INDIAN CONTRACT ACT 1872

Presented by-

Ashish Kumar Gupta Ashutosh Mishra Galgotias Business School

INDIAN CONTRACT ACT 1872

According

to Sec 2 (h) of the Contract Act, 1872 an agreement enforceable by law is contract.

ESSENTIALS OF CONTRACT

FREE CONSENT
"Free consent" - Consent is said to be free when it is not caused by 1) 2) 3) 4) 5) coercion, undue influence fraud, misrepresentation, mistake. 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.

THE EFFECT OF NO FREE CONSENT & NO CONSENT AT ALL

When the consent is not free, then the contract is voidable. When there is no consent , then the contract is void ab initio.

The tern coercion means forcibly compelling a person to enter into a contract. The consent of a party is obtained by either of the following techniques committing or threatening to commit. unlawful detaining or threatening to detain any property.

COERCION

Example

A threatens to kill B if he does not agree to sell his car to A for Rs. 10,000. Fearing death, B enters into an agreement with A for the sale of his car for Rs.10,000 only

UNDUE INFLUENCE
The term undue influence means the unfair use of ones superior power in order to obtain the consent of a person who is in a weaker position. A contract 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

THREE ESSENTIAL PARTS OF UNDUE INFLUENCE.

The subsisting relation between the parties is in a position to dominate the will of the other.

The dominant party uses his superior position to obtain an unfair advantage over the other.
By the use of such dominant position, the dominant party obtains the unfair advantage over the other.

EXAMPLE

A, an illiterate elderly women, was possessing certain property. B her nephew, was managing the affairs of his aunt (A). A gifted whole of her properties to B. it was held that B, who managed the affairs of his aunt, was in a position to dominate his aunts will. Therefore the gift deed was set aside on the ground of undue influence.

EFFECTS OF 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.

FRAUD
Section 17 defines the term fraud means 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 contact : 1. The suggestions as a fact of that which is not true by one who does not belief it to be true ;
2.

The active concealment of a fact by one having knowledge or belief of the fact ;

FRAUD
3.

4. 5.

A promise made without any intention of performing; Any other act fitted to deceive and Any such act or omission as the law specially declares to be fraudulent.

EXAMPLE
A was induced to buy shares in a company, on account of false statement made by B, B was neither a director nor representative of the company. But was a mere stranger. A wanted to set aside the contract on the ground of fraud. It was held that could not set aside the contract because the false statement was not made by the company or its authorized agents.

MISREPRESENTATION

The term misrepresentation may be defined as an innocent misstatement of facts which are material for the contract. It is a false representation which is made innocently.