Consent in the Law of Contract

What it keeps and what it decides. It keeps the core, since nobody who refused has consented. It decides the zone, since ordinary usage does not settle whether two people who agreed while meaning different things have consented, and section 13 says they have not.

Stage two: section 14

"Free consent" defined. Consent is said to be free when it is not caused by coercion as defined in section 15, undue influence as defined in section 16, fraud as defined in section 17, misrepresentation as defined in section 18, or mistake subject to 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.

Three things to notice.

It is a negative definition, of the kind sequence 560 said should be preferred only where the thing defined is itself an absence. Freedom of consent is such a thing: what makes consent free is precisely the absence of the five vitiating causes.

It is a negated disjunction, and by De Morgan's rule at sequence 350 it is equivalent to a conjunction of five denials. A party alleging that consent was not free needs to establish any one of the five; a party asserting that it was free must be able to meet all five. That asymmetry is the practical content of the section and it is invisible in the words.

Its last sentence supplies a causation test. Consent is caused by one of the five only where it would not have been given but for it. The vitiating factor must have made the difference, and this is what stops the section becoming a licence to escape any bargain in which anything improper occurred.

The five definitions

Section 15, coercion. 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.

Section 16, undue influence. A contract is induced by undue influence where the relations between the parties are such that one is in a position to dominate the will of the other and uses that position to obtain an unfair advantage. Sub-section (2) deems a person to be in such a position where he holds real or apparent authority over the other or stands in a fiduciary relation to him, or where he contracts with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress. Sub-section (3) shifts the burden: where such a person contracts and the transaction appears unconscionable, the burden of proving that it was not induced by undue influence lies on him.

Section 17, fraud. Means and includes any of five acts committed by a party, or with his connivance, or by his agent, with intent to deceive another party or his agent, or to induce him to enter into the contract: the suggestion as a fact of what is not true, by one who does not believe it to be true; the active concealment of a fact by one having knowledge or belief of it; a promise made without any intention of performing it; any other act fitted to deceive; and any such act or omission as the law specially declares to be fraudulent. Its Explanation provides that mere silence as to facts likely to affect willingness is not fraud, unless the circumstances are such that it is the duty of the person keeping silence to speak, or unless his silence is in itself equivalent to speech.

Section 18, misrepresentation. Means and includes the positive assertion, in a manner not warranted by the information of the person making it, of what is not true though he believes it to be true; any breach of duty which, without intent to deceive, gains an advantage to the person committing it by misleading another to his prejudice; and causing, however innocently, a party to make a mistake as to the substance of the thing which is the subject of the agreement.

Mistake is not defined in one section but by the group at 20 to 22, below.

Read the four definitions as a logician. Sections 17 and 18 both open "means and includes", which sequence 580 identified as the exhaustive-plus-enumerated form. Section 15 is genus and differentia in a single sentence. Section 16 is a general principle followed by deemed instances and a shifted burden, which is a general definition with a denotative supplement. Four sections, three different techniques of definition, all on one page.

The consequences

Section 19, voidability. Where consent is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party whose consent was caused by fraud or misrepresentation may instead insist that the contract be performed and that he be put in the position he would have been in if the representations had been true. Its Exception provides that where the consent was caused by misrepresentation, or by silence fraudulent within section 17, the contract is nevertheless not voidable if the party had the means of discovering the truth with ordinary diligence. Its Explanation provides that a fraud or misrepresentation which did not cause the consent does not render the contract voidable.

Section 19 no longer mentions undue influence. The words were repealed by Act 6 of 1899, section 3, and the same Act inserted section 19A.

Section 19A, undue influence. Where consent is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused, and any such contract may be set aside either absolutely or, if the party entitled to avoid it has received a benefit under it, on such terms as the Court thinks just. Its illustrations are a father giving a bond under threat of the prosecution of his son for forgery, and a money-lender advancing one hundred rupees and by undue influence obtaining a bond for two hundred with interest at six per cent a month.

Sections 20 to 22, mistake. Section 20 makes an agreement void, not voidable, where both parties are under a mistake as to a matter of fact essential to the agreement; its Explanation excludes an erroneous opinion as to value. Section 21 provides that a contract is not voidable because it was caused by a mistake as to a law in force in India, but a mistake as to a law not in force in India has the same effect as a mistake of fact. Section 22 provides that a contract is not voidable merely because it was caused by one party being under a mistake as to a matter of fact.

The pattern is worth stating. Coercion, undue influence, fraud and misrepresentation make a contract voidable, at the option of the injured party. Bilateral mistake of fact makes an agreement void. Unilateral mistake and mistake of Indian law do neither.

The case

Chikkam Ammiraju v. Chikkam Seshamma, 34 Ind Cas 578, (1917) 32 MLJ 494, decided on 23 January 1917 by a Letters Patent bench of the Madras High Court, is the standard Indian illustration of coercion, and it shows a précising definition being applied at its edge.

Facts. A husband threatened his wife and son that he would commit suicide if they did not execute a release deed in favour of his brother. Under that threat they executed it. The lower courts found as a fact that the threat was made, that it was on account of the threat working on their minds that the deed was executed, and that this amounted to coercion within section 15 although the threat came from a person who was not a party to the deed, and decreed a suit for cancellation. On second appeal one judge would have dismissed the appeal and the other would have allowed it, and the matter came before a Letters Patent bench on that difference.

Held. The appeal was dismissed and the deed held voidable. Per Wallis CJ, suicide is an act forbidden by the Indian Penal Code within the meaning of section 15: it is impossible to hold that an act which it is punishable to abet, or to attempt, is not forbidden by the Code, the absence of a section punishing the act itself being due only to the suicide being beyond the jurisdiction of the court. The threatened act must be to the prejudice of any person whatever, and a threat by a husband and father to kill himself is an act to his own prejudice, which suffices; it is also directly to the prejudice of the wife and the son. Per Sadasiva Aiyar J, the words "any person whatever" were advisedly used to show that the act need not be to the prejudice of the person entering into the contract, and it does not matter who made the threat.

Why it matters here. Because the whole argument in the case is about how far a reference reaches. Section 15 fixes coercion by pointing at another statute, which is a technique of definition, and every question in the case is a question about the boundary that technique produced: is suicide forbidden by the Code when the Code does not punish it, and whose prejudice counts. That is a précising definition being tested at its edge, in front of the reader.

A caution about that case, stated as three verified facts

One. Section 15 as printed in the bare Act still reads "any act forbidden by the Indian Penal Code (45 of 1860)". The words have not been altered.

Two. The Indian Penal Code stands repealed by section 358 of the Bharatiya Nyaya Sanhita 2023.

Three. The Sanhita contains no general offence of attempting suicide. Its section 226 punishes an attempt to commit suicide only where it is made with intent to compel or restrain a public servant from discharging his official duty. Abetment of suicide survives, at section 108.

What follows is not stated here, because it has not been verified. Whether a threat of suicide still amounts to coercion under section 15 depends on how the reference to a repealed enactment is now construed, and this book does not answer it. What a student should carry away is the structure: the case reasons from the Penal Code to the Contract Act, and the Penal Code it reasons from is gone. A definition that points at another statute inherits every change made to that statute, which is the general lesson and is safe to state.

A worked example

Suresh, aged nineteen and of sound mind, is persuaded by his employer to sign a bond agreeing to serve for five years at a fixed wage. The employer tells him, untruly and knowing it to be untrue, that every employee has signed one; he adds that the company's accounts show a profit, which he believes but has not checked and which is false; and he says that if Suresh does not sign, his brother's pending application for a loan from the company will be rejected.

Work through the sections in order.

Section 10. Is there free consent of parties competent to contract? Competence first.

Sections 11 and 12. Suresh is of the age of majority and of sound mind on the section 12 test, and is not otherwise disqualified. Competent.

Section 13. Did the parties agree upon the same thing in the same sense? On these facts, yes. There is consent.

Section 14. Was it free? Test the five in turn.

Section 15, coercion. The threat to reject the brother's loan application is not an act forbidden by the Penal Code and is not a detention of property, so it is not coercion, however oppressive it feels.

Section 16, undue influence. The employer holds real authority over Suresh, so he is deemed to be in a position to dominate his will; if the bond appears unconscionable, the burden of proving it was not induced by undue influence falls on the employer under sub-section (3). This is the strongest head.

Section 17, fraud. The statement that every employee has signed is a suggestion as a fact of what is not true, by one who does not believe it to be true. Fraud, on the first limb.

Section 18, misrepresentation. The statement about the accounts is a positive assertion, not warranted by the information of the person making it, of what is not true though he believes it. Misrepresentation.

Sections 20 to 22. No mistake as to a matter of fact essential to the agreement is shared by both, so section 20 does not apply; nothing turns on a mistake of law under section 21; and any unilateral mistake of Suresh's is caught by section 22 and does not by itself avoid the contract.

The consequence. Under section 19 the contract is voidable at Suresh's option for the fraud and for the misrepresentation, and under section 19A for the undue influence, with the court able to set it aside on terms. But section 14's last sentence has to be satisfied for each: consent is caused by a factor only where it would not have been given but for it, and whether Suresh would have signed anyway is a question of fact.

And section 19's Exception has to be considered for the misrepresentation about the accounts: if Suresh had the means of discovering the truth with ordinary diligence, the contract is not voidable on that ground, though the fraud is untouched by the Exception, since active concealment and false statements known to be false are outside it.

What the exercise shows. Fourteen sections, applied in order, produce a definite answer with the doubtful points identified. That is what a précising definition is for: it converts a question about a vague English word into a checklist.

Distinctions that carry marks

What this does not mean

Consent and free consent are not the same thing. Section 13 can be satisfied while section 14 is not, and the contract is then voidable rather than non-existent. Where section 13 itself fails there is no consent at all.

Void and voidable are not interchangeable. Bilateral mistake makes an agreement void, so it never was a contract. The other four make it voidable, so it is a contract until the injured party avoids it.

A statutory definition that points at another statute is not self-contained. Section 15 is the standing example, and the caution above is the reason.

Quick revision

Section 10: free consent, competent parties, lawful consideration, lawful object, not expressly declared void.

Sections 11 and 12: competence, and sound mind defined by an operational test applied at the moment of contracting.

Section 13: consent is agreeing upon the same thing in the same sense. Précising, stage one.

Section 14: free consent is consent not caused by coercion, undue influence, fraud, misrepresentation or mistake, and caused means it would not have been given but for. Stage two, negative, and a negated disjunction: one head defeats it, all five must be met to establish it.

Sections 15 to 18 define the four; mistake is dealt with by sections 20 to 22.

Section 19 voidable for coercion, fraud, misrepresentation, with an Exception for means of discovery; section 19A for undue influence, inserted by Act 6 of 1899, when the words were repealed from section 19.

Sections 20 to 22: bilateral mistake of fact makes it void; mistake of Indian law and unilateral mistake do not avoid.

Chikkam Ammiraju v. Chikkam Seshamma: a threat of suicide held coercion, because suicide is an act forbidden by the Penal Code, and the prejudice may be to the threatener himself. Its reasoning rests on a Code that has been repealed and on an offence the Sanhita does not carry forward.

Test yourself

1. How do sections 13 and 14 between them précise the word "consent"?

Section 13 takes the ordinary word, which means agreement, permission or willingness, and adds a requirement usage does not settle: the parties must agree upon the same thing in the same sense, so that two people who agreed while meaning different things have not consented. Section 14 then narrows the result a second time, by excluding consent caused by coercion, undue influence, fraud, misrepresentation or mistake. The definition is therefore performed in two stages, each of which decides cases the ordinary word leaves open.

2. Why is section 14 said to be a negated disjunction, and what follows practically?

Because it defines free consent as consent not caused by any one of five factors, which is the denial of a disjunction of five alternatives. By De Morgan's rule that is equivalent to a conjunction of five denials. Practically, a party alleging that consent was not free needs to establish only one of the five, while a party asserting that it was free must be able to meet all five, and that asymmetry is invisible in the wording of the section.

3. What causation does section 14 require?

That the consent would not have been given but for the existence of the coercion, undue influence, fraud, misrepresentation or mistake. The vitiating factor must have made the difference, so the mere presence of impropriety is not enough. Section 19's Explanation makes the same point for fraud and misrepresentation, providing that one which did not cause the consent does not render the contract voidable.

4. Distinguish the effects of the five vitiating factors.

Coercion, fraud and misrepresentation make the contract voidable at the option of the injured party under section 19, and a party misled by fraud or misrepresentation may instead insist on performance with the representation made good. Undue influence makes it voidable under section 19A, and the court may set it aside absolutely or on terms where a benefit has been received. Bilateral mistake as to a matter of fact essential to the agreement makes the agreement void under section 20, while mistake as to Indian law under section 21 and unilateral mistake of fact under section 22 have no such effect.

5. Why does section 19 no longer mention undue influence?

Because the words were repealed from it by Act 6 of 1899, section 3, and the same Act inserted section 19A to deal with undue influence separately. The separation matters, because section 19A adds a remedy section 19 does not have: the court may set the contract aside absolutely, or, where the party entitled to avoid it has received a benefit, upon such terms and conditions as seem just.

6. What does Chikkam Ammiraju illustrate about a definition that points at another statute?

That such a definition inherits every change made to the statute it points at. Section 15 fixes coercion by reference to acts forbidden by the Indian Penal Code, and the whole argument in the case was about how far that reference reached: whether suicide is forbidden when the Code does not punish it, and whose prejudice counts. Three things are now verified: section 15 still names the Penal Code; the Penal Code stands repealed by section 358 of the Bharatiya Nyaya Sanhita 2023; and the Sanhita has no general offence of attempting suicide, its section 226 covering only an attempt made to compel or restrain a public servant.