Legal Llama

  Effect of flaw in consent Section 19 deals with the effect of flaw in consent caused by coercion, misrepresentation and fraud and Section 19-A when the consent has been obtained by undue influence. The relevant provisions-contained in these Sections are as under: 19. Voidability of agreement without free consent- When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. When A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true. 19-A. 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 ...

  MISTAKE When the consent of the parties to the contract is caused by mistake, it is not free consent which is needed for the validity of a contract. One, or both, of the parties may be working under some misunderstanding or misapprehension of some fact relating to the agreement. If such a misunderstanding or misapprehension had not been there, probably they would not have entered into the Agreement. Such contracts are said to have been caused by mistake. Mistake work in two ways: 1.       Mistake in the mind of the parties is such that there is no genuine agreement at all. There may be no consensus ad den, ie, the meeting of the two minds, ie, there may be absence of "consent" as defined in Section 13. The offer made and acceptance do not coincide and thus no genuine agreement is constituted between the parties. 2.       There may be a genuine agreement, but there may be mistake as to a matter of fact relating to that agreem...

  MISREPRESENTATION An innocent misstatement or false statement is known as misrepresentation. Section 18 of the Indian Contract Act, 1872 defines "misrepresentation" as under: "Misrepresentation" means and includes- (1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; (2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him; (3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement." Positive assertion, ie, an explicit statement of fact by a person of that which is not true, though he believes it to be true amounts innocently, ie, without any intention to deceive. When there is a breach of d...

FRAUD When the consent of a party to the contract has been obtained by fraud, the consent is not free consent which is necessary for the formation of a valid contract. In such a case the contract is voidable at the option of the party whose consent has been so obtained (Section 19). Fraud or deceit is also a tort, for which an action for damages can also lie. Section 17 defines fraud as follows: "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him, to enter into the contract: (1) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact; (3) promise made without any intention of performing it (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to ...

  UNDUE INFLUENCE If the consent of a party of the contract has been obtained by undue influence, the consent is not the free consent which is needed for the validity of a contract and contract is voidable at the option of the party whose consent has been so obtained. Section 16 defines undue influence as under: (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 a...