Under the Indian Laws, all agreements are contracts provided it is made by the free consent of parties competent to contract for a lawful consideration and with a lawful object. Any agreement entered into by a party without free consent would be void.
In order to constitute a valid contract both parties to a contract must willingly consent to the terms and conditions of the contract in order to make the contract valid and legally binding.
Consent has been defined under the Indian Contract Act as two or more persons are said to consent when they agree upon the same thing in the same sense.
Consent is said to be free when it is not caused by-
- Undue influence
Any agreement that does not have free consent as defined aforesaid will be invalid and unenforceable.
Coercion would mean the committing or threatening to commit any illegal act or the unlawful detaining or threatening or threatening to detain any property to the prejudice of the person who is entering into the agreement.
Undue influence would be whether relations between the parties as such that one of the parties is in a position to dominate or prevail over the other and uses that position to take unfair advantage of the other.
Fraud means and includes a suggestion by one party to the other of the fact which the first party knows is not true or the active concealment of a fact by one person in order to use it for his advantage. It can also be a promise that has been made without the intention of performing it or with the intention to deceive the other party.
Misrepresentation means that a positive assertion of a material fact in a manner by the person making it though he knows is not true in order to take advantage. It could also mean causing the other party to make a mistake as to the substance of the subject of the agreement.
A party to a contract whose consent was caused by misrepresentation, may if he thinks fit, insist that the contract shall be performed and that he shall be placed in a position which he would have been placed had the representations be true.
Sushila Ram Varma
Chief Legal Consultant
The Indian Lawyer