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Lecture 6.2.Docx

The document discusses legal concepts related to free consent, specifically focusing on undue influence, fraud, and misrepresentation in contracts. Undue influence occurs when one party dominates another's will to gain an unfair advantage, while fraud involves deceptive acts intended to mislead another party into a contract. Misrepresentation, on the other hand, involves false assertions made without the intent to deceive, leading to a misunderstanding about the contract's subject matter.

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2 views3 pages

Lecture 6.2.Docx

The document discusses legal concepts related to free consent, specifically focusing on undue influence, fraud, and misrepresentation in contracts. Undue influence occurs when one party dominates another's will to gain an unfair advantage, while fraud involves deceptive acts intended to mislead another party into a contract. Misrepresentation, on the other hand, involves false assertions made without the intent to deceive, leading to a misunderstanding about the contract's subject matter.

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ug1701198
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lecture 6.

Free Consent-continuation

Section 16- Undue Influence


Sec. 16(1) Definition of Undue Influence-
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.
That means, a contract is made using one’s dominant position over another person’s will or
mind (i.e. he is in a weak position to take his own decision freely/independently) and the
dominant person is getting an unfair advantage through such a contract.

Sec. 16(2) Different Ways of Domination


Who is in the position to dominate the will/mind of another person?
-Who holds a real or apparent authority over the other;
Example: Employer-employee, moneylender-debtor, police officer-accused master-servant
-Who stands in a fiduciary relation to the other;
Example: Father-son, husband-wife, teacher-student, lawyer-client, doctor-patient
-Who makes a contract with a person whose mental capacity is temporarily or permanently
affected due to age, illness or mental or bodily distress.
Example: Nurse-patient, Caregiver-handicapped

Sec. 16(3) Burden of Proof of Undue Influence


If from the transaction of the contract, it appears from the face of it or on evidence adduced
that the contract is to be unconscionable
the person in the dominant position is bound to prove that he did not apply any undue
influence, over the will of the other.
But it is to remember that first one’s dominant position is to be proved, and then the
dominant person has to prove that he applied no undue influence.
Section 17- Fraud
Definition and Ingredients of Fraud-
It means and includes any of the following acts, which is committed by
a party to the contract, or with his connivance, or by his agent,
with the intent to deceive another party of the contract or his agent, or to induce him to enter
into the contract: -

What acts are constituted as frauds?


-suggesting a fact which one knows it as a false fact (suggestio falsi);
-actively concealing a true fact which one knows (suggestion veri);
-falsely promising to perform something with no intention to perform it (false promise);
-doing any other act which is fitted to deceive;
-any act or omission which the law may declare as fraudulent.
So, fraud is done by a party himself, or by his agent or with his connivance to the other party or
his agent with a clear intention of deceiving another party and thereby causing him to enter
into a contract. In such a case the consent of the other party is not a free consent.
Example: The seller is giving false information of the production capacity of his factory.

Explanation: Regarding non-disclosure of a fact or keeping of silence to affect one’s willingness


to enter into a contract. When keeping silence is a fraud and when it is not a fraud.
Mere silence by a party is not considered a fraud.
But where one person is under an obligation to speak about a fact and he is not
speaking/keeping silence and through such silence he is concealing a fact from the other party,
it is treated as a fraud.
Again, where one person’s silence regarding a fact is equivalent to his speech and such silence
gives a different meaning, then it is treated as a fraud.
Example: In an auction, one is selling his unsound horse without disclosing the fact. Such silence
is not a fraud.
But where the prospective buyer is asking the seller that if you do not deny I shall assume that
your horse is sound. And in such a case, if the seller remains silent, it is a fraud because he is
under an obligation to tell the truth that his horse is unsound and through his silence he is
suggesting to the prospective buyer that the horse is sound.
So, one’s intention is bad, he wants to deceive another to make the other enter into the
contract. Thereby intention to deceive is the essential ingredient of a fraud. And
non-disclosure or silence about a fact is fraud only when it is a breach of duty or it is
equivalent to speech.

Section 18- Misrepresentation


Definition- Misrepresentation means and includes: -
-an unwarranted positive assertion of an information, which is not true but the person saying
such fact believes his statement as true (unwarranted false statement);
Example: The seller is telling the prospective buyer that 600 kg rice can be harvested surely
from this paddy field; and he is saying so because he thinks that it is possible to get such an
amount from this field, but actually 300 kg rice can be harvested.
-committing a breach of duty, but without an intent to deceive, which results him to gain an
advantage, by misleading another to his prejudice or anyone claiming under him to enter into a
contract;
Example: The banker is giving a reference letter about his client who subsequently gets money
from a party, showing that reference letter, however the bank’s reference letter does not
contain the words ‘without responsibility’. It is a breach of banker’s duty which misleads the
party to lend money to the bank’s client.
-causing innocently a party to an agreement to make a mistake about its subject matter.
Example: While making a contract to sell and deliver heavy equipment, the purchaser of the
equipment says the seller that the road is strong enough to carry such heavy equipment but in
reality, it is not possible to avail the route as the road is not made of concrete.

Basic difference between fraud and misrepresentation


In case of fraud, there is a bad intention to deceive another but in case of misrepresentation,
there is no such bad intention, though something wrong is done.

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