When a person has assented to an offer given to him by another person, he is
said to accept the offer and this accepted offer becomes a promise. When two
parties who have accepted each other’s promise and have provided the adequate
consideration the promise turns into an agreement. This is given in section 2
(e) of the Indian Contracts Act, 1872. An agreement which is enforceable by law
takes the form of contract. This is reiterated in section 2 (h) of the ICA,
Types of Contract:
- Valid contract
Section 2 (h) of the ICA says that an agreement which is enforceable by law is
considered as a valid contract.
- Void contract
Section 2 (g) of the ICA says that an agreement which is not enforceable by law
is considered to be void. 
- Voidable contracts
Section 2 (i) of the ICA says “An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option of other or
others, is a voidable contract.
There are basically three type of voidable contracts:
Initially voidable contracts
- Initially voidable
- Subsequently voidable
- Voidable by law (contracts become voidable due to other laws in
subsisting in the country e.g. section 8 of Hindu Minority Act)
These types of contracts are covered under section 19 and section 19 (A) of the
ICA. Section 19 covers those type of agreements that are entered by the ways of
coercion, fraud and misrepresentation. This section precisely says that an
agreement which is entered into by the parties without the free consent of any
one of the parties and the consent is taken through coercion, fraud or
misrepresentation, the contract is said to be voidable at the option of the
party whose consent has been taken with the help of these means. It says that if
the party whose consent has been caused by fraud or misrepresentation wants the
contract to go on then he shall be put in the position in which he would have
been in if the misrepresentation made to him had been true.
There are two exceptions to this section:
- If the party whose consent has been caused by silence to a fact or by
misrepresentation, which is said to come under the purview of fraudulent as
per section 17 and the party has proper means of discovering the truth with
ordinary scheme of things then the contract is not said to be voidable.
- If the consent given by the concerned party is not caused by the fraud
or misrepresentation then it doesn’t make the contract voidable
Under section 19, three elements are covered due to which the contract is
rendered voidable i.e., coercion, fraud and misrepresentation. These terms
are discussed in detail in section 15, section 17 and section 18 respectively.
Coercion is defined in section 15 of the ICA. It is defined as:
threatening to commit an act which is 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.”
The place at which coercion is done doesn’t
necessarily require the IPC to be applicable at that place. When consent to a
party is taken by coercion, it renders the contract voidable.
Since coercion is said to be applicable on cases which are forbidden by the
Indian Penal Code, there have been a lot of discussion on commissions of acts
which are naturally detrimental but are not forbidden by the Indian Penal code.
An example being the case of suicide.
Suicide is not considered punishable under the IPC but the act in itself could
be used to threaten someone to take consent. This was held in a famous case
named Chikham Amiraju V. Chikham Seshamma
, by the Madras High Court. The
issue involved was whether threatening to do the act of committing suicide to
take the consent of a party, can be considered as coercion.
The facts of the
case were such that a Hindu male on account of committing suicide, threatened
his wife and his son to deliver to a certain property to his brother. Madras
High Court held in this case that the threat given by the man to commit suicide
totally amounted to the coercion, given under article 15 of the ICA. There was a
difference in the opinion relating to this issue. The dissention judges were of
the view that though suicide is not punishable, attempt to suicide in punishable
under the IPC. Notwithstanding this fact, the majority opinion was that the
reason behind suicide not being punishable is that the one who commits suicide
is not available to be punished.
Fraud is explained in section 17 of the Indian Contract act. It can be defined
as the intentional misrepresentation of facts done by a party in order to
deceive the party or in order to induce him to enter into the contract. Fraud
renders the contract voidable.
The following acts can be put under the bracket
Some of the landmark cases discussed on fraud are discussed below:
- Suggesting a fact this is factually wrong and which the person
suggesting knows to be so.
- Concealing an active fact, which he has the knowledge of beforehand.
- A promise made that is made with an intention of not actually performing
- Any other deceiving act.
- Any act or abstinence that the law specifies to be fraudulent.
- Derry V. Peek (1889)
The main issue discussed in this case was that whether the false representation
made by the respondent was done with the intention to deceive the party or not.
The facts of the case were such that a company under the false impression that
they have been allowed by the concerned authority to use steam for running the
tram, put out a pamphlet that they are authorized to do so. Since they didn’t
have the required permission to do, the company was wounded up. The shareholder
of the company sued the company for fraud. The court held in this case that the
company is not liable for fraud. The court gave the rationale that if the false
representation is made believing that the statement to be true it would not
amount to fraud.
- Ningawwa V. Byrappa Shiddappa Hireknarbar
In this case the expression “any other act fitted to deceive” mentioned in the
section 17 was brought into light. The facts of this case were such that a
husband, in order to gain advantage of the illiteracy of his wife made her to
sign a document that he claimed had the documents of two lands but actually
contained the documents of four lands. The court held that the act done with an
intention to deceive and would subsequently come under the purview of fraud.
When misrepresentation is involved in this agreement it
renders the agreement voidable. This is explained in section 18 of the
Indian Contract Act and includes:
Some of the landmark cases discussed related to misrepresentation has been
- A positive statement made by the person, which according to his facts is
not true, believing it to be true asserts it.
- Any type of breach done by a party which gives unfair gain to one party
by misguiding the other party.
- When the party makes a substance as to the mistake related to the
substance of the thing, which is the subject matter of the said contract.
- Bisset V. Wilkinson
The main issue of this case was whether a statement of opinion can hold the
contract voidable owing to the fact that it was done by misrepresentation. The
contract given was for the sale of a land. The seller was aware of the fact that
sale is done for sheep-farming. He was of the opinion that the land is suitable
to occupy 2000 sheep. The land in turn came out to be not useful for this
purpose. The purchaser pleaded misrepresentation and refused to pay the prize.
The privy council held that buyer can’t back from the contract as
misrepresentation can be done only if the representation done is related to a
certain specific fact. In this case the respondent had only given his opinion
related to the land.
- R. v. Kylsant
The facts of the case were such that a company in its prospectus stated that it
had paid all its dividends, regularly. This made an impression in the mind of
people that the company is running in profit. But actually, the company was
running into losses. It was held that the non-disclosure of this fact was held
to be misrepresentation.
Section 19 (A)
In an agreement when the consent of a party is taken on account of being under
influence, the agreement becomes a contract that is voidable at the option of
the option of the party whose consent was so taken. This is given in section
19(A) of the ICA, 1872. The contract can be set aside by the court in a way it
seems to be correct if one of the parties has received undue benefit.
Undue Influence- It is said that undue influence is being exercised when the
relationship existing between the parties is such that one person is able to
dominate the will of another and also use that to gain undue advantage.
person is said to exercise under influence if:
- He holds apparat or real authority over the other party.
- When in a contract the mental capacity of one person is disturbed due to
age, illness, bodily and mental distress.
The burden of proof that undue influence is not being exercised depends upon the
party who is in the position to dominate the will of the other party.
Some of the landmark cases discussed on undue influence are listed below:
- William v. Bayley
The facts of the case were such that a son took the signature of his father in
various of the promissory notes and paid it to the banks. When the bank came to
know about the truth, it threated to take harsh prosecution against the sun if
no satisfactory action to rectify this. Due to this reason the father mortgage a
property to fill in for the promissory notes. He then moved to the court to make
the agreement canceled on the ground it was under influence. The house of lord
was of the opinion that the undue advantage was taken by the bank on account of
the father fearing that his son would be prosecuted and consequently, the
agreement is voidable at the option of the father.
So, the cases in which the consent of parties or one of the parties is not free
right from the starting, are considered to be initially voidable and are delt
under section 19 and 19A.
- Subsequently Voidable Contract
The contract which starts as a valid but at a later period of time theirs is an
option for the one of the parties to rescind it or to go forward with it, theses
type of contracts are called subsequently voidable. These contracts are covered
in section 39, section 53, section 55 of the ICA.
Section 39- This section says that if one of the parties to a contract has
restrained himself entirely from performing the contract, the promise can end
the contract unless he signifies implicitly or explicitly his willingness to
If one of the parties is at the position of undue advantage as a consequence of
the voidable contract being rescinded, the aggrieved party can file a suit for
the breach. Restitution under section 39 is dealt by section 64 of the ICA.
Section 64 of the ICA says that When a party puts an end to a voidable contract,
the other party need not perform and if the rescinding party has incurred any
benefit from the contract, he shall restore the benefit he had received.
Muralidhar Chatterjee v. International Film Co Ltd.
The defendants (a firm of film importers) agreed with the plaintiffs to supply
three films in three months respectively. The plaintiffs were supposed to pay
fixed money. Rs 2000 was paid against this and one film was delivered. But due
to some technicalities the film was taken back. So, essentially the money was
paid without the film being delivered. The plaintiffs were then of the opinion
that there is a breach of contract on account of delay and breach of contract.
They sued the firm for the refund of money. The privy council in its judgement
said that the money is supposed to be refunded as per section 64 of the ICA. In
the judgement Sir George Rankin said “The contract which may be ‘put an end to’
under section 39 is voidable.
Section 53- In a contract that has reciprocal promises, and one of the parties
abstains the other from performing the promise, the contract is rendered
voidable at the option of the party who was prevented from performing the
contract and he also entitled for compensation from the party for any loss
The compensation aforementioned is dealt under section sec 73 of the ICA.
Section 73 says that if the contract is broken, the party who suffers on account
of the breach is entitled to receive compensation for any loss or damage done to
him in the usual course of breach of contract.
Ramchandra Narayan Nayak v. Karnataka Nerravari Nigam Ltd
The contract was for making a canal and the other department had to supply
cement. The digging was commenced by the contractor and the material was not
supplied and nor he was allowed to take the material from outside. The
department considered this to be breach of contract. The security money was also
forfeited. The payment for that done part of the work was all withheld. The
court was of the opinion that the forfeited and the held money should be
released due to the fact that the department had disabled the contractor from
performing the contract.
Section 55- In a contract when a party promises to do a certain thing or things
before a specified time and then he fails to do so before the specified time,
the contract or the part of contract that hasn’t been performed, becomes
voidable at the option of the promisee, if the intention of the parties is that
time is the essence of the contract.
If time is not the essence of the parties then the contract doesn’t become
voidable. But still the promisee is entitled for compensation.
If the promisee after the lapse of the specified time accepts the performance of
the promisor, the promisee cannot claim compensation for the same. (section 62
and section 63)
Bhudra Chand v. Betts
The plaintiff contracted with the defendant to engage his elephant for the
purpose of kheda (to capture wild elephants). The contract had time as an
essence. The elephant was supposed to be delivered on 1st October, 1910. The
defendant applied for extension till 11th and still not delivered it. The
plaintiff sued for breach and damages. The court held that the parties had the
intention for time to be the essence citing the reason that the extension was
asked considering time to be the essence.
So, the cases in which the contracts start normally, but at a later stage it
becomes voidable due to one of the parties, are called subsequently voidable
contracts and are delt under section 39, 53 and 55.
Agreements cannot be considered to be voidable due to the fact that that they
haven’t even taken the form of contract. If the agreement in the process of
becoming contract lapses at any stage, the agreement becomes a void
straightaway. In a nutshell, the agreement in order to become a contract should
fulfill the essentials of section 10 and f it fails to do so, the agreement
- India Contract Act, 1872, §, 2(e) No. 9, Acts of Parliament, 1872,
- Id, §, 2(h)
- Id, §, 2(g)
- Id, §, 2(i)
- Id, §, 15
- ILR (1918) 41 Mad 33
- Id, §, 17
- LR 14 AC 337
- AIR 1968 SC 956: (1968) 2 SCR 797
- Id, §, 18
- 1927 AC 177(PC)
- (1932) 1 KB 442
- Id, §, 19(A)
- (1866) LR 1 HL 200
- AIR 1974 SC 1924
- 15 SCC 140: (2014) 5 SCC (Civ) 159
- 22 cal LJ 566: 33 IC 347