Free Consent - Introduction

 We have been discussing the essentials of a contract from the very start like an offer, acceptance, consideration, competent parties, etc. Now we will be discussing one of the another most important aspect for a valid contract i.e. Free Consent as mentioned in the Indian Contract Act, 1872.

Section 10 requires that for an agreement to be a valid contract, the contract should be made with the free consent of all the parties to a contract. But before proceeding with what free consent constitutes it is important to first understand the meaning of consent.

Black’s Law Dictionary defines Consent as “voluntary agreement by a person in the possession and exercise of sufficient mentality to make an intelligent choice to do something proposed by another.” In simpler terms, it is the agreement of someone to do something. Under contract law, consent is defined on the basis of the concept of consensus ad idem which literally means ‘meeting of minds.’ Consent is defined under section 13 of ICA as,

“Two or more persons are said to consent when they agree upon the same thing in the same sense.”

Therefore, parties are said to consent when they agree in the same sense about the same thing. An illustration would be of help here. For example, Ross and Rachel entered into a marriage contract. Ross proposed a contract of marriage to Rachel where he will pay for Rachel’s son’s college tuition fee if she agrees to marry him. Rachel, however, thought that the contract is about the marriage of Ross’s daughter, Emma, with her son, Mathew. Ross and Rachel agreed on the same thing i.e. marriage but did not agree upon it in the same sense. Therefore, no contract exists between them.

Another example is the case of Raffles v. Wichelhaus. In this case, the plaintiff offered to sell Surat cotton to the defendant. The Surat Cotton was to be delivered to the defendant by a ship named Peerless. There were two ships that had this name, one of which was supposed to depart from Bombay in October and the other one in December. Both parties were thinking about a different ship. The defendant assumed the cotton will be delivered by the ship which departed in October but the plaintiff was planning to send the cotton by the ship that departed in December. Thus, when the cotton arrived in December the defendant refused to pay for it since it was months late according to him. The plaintiff filed a suit against the defendant for breach of contract. It was held by the court that

“It is essential to the creation of a contract that both parties should agree to the same thing in the same sense. 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 a similarity of name, had a different person or ship in mind, no contract would exist between them”.

Meaning of the phrase ‘Same Thing’

The phrase “same thing” includes the whole content of the agreement i.e. the terms of the transaction. It is important that there is consensus ad idem between the parties regarding the essential terms of the transaction to constitute a valid contract. (Dhulipudi Namayya v Union of India.)

Now that the meaning of consent is clear, it is important that we discuss free consent-

Free consent is defined by section 14 of the ICA,

“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.”

This section can be explained with the help of a chart:

Where the consent is caused by coercion, undue influence, fraud, or misrepresentation, the consent is not free which results in the contract becoming voidable at the option of the party who claims that his consent was not free. Where the consent is taken/given by mistake, the contract is void and cannot be enforced by either party. 

For better understanding, consider the following examples: -

1.     Rachel forces Monica to transfer her property to Rachel by threatening to kill Chandler (Monica’s husband). Monica agreed to transfer the property to Rachel as she got scared because of Rachel’s threats and coercion. Thus, Monica will have the option of canceling the sale because the consent was not free and was caused by coercion.

2.     LawVastutah (a start-up) wants to give exclusive patent rights of a legal AI technology developed by it called SHELDON. Khaitan(an established one tier firm) offers to buy the rights from LawVastutah. The founders of LawVastutah is a former student of the founder of Khaitan. The founder of Khaitan asks the founder of LawVastutah to sell Khaitan the patent rights at a discounted price. Because of the previous relationship between them, the founder of LawVastutah feels obligated to accept his demand. Here, LawVastutah is well within its rights to file for the contract to be declared void as its terms are agreed upon only because of the influence of the founder of Khaitan on the founder of LawVastutah. Consent of the founder of LawVastutah is induced by undue influence of the founder of Khaitan and therefore the contract is voidable at the option of LawVastutah. 

3.     Daya wants to get a divorce from Jethalal on the ground of Adultery. Jethalal, fearing his father, makes a fake promise to Daya to transfer all his property in her name if she does not file for divorce. Daya agrees to do so but Jethalal does not fulfil his promise. This would be a clear-cut case of fraud as the promise made by Jethalal was fake and he never intended on performing it. Daya’s consent was based on a fraudulent promise and was thus not free.

4.     Arjun sells his horse to Sarah for Rs. 10,000. Before purchasing the horse, Sarah asks Arjun about the physical and mental stability of the horse. Arjun ensures Sarah that the horse is in the best condition believing it to be true. Sarah buys the horse on this guarantee by Arjun. It is later known that the horse is unstable. This is case of innocent misrepresentation. There are two more types which will be explained in detail in later articles. Sarah’s consent was not free as it was misguided by Arjun’s guarantee. Sarah can thus get the sale reversed. 

5.     Gunther hires Rachel as the PR Manager for the company he works in unaware of the fact that his boss hired another person for the job the same morning. This is a mistake of fact and thus the contract is void.

Consent is free only when it is not affected by the abovementioned five circumstances. However, consent is not free only when there is a direct causal connection between the decision of the parties and the existence of such settings as mentioned in section 14. The act of parties should be a proximate and immediate cause of the particular effect. The cause would not be considered as a cause to have affected the action of parties, if the contended cause is distant and not immediate, remote and not proximate.

For example, Phoebe threatened Ross to beat him if he doesn’t lease her his flat when the construction of his house will be complete after two years. After two years, Ross leases the flat to Phoebe. Ross now cannot claim that the two-year-old threat was what caused him to lease the flat to Phoebe.

To sum it up in the words of Mulla, “Mutual consent, which should also be a 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”.

 

BY

LAWVASTUTAH

 

REFERENCES:

1.     Indian Contract Act,1872

2.     Pollock & Mulla, The Indian Contract and Specific Relief Acts, 16th edition.

3.     Avtar Singh, Contract and Specific Relief, 12th edition.

4.     Halsbury’s Laws of India Contract, 2e 2015.

5.     Raffles v. Wichelhaus, (1864) 2 Hurl & C 906.

6.     Dhulipudi Namayya v. Union of India, AIR 1958 AP 533.