free consent business law
TRANSCRIPT
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
FREE CONSENT-(SECTION 13-21)
COERCION
UNDUE INFLUENCE VOIDABLE
FRAUD
MISREPRESENTATION MISTAKE VOID
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Coercion(sec 15)
Undueinfluence
misrepresentation
mistake
Fraudulent(sec17) Innocent (sec 18)
Mistake of law(sec21)
Mistake of fact(sec20)
Of the country Of theforeign Bilateral unilateral
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
DEFINITIONS COERCION(SEC-15)
committing or threatening to commit any act
forbidden by IPC OR unlawfully detaining orthreatening to detain, any property to the prejudiceof any person with the intention of inducing anyperson to enter into an agreement.
UNDUE INFLUENCE(SEC-16)A contract is said to be induced by undue influencewhere the relations subsisting between the partiesare such that one of the parties is in the position todominate the will of the other and uses the position
to obtain an unfair advantage over the other
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
COERCION(SEC-15) When the person is compelled to enter into a contract bythe use of force by the other party under a threatcoercion is said to be employed.
Eg. A threatens to shoot B if he does not release him
from Debt which A owes to B.B releases A under thethreat.
Other e.g. Ranganayakamma v Alwar Setty (girl wasforced to adopt a kid after her husbands death)
Effect-the contract is voidable at the option of party Threat to commit suicide also amount to coercion
Duress-near equivalent term of coercion ,is used inEnglish law
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
UNDUE INFLUENCESection16(2) of IC Act
- person is deemed to be in a position to dominatethe will of another
A) where he holds a real or apparent authority overthe other e.g. master servant ,public officer&accused
b) Where he stands fiduciary relationship to theother e.g. father son ,guardian ward
c) Where he is mentally or physically ill eithertemporarily or permanently due to age, illness,mentally or bodily distress
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Coercion undue influence Obtaining theconsent-consentobtained bycommitting orthreatening to commitan offense
Physical force is used
May be even used bystranger to thecontract
Here, consent isobtained bydominating the will ofother person
Mental force is used
Can only be used byparty to contract
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
FRAUD SECTION -17 MEANS AND INCLUDES ANY OF THE FOLLOWING
ACTS;
A false suggestion as to a fact known to be false or notbelieved to be true (e.g. a companys prospectus)
Active concealment of fact by one having knowledge orbelief of fact (A sold mare to B which had a defectedfoot, and the defect was filled up to defy detection ,B
discovered the defect and it was held that the agreementcould be avoided by B)
A promise made without any intention of performing it(eg .man marrying wife just as a fraud)
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Any other act fitted to deceive
Any such act or omission as lawspecifically declares to be fraudulent
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
MISREPRESENTATION(SECTION-18) Means false representation made innocently with an
honest belief as to its truth by a party without any
intention to deceive
Thus false statement is made willfully or innocently
Fraudulent misrepresentation innocent misrepresentation
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Misrepresentation fraud It is innocent The suggestion is
believed to be true
The aggrieved party canrescind the contract orsue for restitution butcannot suit for damages
I truth is discovered thecontract will not beavoided
It is deliberate
Fraud is not believed tobe true
He can also claimdamages
If truth is discovered thecontract is voidable
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
MISTAKE SECTION -20 MEANS erroneous belief concerning something.
it means that parties intending to do one thing
have by intentional error done something else
Mistake is of two kinds 1. Mistake of fact
2. Mistake of law
Mistake of law is of Indian law or foreign lawMistake may be unilateral or bilateral
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Mistake of fact-a man and a woman madea separation deed under which the managreed to pay a weekly allowance to the
woman under a mistaken assumption thatthey were lawfully married. it was held thatthe agreement was void as there was
common mistake on a point of fact whichwas material to the existence of theagreement( Galloway v. Galloway)
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
BILATERAL MISTAKES Mistake as to subject matter i.e existence,
identity, price, quantity, title, price, quality
Mistake as to possibility of performance i.ephysical impossibility, legal impossibility
UNILATERAL MISTAKE
As to nature of contract As to identity of persons
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
E.g. of bilateral mistakes Existence of Subject matter-there is anagreement between A and B for the purchase ofa certain horse, but the horse is dead at the time
of the contract. the agreement is void Mistake of identity of subject matter-eg. Of 2
cars maruti and santro
Price-a seller, within the knowledge of B ,thebuyer makes a mistake n writing a figure$1250,the agreement is void
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Unilateral mistakes Mistake as to nature of contract-e.g.. A blindman signing a document read over to himwrongly will not bind him. this is because of thefact that the mind of the signer does notaccompany the signature, but this rule will notapply to the person who can read.
(b) mistakes as to identity of persons-mistake asto the identity of a person may also avoid acontract, where A intends to contract only with B,but enters into a contract with C believing him tobe B, the contact is vitiated
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Doctrine of caveat emptor Under the doctrine of caveat emptor, the buyer could not
recover from the seller for defects on the property thatrendered the property unfit for ordinary purposes. The
only exception was if the seller actively concealed latentdefects
Caveat emptormeans let the buyer beware or that thebuyers should examine and check for themselves thingswhich they intend to purchase and that they cannot later
hold the vendor responsible for the broken condition ofthe thing bought.
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
Exercise A agreed to sell B a specific cargo of corn perS.S.Malwa supposed to be on its way fromLondon to Mumbai. it turned out that before theday of the bargain the ship had been cast away,and the goods lost. Discuss the rights of A andB.
A contracts with B to buy a necklace ,believing itis made of pearls whereas it is in fact made upof imitation pearls of no value .B knows that A ismistaken and takes no steps to correct the error.is A bound by the contract?
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
A an old man of feeble sight, signed a bill ofexchange thinking it was a guarantee there wasno negligence on the part of A .is A liable.
A purchased a typing machine on a dealersrepresentation that it was a new model .afterpaying the purchase price ,he discovered that,although the machines looked new ,it was
actually a re-built model. what are As legalrights?
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AMITY GLOBAL
BUSINESS SCHOOL Chandigarhanswers
1.agreement is void
2yes,the doctrine of caveat emptor willapply
3.no
4.a may void the contract on account of
fraud and claim damages