Assignment No.

1 Free Consent

“CONSENT” DEFINED

According to Section 13, “two or more persons are said to be consented when they agree upon
the same thing in the same sense.” (Consensus-ad-idem)

“FREE CONSENT” DEFINED

Under Section 14, Consent is said to be free when it is not caused by

1. coercion, as defined in section 15, or

ELEMENTS VITIATING FREE CONSENT

1. COERCION (SECTION 15)

“Coercion” is the committing, or threatening to commit, any act forbidden by the Pakistan Penal
Code, 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.

Illustration

 A threatens to shoot B, if B does not agree to sell his property to A at a stated price. B's
consent in this case has been obtained by coercion.

 A, on board an English ship on the high seas, causes B, to enter into an agreement by an act
amounting to criminal intimidation under the Pakistan Penal Code. A afterwards sues B for
breach of contract at Karachi. A has employed coercion.

2. UNDUE INFLUENCE (SECTION 16)

According to Section 16 - 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 other and uses the position to obtain unfair advantage over the other.

Illustration

A's son has forged B's name to a promissory note. B, under threat of prosecuting A's son, obtains

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Assignment No. 1 Free Consent

a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the
bond aside.

Effects of Undue Influence

a. When consent to an agreement is caused by undue influence, the agreement is a contract

b. Any such contract may be set aside either absolutely or partly who was entitled to avoid it
has received any benefit there under upon such terms or conditions as the court may deem fit.

Burden of Proof

Section 16(3) has clearly mentioned that the burden of proof that such contract was not induced
by undue influence shall lie upon a person who is in a position to dominate the will of other.

Illustration

B son of A has sued his father for a contract which was induced by undue influence. It is the
responsibility of A father of B to prove that the contract was not made under undue influence.

3. FRAUD (SECTION 17)

“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 of his agent, or to
induce him to enter into the contract:

a. the suggestion, as to a fact, of that which is not true , by one who does not believe it to be
true;
b. the active concealment of a fact by one having knowledge or belief of the fact;
c. a promise made without any intention of performing it;
d. any other act fitted to deceive;
e. any such act or omission as the law specially declares to be fraudulent

Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not
fraud, unless the circumstances of the case are such regard being had to them, it is the duty of the
person keeping silence is, in itself, equivalent to speech.

Illustrations

False Statement of Fact - Sec. 17 (1)

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Assignment No. 1 Free Consent

A fraudulently informs B that A's estate is free from encumbrance. B thereupon buys the estate.
The estate is subject to a mortgage. B may either avoid the contract, or may insist on its being
carried out and the mortgage debt redeemed.

Active Concealment - Sec. 17 (2)

B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal,
the existence of the ore from A. Through A's ignorance B is enabled to buy the estate at an
under-value. The contract is voidable at the option of A.

Promise made without any intention to perform it - Sec. 17 (3)

A man takes a loan without any intention to repay or when he is insolvent or purchase goods on
credit without any intention to pay for it there is fraud.

Any act or omission, which the law declares as fraudulent – Sec. 17 (5)

In transfer of Property Act declares certain kinds of omission on the part of the seller or the
buyer as fraud. The seller of immovable property is bound to disclose the material defect in the
property or in the seller's title to the intending buyer. Similarly the buyer of the immovable
property is bound to disclose the material facts to seller so that he may be made aware to increase
the value of his interest.

4. MISREPRESENTATION (SECTION 18)

According to Section 18 "Misrepresentation" means and includes:

a. 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

b. 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

c. Causing, however innocently, a party to the agreement, to make a mistake as to the substance
of the thing, which is the subject of the agreement.

Illustrations

 A, by a misrepresentation, leads B erroneously to believe that, five hundred mounds of

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that only four hundred mounds of indigo have been made. After this B buys the factory. The
contract is not voidable on account of A's misrepresentation.

 In a contract for sale of wheat of 500 bags, it was stated by the seller that sulphur was not
used in its cultivation, whereas in 5 acres of land sulphur was used. This is misrepresentation
of mistake.

5. MISTAKE

Mistake is of two types.

 Mistake of Fact
 Mistake of Law

A. MISTAKE OF FACT (SECTION 20)

Mistake of fact is categorized under two heads as follows.

Bilateral Mistake

Where both the parties to an agreement are under a mistake as to a matter of fact essential to the
agreement, the agreement is void. It is a mutual mistake as to an existing agreement that renders
the agreement void.

Illustrations

 A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of
bargain though neither party was aware of the fact. The agreement is void, as there is
bilateral mistake as to the existence of the subject matter.

 A agrees to buy from B all his horses believing that B has two horses but B actually has three
horses. The agreement is void because there is a bilateral mistake as to the quantity of subject
matter.

Unilateral Mistake

In unilateral mistake only one party is under a mistake as to the matter of fact. Under such
mistake, the contract is not rendered void. A contract is not voidable merely because it was
caused by one of the parties to it being under a mistake as to a matter of fact.

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Illustration

A wants to contract only with B, but makes a contract with C; believing him to be B.

B. MISTAKE OF LAW

It is of two types

 Mistake of Pakistani Law

Mistake of Pakistani Law

The contract is not voidable because everyone is supposed to know the law of his country.

Illustration

A & B make a contract grounded on the erroneous belief that a particular date is barred by the
Pakistani Law of Limitation; the contract is not voidable.

Mistake of Foreign Law

A mistake of foreign law is treated, as mistake of fact i.e. the contract is void if both the parties
are under a mistake as to foreign law because one cannot be expected to know the law of other
country.

Illustration

There is an agreement between A and B to sell a certain quantity of Sulphuric acid with 25 %
concentration. Export over 10 % is prohibited in the other (foreign) country. The contract is void.

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