Consent

Free consent and its effects

Coercion
Undue influence
Fraud (section 17)
Fraud and its effects
Misrepresentation
Mistake and its effects

[Terms and symbols used]

P.P.C Pakistan Penal Code
/ or
|| column saperation
Consent (section 13) (approval/assent/agreement)
“Two or more persons are said to be consent when they are agree upon the same thing in
the same sense”.
Free Consent (section 14) (free assent/agreement)
“Consent is said to be free when it is not caused by coercion, fraud, misrepresentation,
undue influence and mistake”.
Coercion (section 15) (compulsion/intimidation/force/unwillingness)
“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 a
agreement”.
1. Committing offence (obtaining or attempt to obtain the consent through an act
forbidden by P.P.C)
2. Unlawful detaining or threatening to detain (to obtain the consent of a person to enter
into an agreement)
3. Threat against any third party (i.e. in which the concerning aggrieved person has
property or some interest)
4. Presence of Pakistan Penal Code (is immaterial, presence/non-presence makes no
difference)
Effects of Coercion
1. The contact becomes voidable at the option of the aggrieved person/party, the
aggrieved party/person has two options
a. may compel the other party for specific performance (if deems fit)
b. ma set aside the contract
2. Section 64if the aggrieved party decides to set aside the contract he must restore any
benefits received by him under such contract
Undue influence (section 16(1)) (undue use of power/authority/control)
1. Position to dominate (one of the two parties must be in position to dominate the other
party, i.e. having a superior authority over the other)
2. Undue advantage (person having the superior authority must obtain an undue
advantage with the use of his power)
a. case if mental distress (it is easy to compel a person having temporary/permanent
defective mental capacity to enter into a contract even on terms against himself, so it is a
voidable contract on the option of defective person)
b. real or apparent authority (the relation between the dominant and dominee can either
be of real type or the apparent type, i.e. a police officer and a criminal, a doctor and his
poor patient)
c. fiduciary relation (dominance due to the natural love and affection, mutual trust and
confidence)
Burden of Proof (no one carries the burden of proof, only the status of the parties may
prove the existence of the undue influence)
Distinction between coercion and undue influence
Coercion || Undue Influence
To do any act not involving the free will, under the pressure of the other party || Acting
under the dominance of a person misusing his superior authority
Forbidden by P.P.C || No particular provision in P.P.C
Consent is obtained through an offence and compel the other to enter into a contract ||
Consent is obtained by dominating the free will of the other party
Physical pressure can be applied to attain the consent || Ethical/moral pressure is posed to
attain the assent
Can be applied by any one either by the contracting parties or by someone outsider ||
Only the contracting parties do so
To do or to threaten to do an illegal act || The act done by the dominant party is unfair not
illegal
The aggrieved party is bound to return any benefit which he received due to execution of
contract || The court the aggrieved party refund the benefit if he received under the
contract

Fraud (section 17) (Intentional/premeditated Misrepresentation)

Knowingly conveying a wrong statement to someone, believing it to be untrue/false
about a particular subject matter to deceive or induce. Mainly with intention to deceive
the other
“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 or to induce another party
thereto or his agent, to enter into a contract”.
1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be
true
2. the active concealment of a fact by one having knowledge or belief of the fact
3. a promise made without any intention of performing it
4. any other act fitted to deceive
5. any such act or omission as the law specially declares to be fraudulent
Explanation (silence whether fraud): 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 that, regard being had to them, it is the duty of the person keeping
silence to speak, or unless his silence is, in itself, equivalent to speech.
Causes of Fraud1. False statement about fact
2. Active concealment of fact
3. Promise made without intention to perform
4. Aim to deceive the other
5. Any act or omission
Essentials of Fraud
1. A false statement or active concealment of material fact
2. Acted upon by the party misled and deceived
3. Committed before the conclusion of the contract
4. With the intention to deceive or induce the other
5. Statement made with the knowledge of falsehood of the statement
6. Statement believed to be true by the other party
7. The aggrieved party must suffer some loss
8. The other must have been deceived by the fraudulent conduct of the first party
Effects of Fraud
1. Avoid the contract (the consent was obtained through fraudulent silence, and it could
be discovered through ordinary diligence)
2. Affirm the contract (the contract can be affirmed for the execution)
3. Notice of the intention (loss of opinion on account of affirmation/avoidance, if no
notice is served)
4. Sue for damages (can sue only in case if the rights are available i.e.
a. no third party has acquired the rights/possession
b. no affirmation declared, when the fraud came to knowledge
c. parties can be restored to their original position
Circumstances for the loss of rights
a. party alleged of fraud could discover the fraud through ordinary diligence
b. the ignorance of fraud/misrepresentation caused the consent
c. after the information of misrepresentation/fraud no intention was showed to
avoid/accept the contract
Burden of Proof (lies on the party claiming/pleading on the grounds of fraud)
Misrepresentation (section 18) (Unintentional Lying)
Unknowingly conveying a wrong statement to some one, believing it to be true about a
particular subject-matter is said to be misrepresentation.
Section 18, Contract Act 1872 includes:
1. “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, or
2. Any breach of duty which, without an intent to deceive, gains an advantage to the to
the person committing it, or any one claiming under him, by misleading another to his
prejudice or to the prejudice of any one claiming under him, or
3. Causing, however innocently, a party to an agreement, to make a mistake is to the
substance of the thing which is the subject of the agreement”
Essentials:
1. the representation must be made innocently with an intention that it shall be believed to
be true
2. representation statement must be false
3. at the time of contract the false representation must be believed to be true by parties
4. no intention of the parties to deceive each other
5. it must occur before the execution of the contract
6. the parties must have acted according to the false information
7. the other party should suffer a lose de to the execution of the (misrepresented) contract
8. it should not be possible for the other party to discover the truth with ordinary
diligence
Occurrence of misrepresentation
1. Intention (misrepresentation must be untrue but it should be believed to be true)
2. Unjustified statement (a false but positive statement in result of ignorance, believed to
be true by the person making it)
3. Breach of duty (availing an advantage through a misrepresented statement, misleading
the other to his prejudice)
4. Misrepresentation of fact (fact must be relevant to the contract)
5. Mistake about subject matter (innocently causing the other to make mistake)
6. Inducement (consent should be caused by the misrepresentation, other wise consenting
party cannot avoid the contract)
Effects of misrepresentation
1. Avoid the contract (if the misrepresentation could not be discovered by the ordinary
diligence, then the other party can avoid the contract)
2. Affirm the contract (contract can be carried on for the fulfillment of terms)
3. Claim for restitution (restitution can be claim but no damages, the return of the paid
amount or the transferred property)
4. Lost of rights
a. when the consent was given with the knowledge of misrepresentation
b. third party has acquired rights of the subject matter of contract in good faith and for
value
c. the aggrieved party had the means of discovering the truth with ordinary diligence
5. Burden of proof (lies on the party pleading/claiming on the grounds of
misrepresentation )

Mistake:
1. Mistake of Fact (one or the both of the parties are under a mistake as to a matter of
fact, essential for agreement)
a. Bilateral/vital operative mistake (sec. 20) (when one or both of the parties are under a
mistake as to a matter of fact, essential to agreement. Void in following conditions
- mistake must be of both parties
- it must be a mistake of fact not of law
- must be about a fact corresponding to contract
Types of bilateral mistakes:
1. regarding the existence of subject matter (the existence of the subject matter is
believed by the both parties, which in fact does not exist, in this situation no constitution
of the contract)
2. regarding the identity of subject matter (if the subject matter is not identical in the
minds of the parties then the contract is void)
3. regarding the quality of the subject matter (constitutes the void agreement)
4. regarding the quantity of the subject matter (constitutes the void agreement)
5. regarding the title of the subject matter (selling or leasing such a property which is not
possessed by him, constitutes the void agreement)
6. regarding the price of the subject matter (constitutes the void agreement)
7. caused by the third party (mistake caused by the negligence of the third party,
agreement is viod)

b. unilateral mistake (when the mistake is done by one of the parties, then the agreement
is not void, it can be avoided only on the proven grounds of misrepresentation and fraud)
Types of the unilateral mistakes
1. as to the nature of the transaction (any innocent mistake done by either of the parties,
the agreement is void)
2. as to the identity of the contracting party (where the identity of the parties is essential
and the identity is having some fault the agreement is declared void, and if the identity is
not essential then the agreement is valid).
2. Mistake of Law
a. mistake of Pakistani law (the ignorance of law is no excuse, the mistake of the law in a
particular matter is non-ignorable. Section 21; the contract is not voidable because it was
caused by a mistake as to any law in force in Pakistan)
b. mistake of foreign law (treated as the mistake of fact, sec 21; mistake of the foreign
law is has the same effect as the mistake of fact)
c. mistake of private law (treated as a mistake of fact, and is excusable, thus the contract
becomes void)
Distinction between fraud and misrepresentation
Fraud || Misrepresentation
False statement, deliberately made to deceive the other party || False and innocent
statement with no intention to cause any harm to the other party
Aggrieved party can claim damaged || The aggrieved party can avoid the contract but can
claim no damages
The concealment of material fact || Material facts are presented in good faith
Person making the statement has the knowledge of falsehood of the information || Person
making the statement has no knowledge of the falsehood of the information
Wider term, covers misrepresentation also || Shorter term, cannot cover the fraud
Committed to avail undue advantage from the other party || Not committed to avail the un
due advantage from the other party
The party making false statement has the complete knowledge of the facts || The party
making statement has no knowledge about the facts
It is made by one party deliberately/intentionally || Result of the act done by the party,
unintentionally
Contract is voidable at the option of the aggrieved party, even though if he had the means
of discovering the truth || Aggrieved party cannot avoid the contract, if he had the means
to discover the truth.