Concept of Consent and Free Consent:
When two parties enter into a contract they should give their consent. The
consent of the parties means that they understand the same thing in the same
sense. There must be no misunderstanding between the parties about the subject
matter of the contract. Section 13 of the Indian Contract Act defines the term
'Consent' as two or more persons are said to consent when they agree upon the
same thing in the same sense.
According to Section 10 free consent is an essential requirement of a valid
contract. Mutual consent, which should also be free consent is the sine qua non
of a valid agreement and one of its essential elements is that a thing is
understood in the same sense by a party as is understood by the other i.e. both
parties should have consensus-ad-idem. Not only consent but free consent is
declared by section 10 to be necessary to the complete validity of a contract.
Where there is no consent there can be no contract at all. Where there is
consent, but not free consent, there is generally a contract voidable at the
option of the party whose consent was not free. According to section 14, consent
is said to be free unless it is caused by coercion, undue influence, fraud,
misrepresentation, or mistake. Consent caused by coercion, undue influence,
fraud, misrepresentation makes the contract voidable at the option of the party
whose consent was not freely obtained.
Whereas when there is a mistake of fact from both the parties, the entire
contract is said to be void. Thus, consent involves the identity of minds in
respect of the subject matter of the contract. In English Law, this is
called 'consensus-ad-idem'. If the parties are not ad-idem on the subject matter
of the contract, then there is no real agreement between them.
When two persons enter into a contract concerning a particular person or a thing
and it turns out that each of them had a different person or thing in mind, no
contract would exist between them. To illustrate this point, let us assume that
Mr. A is a person who at gunpoint compels Mr. B to sell his car and Mr. B
subsequently sells that car to Mr. A. This act of Mr. A amounts to coercion as
per section 15 of the Indian Contract Act, 1872.
Now, in this case, even though there is consent, it's not a free consent and
hence the contract becomes voidable at the option of the person whose consent
was obtained by coercion. When the consent of any party is not free, the
contract is usually treated as voidable at the option of the party whose consent
was not free. If, however, the consent has been caused by mistake on the part of
both parties, the contract is considered void.
Section 16 of the Indian Contract Act, 1872 defines and explains the concept of
Undue Influence and the nature of transition entered due to undue influence. A
party to a contract, though consenting to it, may not give a free consent
because he is exposed to such influence from the other party as to deprive him
of the free and voluntary use of his judgment. Such a contract is said to be
entered by undue influence.
Undue influence is improper use of intimidation or inducement by the person
using his dominant position, for the benefit of himself or someone else so that
the acts of the person influenced are not, in the fullest sense of the word, his
free, voluntary acts. It is any influence upon a person entering into an
agreement, which having regard to the age, innocence or mental/physical capacity
of the party, and all the circumstances of the case appears to have been such as
to hinder a person's exercise of free and voluntary acts.
Where one party exercises such domination over the mind and will of the other
that the other's independence of decision was substantially undermined and
hindered, and it was due to the influence of such person in dominant position
that the victim entered into a contract, the victim will be entitled to relief
on the ground of undue influence. Undue influence is an inclusive phrase
covering cases of undue influence in particular situations, as also cases of
domination or pressure outside those special relations like husband-wife,
parent-child, attorney-client, etc.
Section 16(1) of the Indian Contract Act requires the Court trying a case to
consider two things: Are the relations between the promisor and the promisee
such that the promisee is in a position to dominate the will of the promisor?;
and Has the promisee used that position to obtain an unfair advantage over the
donor? 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 substantiated the second essential has been reached,
namely, the issue whether the contract has been induced by undue influence or
not arises. When once it has been established that one party to the contract
possessed a general influence and dominance over the will of another, it need
not be shown how in the particular instance it was used, and it will be presumed
that the dominant position has been used unless contrary is shown.
The presumption would not arise if the dominance over the will of the other is
not established. It is not necessary that the parties should be related by
blood, marriage or adoption, but that their relations towards each other are
such that one is in a superior dominating position over the other. The section
is not restricted to cases where strictly or technically fiduciary relationship
is established; and it applies to all varieties of relations where the
possibility of exercising undue influence exists from confidence created or
established, or relations in which dominance may be exercised by one person over
A mere finding that the promisee obtained an unfair advantage over the promisor
is not sufficient to establish undue influence, unless it is also shown that the
promisee was in a position to dominate the will of the promisor, and did so to
use that position.
In, Williams v Bayley
(1866) LR 1 HL 200, son forged his father's
signature on several promissory notes and paid them into his banking account.
Bank manager threatened prosecution of the son when it came to his knowledge
that the signatures on promissory notes are forged. To avert this threat by the
manager, the father agreed to give an equitable mortgage to the bank on his
property in return for the promissory notes.
The House of Lords held the agreement to be voidable at the option of the father
and stated that there was an imbalance between the position of father, son and
the bank manager and that the manager ad a dominant position in this case which
he used to induce the father to mortgage his property.
Now the question arises as to when can a person be said to be in a position to
dominate the will of the other. Answer to this question is provided by Section
16(2) of the Act. This sub-section lays down a special presumption that a person
is deemed to be in a position to dominate the will of another. One such
presumption is when promisee holds a real or apparent authority over the other
examples of such cases are relations between master and the servant, parent and
child, etc. Another such presumption is when promisee stands in a fiduciary
relation to the other. It means a relationship based on trust and confidence.
The category of fiduciary relationship very wide. It includes the relationship
of guardian and ward, spiritual adviser (guru) and his disciples, doctor, and
patient, solicitor and client, trustee and beneficiary, a woman and her
confidential managing agent. Another factor under which consent is presumed to
be caused by undue influence is when a person makes a contract with a person
whose mental capacity is temporarily or permanently affected by reason of age,
illness, or mental or bodily distress. Persons of weak intelligence, old age,
indifferent health or those who are illiterate can be easily influenced. Hence,
the law gives their protection.
For example, In Sher Singh and Ors. vs Pirthi Singh and Ors
AIR 1975 All
259, A, an illiterate old man of about 90 years, physically in firm and mentally
in distress, executed a gift deed of his properties in favour of B, his nearest
relative who was looking after his daily needs and managing his cultivation. The
court held that B was in a position to dominate the will of A. Section
16(3) throws the burden of proving free consent on a party who, being in a
dominant position. The reason for this rule is that a person, who had obtained
an advantage over another by dominating his will, may also remain in a position
to suppress the requisite evidence in support of the plea of undue influence.
That is the principle of equity and fairness come into play.
If the consent of a party is induced by undue influence, the contract is
voidable at the option of the party whose consent has been so caused. According
to section 19A, 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 thereunder, upon such
terms and conditions as to the Court may seem just.
When a contract is avoided on the ground of undue influence, the court has the
discretion to ask the aggrieved party for refunding the benefit either in full
or in part of set aside the contract without any direction to the aggrieved
party to refund the benefit.
Written By: Arnav Ashtikar
- Avtar Singh, Contract and Specific Relief, 12th edition
- Pollock & Mulla The Indian Contract Act,1872, 15th edition
, 1st-year B.A. LL. B. at Symbiosis Law