Free consent

13-22
 13. 'Consent' defined.—
 Two or more persons are said to consent when they agree upon the same thing
in the same sense.
 Two or more persons: This clarifies that consent is a bilateral
concept, requiring agreement between multiple individuals.
 Agree upon the same thing: This emphasizes that both parties must understand
and agree to the same subject matter of the agreement.
 In the same sense: This further underlines the importance of shared
understanding and interpretation of the terms and conditions. Both parties
must have the same mental picture of what they are agreeing to.
 Section 14
 Consent is said to be free when it is not caused by--
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the
existence of such coercion, undue influence, fraud, misrepresentation or
mistake.
Vijaysinh Mohansinh Solank v Transport Manager, Ahmedabad Municipal Transport Services,
AIR 1982 Guj307

 Even if there be undue influence or coercion, but if it does not appear that it was
instrumental in making the promisor to do the act in question, the existence of
coercion etc., would be of no avail. The word 'cause' is not a term of art, but it is
a term of science. Nothing can be said to be the cause of a particular effect,
unless it is the proximate and immediate cause of that effect. When a particular
effect is said to be caused by a particular factor, it must be clearly and cogently
established that the effect is the direct outcome of that particular cause. If the
alleged cause is remote and not proximate, is distant and not immediate, such a
cause cannot be said to be the cause in legal parlance
Meaning of Free Consent
 Section 14 of the Indian Contract Act 1872 states
that consent is free when not obtained by fraud,
misrepresentation, undue influence, coercion, or mistake. If
any of the above methods take the consent, then the contract
is voidable at the choice of the aggrieved party.
 Mistake void (20-22)
Section 15
 15. “Coercion” defined.—“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.
 Explanation.—It is immaterial whether the Indian Penal Code (45 of
1860) is or is not in force in the place where the coercion is
employed.
 Committing, or threatening to commit, any act forbidden by the
Indian Penal Code (45 of 1860)
 Whether threatening to commit suicide will be consider as coercion?
 Chikham Amiraju v. Chikham Seshamma ILR (1918)
 The unlawful detaining, or threatening to detain, any property,

 Meaning of Property?
 Movable and immovable?
 Animals are property?
 Detention of property as coercion: Astely v. Reynolds.
 Difference between Duress and coercion.
 Can committing threat against stranger will be the part of coercion?
 Indirect threat/not immediate threat will come under coercion?
 English law : Duress.
 Indian law: Coercion.
 Threat to take suit back until the contract will not executed is coercion.
 Strike and threat to do strike is coercion????
 Coercion in section 72
 Liability of person to whom money is paid, or thing delivered, by
mistake or under coercion.
 A person to whom money has been paid, or anything delivered, by mistake
or under coercion, must repay or return it.

 Illustrations
(a) A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing
this fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuses to deliver up certain goods to the consignee, except upon
the payment of an illegal charge for carriage. The consignee pays the sum charged in order
to obtain the goods. He is entitled to recover so much of the charge as was illegally
excessive.
Compulsion of law
 Andhara Sugar limited v. State of Andhrapradesh
 TGM Asadi v. e-cofee board.
 “The consent of the occupier of the factory is free as defined
in section 14 of the Indian Contract Act. The compulsion of
law is not coercion.”
 Undue Influences
 [16. Undue influence defined.-- (1) A contract is said to be induced by "undue influence" where the relations subsisting between the
parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair
advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the
will of another--
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or
mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on
the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue
influence shall lie upon the person in a position to dominate the will of the other.
Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872).
Illustrations
(a) A having advanced money to his son, B, during his minority, upon Bs coming of age obtains, by misuse of parental influence, a bond
from B for a greater amount than the sum due in respect of the advance. A employs undue influence.
(b) A, a man enfeebled by disease or age, is induced, by Bs influence over him as his medical attendant, to agree to pay B an
unreasonable sum for his professional services, B employs undue influence.
(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B
to prove that the contract was not induced by undue influence.
(d) A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except
at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the
 Undue influence is ability to dominate the will of
other person.
 Ability to dominate will if other
 Consent under pressure
 Subtle species of fraud : Mastery on the mind of
victim
Real authority and apparent authority
 Real authority are those authority where the person is in position to
dominate the will of the other person under such authority.
 Police and offenders relationship.
 Apparent authority
 Are those authority where person is not having direct authority on the person but
indirectly he is using the colour of that offices to influence the person.
 Fiduciary relationship
 Every relationship which based upon trust, confidence
 Solicitor, Client, Spiritual guru.
Mental Distress
 Mental or bodily distress means the mental capacity of a
person is affected. It can be either permanently or
temporarily affected. The reason behind such health
condition can be age, illness, mental or bodily distress.
 Statutory compulsion : Not considered as undue influence
Economic Duress/Presumption of undue
influence
 In contract law, economic duress also called business compulsion,
refers to one party's improper or illegal conduct that causes the other
party's fear of economic hardship and the fear prevents the party
from engaging in a commercial agreement with free will.
 Bhimbha v. Yashwantrao (Poor farmer case).
 (Hindu widow case).
 ‘Pao On Vs. Lau Yiu Long [1979] UKPC 17',

 Facts
 The plaintiffs (P) owned the shares of a private company which owned a building that the defendants (D) wanted to buy.
The defendants were majority shareholders in a public company. P agreed to sell their shares in the private company to D so
that D could acquire the building. In return P would get shares in the public company. Fearing a drop in share value of the
public company would result, P and D made another agreement that P would not sell their shares for a while. However, P
realized that D might profit from this agreement and demanded that this second agreement be replaced with one in which P
was indemnified for any fall in share value but might also benefit from any rise in share value. Fearing that not agreeing to
this would delay the main contract, D agreed. The share value did drop, and P sought to rely on the indemnity contract. D
refused to comply with this, and the case reached the Privy Council.
 Issues
 The defendants claimed that the consideration for the indemnity agreement was past consideration and had only been
agreed to under duress.
 Decision/Outcome
 The court found for the plaintiffs. Applying the exception to the doctrine of past consideration in Lampleigh v Braithwaite
(1615) Hob 105 Lord Scarman said that an act done before a promise was made was good consideration for that promise if
it was done at the promisor’s request and the parties understood the act was to be paid for at a later date, and the payment or
benefit would have been enforceable had it been promised in advance
 The above Doctrine of Economic Duress was first laid down in the
case of ‘Pao On Vs. Lau Yiu Long [1979] UKPC 17', by the
Hon’ble Court of Appeal of Hong Kong. The said case established
the essential criteria to constitute an economic duress for the first
time. The court held that “the commercial pressure alleged to
constitute economic duress must be such that the victim allegedly
coerced must have entered the contract against his will, the victim
must have had no other alternative available to him and must have
been confronted with coercive acts by the party exerting the
pressure”.
 Dai-Ichi- Karkaria v. Oil and Natural Gas Commission
 Mere commercial pressure is not sufficient to vitiate the agreement between the parties on the
ground of economic duress.

 Pao On v. Lao Yiu Long case:

 Pressure amounting to compulsion of the will of the
party.
 The illegitimacy of pressure exerted.
 All Practical Purposes the victim should not have
other choice.
 Atlas Express Ltd v. Kafco 1989,
 Facts
 The Kafco imported basket ware and entered a contract with Atlas to sell and deliver baskets to Atlas retail stores. Atlas tried
to negotiate a further term in the contract for a minimum order of £440 per trailer load. Several days later, an Atlas
representative turned up to Kafco’s premises with an empty trailer and told Kafco that if the trailer was not returned with
£440 worth of goods as the new minimum, the trailer would be driven away unloaded. Kafco reasonably believed they would
be unable to negotiate further terms of the contract and thereby sabotaging their opportunity to trade with Atlas, so they felt
compelled to sign the agreement and meet the new terms of minimum stock trade. The agreement continued until Kafco sent
them money on account and a letter stating they had signed the contract under duress. Atlas sued for the money on account.
 Issue
 Whether Kafco signed in duress, even though they had honored the contract.
 Decision / Outcome
 Judgment was awarded in favour of Kafco. Kafco were found to have signed the agreement under economic duress as they
felt that in the circumstances they had no alternative but to sign the varied contract. Kafco had not approved the new terms of
the agreement (as they had previously rejected the proposed variation) and further, there was no consideration for the new
agreement as the variation placed Kafco in a less favourable position financially. Thus, their non-payment of the money of
account resulted from the duress.
 Central Inland Water Transport Corpn. V. Brojo Nath Ganguly (1986)
 Honourable Supreme Court of India held that a Hon’ble Court’s duty is not only to assess whether the
parties have unequal bargaining power relative to one another but also to ascertain whether a
contractual term or a contract is unfair, unreasonable or unconscionable. A contract (or a term in a
contract) can be said to be unfair or unreasonable if it is one-sided or devoid of any commercial logic. It is
held that when one party has unequal bargaining power relative to the other party, any terms and conditions
which are unreasonable may not be enforced as against the party with lower bargaining power.
 89. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair
and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties
who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. … It
will apply to situations in which the weaker party is in a position in which he can obtain goods or services or
means of livelihood only upon the terms imposed by the stronger party or go without them.
 It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a
contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the
contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be.
… there can be myriad situations which result in unfair and unreasonable bargains between parties possessing
wholly disproportionate and unequal bargaining power.
 Exploitation of Needy
 Music Publishing Co. v. Macaulay:
 Macaulay, a novice songwriter aged 21, entered a standard form agreement with Schroeder Music, whereby they would
have the exclusive benefit of his compositions. The global copyright was assigned to another party in return for a fixed
percentage of any royalties. This was to last five years and could be automatically extended for five years if the royalties
went above £5000. Schroeder Music could terminate or assign the contract, but Macaulay could not, and Schroeder was
under no obligation to publish or promote anything. Macaulay claimed the agreement was contrary to public policy.
 The House of Lords held the standard form agreement could not be justified as being purely moulded through
negotiation, competition and public opinion. Macaulay had no bargaining power. The defendants purported to be able to
arbitrarily decline to exploit the plaintiff's work in which event the plaintiff's remuneration under the agreement would be
limited to a £50 advance payable thereunder during the five-year period. The defendants' power to assign precluded the
argument that the restrictions would not be enforced oppressively. The defendants had failed to justify restrictions which
appeared unnecessary and capable of oppressive enforcement.

Mahavir Singh v. State of Hariyana
 Many time applicant has no any choice except to sign on dotted lines.
 In determining the respective bargaining position of the parties, the courts will look at a numbers

of factors, such as age, poverty, illiteracy and emotional state.

 3) Where a person who is in a position to dominate the will of another, enters into a contract
with him, and the transaction appears, on the face of it or on the evidence adduced, to be
unconscionable, the burden of proving that such contract was not induced by undue influence
shall lie upon the person in a position to dominate the will of the other.
Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act,
1872 (1 of 1872).
 Burdon of Proof
 Parties need to prove that
 Existence of dominant position
 The position has been used by the other party.
 At once party proved the Burdon of proof then the liability
to prove the use of that position will lies on powerful party
in certain cases except in unconscionable bargaining.
 Meaning of unconscionable bargaining
 Supreme court stated” unconscionable bargaining means : that shows no regard for conscience”
“Central Inland water transport v. Brojo Nath Gangulay”
 An unconscionable bargain is a harsh transaction where one person is in a much stronger
position than the other. The court may exercise equitable powers to vary or set aside the
transaction. It must be shown that the stronger party knew that the innocent party was at a
disadvantage.
 Rules regarding unconscionable bargaining
 One Party must be powerful.
 No equal footing.
 Hard bargaining will be provided with some remedy not necessarily undue influences.
 Domination of will should be prima facie in its nature.
 Relationship amongst the parties need to be analysed.
 Case laws
 This case of Raghunath Prasad vs Sarju Prasad is an appeal arising from a decree dated November 9, 1920,
issued by the High Court of Judicature at Patna, which modified a prior decree dated September 25, 1917,
pronounced by the Subordinate Judge of Arrah.
 The parties involved are the defendant, Sarju Prasad Sahu, and his father, the plaintiff, Mr. Raghunath Prasad
Sahu, who jointly owned a substantial family property. Disputes arose between them, leading to legal
conflicts over the property. Consequently, the father initiated criminal proceedings against his son.
 To counter the legal challenges, the defendant in Raghunath Prasad v Sarju Prasad mortgaged his properties
to the plaintiff and borrowed approximately ten thousand rupees at a compound interest rate of 24 percent.
Over eleven years, the interest accrued exponentially, reaching Rs 1,12,885. The defendant’s argument
revolves around the claim that the lender took unconscionable advantage of his mental distress by imposing
exorbitant interest rates. Consequently, the defendant asserts the presence of undue influence, invoking
Section 16 of the Indian Contract Act, 1872.
Judgments
 The court, in Raghunath Prasad v Sarju Prasad, in considering the issue of undue influence,
emphasised that the relationship between the parties must be such that one has the ability to
dominate the will of the other. Lord Shaw, referring to sub-section (3) of Section 16, outlined the
sequential process: establishing the dominating relationship, determining if the contract was
influenced by undue influence, and addressing the burden of proof.
 The burden of proving that the contract was not induced by undue influence lies on the party in a
position to dominate the other’s will. The court in Raghunath Prasad v Sarju Prasad highlighted
the importance of recognizing the relationship before assessing the unconscionableness of the
agreement.
 In Raghunath Prasad v Sarju Prasad, the borrower failed to demonstrate that the lender could
influence his will. The only established relationship was that of lender and borrower, insufficient
to prove domination of will.
 Subhas Chandra Das vs Ganga Prasad Das Mushib Case
 Facts of the case
 The court held that to prove section 16 of the Indian Contract Act, 1872 some
conditions need to be fulfilled such as a relationship between the parties one of
them has the intention to dominate the will, also it must be further proved that
defendant use such relation to obtain an unfair advantage over the plaintiff. The
statement made by the donor “he no longer holds any interest in the property”
shows that he has given his consent without any pressure and the donor was good
in the management of the property, which proves that the transfer is not induced
by undue influence.
 Judgments
 The 3 steps are:-
 In the first place, the relations between the parties to each other must be such that one is in a position to dominate the will of the other.
 Once that position is established the second stage has been reached – namely, the issue of whether the contract has been induced by undue
influence or not.
 After this determination, a third point emerges, which is that of the onus probandi. If the transaction appears to be unconscionable (wrong),
then the burden of proving that the contract was not induced by undue influence is to lie upon the person who was in a position to dominate
the will of the others.
 Lastly
 There is no presumption of undue influence in the case of a gift to a son, grandson, or son-in-law, although made during the donor’s illness
and a few days before his death.
 Judgement
 The court held that to prove section 16 of the Indian Contract Act, 1872 some conditions need to be fulfilled such as a relationship between
the parties one of them has the intention to dominate the will, also it must be further proved that defendant use such relation to obtain an
unfair advantage over the plaintiff. The statement made by the donor “he no longer holds any interest in the property” shows that he has
given his consent without any pressure and the donor was good in the management of the property, which proves that the transfer is not
induced by undue influence.
Ladli Prasad Jaisawal v. Karnall Distillery
 Heobserved that Ladli Prasad took undue advantage
of his dominating position qua the affairs of the
Company and compelled the defendants 2 to 5 to pass
the resolutions and thereby obtained an unfair
advantage.
Contract With Paradanashin lady
 Belachi v. Pakeeran
 Contract with Paradnashin women is presumed to have been induced
by undue influence. She can avoid the contract untill and unless the
other party can show that it was her “ intelligent and voluntary act”.
Kali Baksh Singh v. Ram Gopal Singh
 Onus is upon party who is signed contract with P. Lady.
 The contract completely explained to her.
 She has given consent freely.
 2 [19A. Power to set aside contract induced by undue influence.—When
consent to an agreement is caused by undue influence, the agreement is a
contract voidable at the option of the party whose consent was so caused.
 Any such contract may be set aside either absolutely or, if the party who
was entitled to avoid it has received any benefit there under, upon such
terms and conditions as to the Court may seem just.
 (a) A‟s son has forged B‟s name to a promissory note. B under threat of prosecuting
A‟s son, obtains a bond from A for the amount of the forged note. If B sues on this
bond, the Court may set the bond aside.
 (b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue
influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per
month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such
interest as may seem just.]
Question????
 Rajiv has been serving an old and ill man for two years since the old
man is ill and his relatives are not staying with him. however old man
got happy and decided to transfer his property in the name of Rajiv
through a "Will Deed" since Rajiv helped him a lot. however, Raju
prepared a gift Deed took the signature of an old man on it, and
registered accordingly. This document has been challenged by the
relatives of an old man based on undue influence. in this case,
identify the concept of undue influence and decide the
maintainability of the suit before the court of law.