Scribd
Upload
0 views4 pages

Intention to Create Legal Relations

The document discusses the concept of intention to create legal relations, emphasizing that an agreement is not binding unless the parties intend to create legal obligations. It also covers the importance of free consent, defining it and outlining the effects of coercion, undue influence, and misrepresentation on the validity of contracts. Key examples illustrate how these concepts apply in legal contexts, highlighting that agreements lacking legal intent or free consent may not be enforceable.

Uploaded by

Aalika Chakraborty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0 views4 pages

Intention to Create Legal Relations

The document discusses the concept of intention to create legal relations, emphasizing that an agreement is not binding unless the parties intend to create legal obligations. It also covers the importance of free consent, defining it and outlining the effects of coercion, undue influence, and misrepresentation on the validity of contracts. Key examples illustrate how these concepts apply in legal contexts, highlighting that agreements lacking legal intent or free consent may not be enforceable.

Uploaded by

Aalika Chakraborty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

INTENTION TO CREATE LEGAL RELATIONS

An agreement does not become a binding contract unless there is an intention to


enter into legal relations. The parties must intend that the transaction should be
attended by legal consequences and create legal obligations. The intention of
the parties is to be gathered from the terms of the agreement and the
surrounding circumstances. In arriving at a conclusion as to what is the interest
of the parties the courts usually apply an objective and not subjective test. Any
way it is upto the courts to decide whether the parties have intended to enter
into legal obligations.
A contract, however, is defined as an agreement enforceable by law. An
agreement which does not create any legal obligation will not be enforced by
law. Hence such an agreement is not a contract. X offers to play cards with Y for
pleasure and Y accepts. In later on X refuses to do so, Y cannot go to the courts
for enforcing the promise. Hence, such an offer does not create a contract. The
courts of law are not concerned with enforcing social obligations. They deal with
legal obligations.
Examples:
(i) D, agrees to go to a cinema with B. This is not a contract enforceable at law,
because going to a cinema is not a legal matter.
(ii) P Company made an agreement with G Company whereby they were made
agents of the latter. One clause in the agreement was as follows: “This
arrangement is not entered into as a formal or legal agreement and shall not be
subject to legal jurisdiction in the law courts”. Held, there was no intention to
create legal relationship; hence there was no contract. Rose and Frank Co. v.
Crompton Bros. Ltd.
(iii) A company agreed with V that or: expiration of V's existing contract, they
would “favourably consider” the renewal of his contract. Held, this expression
was too vague to be enforced and it was not found that intention was created to
renew the contract. Montreal Gas Co. v. Vasey.

Free Consent

Definition of Free Consent


An agreement is valid only when it is the result of the “free consent” of all the
parties to it.
Section 13: “Two or more persons are said to consent when they agree upon the
same thing in the same sense.”
Consent involves a union of the wills and an accord in the minds of the parties.
When the parties agree upon the same thing in the same sense
Section 14: This section lays down that consent is not free if it is caused by (1)
coercion, (2) undue influence, (3) fraud, (4) misrepresentation or (5) mistake.
Coercion

Definition
Coercion is defined by section 15 of the Act as follows: “Coercion is the
committing or threatening to commit, any act forbidden by the Indian Penal
Code, or unlawful detaining, or threatening to detain, any property, to the
prejudice of any property with the intention of causing a person to enter into an
agreement.

Explanation – It is immaterial whether the Indian Penal Code is or is not in force


in the place where the coercion is employed.

Features or Requisites
The provisions of Section 15 can be analysed as follows:
1. Coercion means (I) committing or threatening to commit an act forbidden
by the Indian Penal Code, or (II) the unlawful detaining or threatening to
detain any property.
2. The act, constituting coercion, must be directed at any person and not
necessarily at the other party to the agreement.
3. The act, constituting coercion, must have been done or threatened with
the intention of causing any person to enter into an agreement.
4. It does not matter whether the Indian Penal Code is or is not in force in the
place where the coercion is employed.

Example: P threatens to shoot Q if he does not let out his house to P, and Q
agrees to do so. This agreement has been brought about by coercion.

Consequences of Coercion
A contract brought about by coercion is voidable at the option of the party whose
consent was so caused – section 19. The aggrieved party can have the contract
set aside or he can refuse to perform it and take the defense of coercion if the
other party so ought to enforce it. The aggrieved party may, if he so desires,
abide by the contract and insist on its performance by the other party.

Undue Influence

Definition
A contract is said to be induced by undue influence where (1) one of the parties
is in a position to dominate the will of the other and (2) he uses the position to
obtain an unfair advantage over the other – Section 16(1).

Presumption
Section 16(2) provides that undue influence may be presumed to exist in the
following cases:
1. Where one party holds a real or apparent authority over the other or
where he stands in a fiduciary relationship to the other. Fiduciary
relationship means a relation of mutual trust and confidence. Such a
relationship is supposed to exist in the following cases – father and son;
guardian and ward; solicitor and client; doctor and patient; preceptor and
disciple; trustee and beneficiary etc.
2. Where a party makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of age, illness or mental or
bodily distress.
Example – F having advanced money to his son B during his minority, upon B’s
coming of age it is obtained by misuse of parental influence, a bond from B for a
greater amount than the sum advanced by F employs undue influence.

Consequences of undue influence


An agreement induced by undue influence is voidable at the option of the party
whose consent was so caused. Such an agreement may be set aside absolutely
or, if the party who was entitled to avoid it has received any benefit there under,
the court can set it aside upon such terms and conditions as may seem just –
Section 19A. The aggrieved party may, if he desires, treat the agreement as
binding and enforce it against the other party.
According to the Madras High Court undue influence by a person, who is not a
party to the contract, may make the contract voidable.

Difference between Undue Influence and Coercion


In both undue influence and coercion, one party is under the influence of
another. (1) In coercion the influence arises from committing or threatening to
commit an offence punishable under the Indian Penal Code or detaining or
threatening to detain property unlawfully. In undue influence, the influence arises
from the domination of the will of one person over another. (2) Cases of coercion
are mostly cases of the use of physical force while in undue influence there is
mental pressure.

Misrepresentation
Representation is a statement or assertion, made by one party to the other,
before or at the time of the contract, regarding some fact relating to it.
Misrepresentation arises when the representation made is inaccurate but the
inaccuracy is not due to any desire to defraud the other party. There is no
intention to deceive.
Section 18 of the Act classifies cases of misrepresentation into three groups as
follows: -

1. Unwarranted Assertion
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. Example – ‘A’ says to B who intends to purchase A’s land. “My land
produces 12 maunds of rice per bigha.” B believes that statement
to be true although he did not have sufficient grounds for the belief.
Later on, it transpires that the land does not produce 12 maunds of
rice. That is misrepresentation.

2. Breach of Duty
a. “Any breach of duty which, without an intend 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. “Under this heading would fall cases
where a party is under a duty to disclose certain facts and does not
do so and there by misleads the other party.

3. Innocent Mistake
a. “Causing, however innocently, a party to an agreement to make a
mistake as to the substance of the thing which is subject of the
agreement.”

You might also like