party whose consent is is obtained by undue influence.

‘COERCION’ AND ‘UNDUE INFLUENCE’ DISTINGUISHED –

  1. Coercion and Undue influence are clearly distinguishable. In Coercion, the consent is obtained by threat and the person is forced to give his consent while in Undue influence, the consent is obtained dominating the will of giver.
  2. Undue influence differs from coercion as Coercion is mainly of physical character and Undue influence is mainly of Moral character.
  3. The party alleging for coercion is bound to prove it in the court of law. However in some cases discussed above, Undue influence can be presumed by the courts and the other person who isn’t suffering has to prove that there was no undue influence.

Author: Akshada Sarpande,
MIT School of law, student of FY BBA LLB

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