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Voidability of Agreements Without Free Consent
A voidable contract is one that may be terminated or amended in certain situations. There must be a legal precedent in order to discharge an obligation because not all contracts are voidable. Finding a defect in a contract is a common way to get out of it. When both parties agree to the voiding of the contract, it is easiest to do so, and this is usually the wisest course of action. A formal agreement between two parties to a contract that is voidable for a number of legal reasons is known as a voidable contract.
Meaning of Violability?
The term "voidable" means "capable of being void." A voidable contract is initially believed to be legitimate and binding, but if flaws are found, one party may reject it. If a party having the power to reject the contract elects not to do so in spite of the defect, the contract continues to be valid and enforceable. In most cases, entering into a voidable contract only harms one of the parties since that party doesn't recognize the other party's dishonesty or fraud.
What is Free Consent?
Section 13 of the Contract Act defines consent as "when two or more persons agree upon the same item and in the same sense." All legal agreements must be based on consensus ad idem, or a meeting of the minds. And free consent is defined in Section 14.
Hughes vs. Smith (1871)
In this case, the Queen's Bench decided that even if a party did not express his or her assent in writing, but instead acted in a way that would lead a reasonable person to believe that he or she was agreeing to the terms put forth by the promisee, that party would still be held to the terms of the agreement as if he or she had done so expressly.
Raffles v. Wichelhaus (1864)
A and B, two parties, entered into a contract for the sale of 125 bales of cotton by the ship "peerless" from Bombay. Party "A" was thinking about one of two ships with the same name, while Party "B" was thinking of the other ship. The judge ruled that neither party had reached a consensus. As a result, the contract was void.
When is a Contract Voidable?
Voidability of agreements without free consent in contracts is covered in Section 19 of the Indian Contract Act (ICA), 1872.
The fundamental prerequisite for a contract's legality is laid out in this section of the ICA, which states that the parties to the contract must have done so voluntarily and free from coercion or other outside pressure. The section also lists a number of situations that might prevent a party's consent from being freely given, including force, undue influence, fraud, deception, and error.
A contract may be voidable at the option of the person whose consent was unfree if one was created with consent that was not free. In other words, the party has the option to accept or reject the contract.
Free consent is defined in Section 14 as−
Consent that is not obtained by coercion, as that term is defined in Section 15,
Undue influence, as that term is defined in Section 16
Fraud, as that term is defined in Section 17
Misrepresentation, as that term is defined in Section 18, or
Mistake, subject to the provisions of Sections 20, 21, and 22."
Coercion is defined as "the act of engaging in or threatening to engage in, any conduct prohibited by the IPC, or the unlawful retention of, or threatening to retain, any property to the detriment of, any person, with the intent to compel that person to enter into, or to cause such person to enter into, an agreement."
The following situations would constitute excessive influence inducing a contract −
If one of the parties is in a position to control the other's will or if he or she is the other party's fiduciary.
If he enters into a contract with someone whose mental state has been adversely affected, either temporarily or permanently, by old age, disease, or physical or mental distress.
If one person is in a position to control another's will and enters into a contract with him, even though the deal seems unfair.
Fraud refers to and encompasses the following actions taken by one party with the intent to deceive another. The assertion is made by one who doesn't think it's true but yet makes the claim. The deliberate hiding of one's belief or knowledge of a fact. A commitment made without any intention of following through with any acceptable deceitful action.
The term "misrepresentation" refers to an inaccurate statement of fact or of law made by one party to another when the second party is being persuaded to enter into a contract with the first and the latter causes the second party to suffer loss.
When one party enters into a contract without fully comprehending the facts or the law, the assent is said to have been granted inadvertently, making the contract defective or voidable. A mistake can be either of fact or of law.
How Voidable Contracts Work
A voidable contract is initially viewed as legitimate and binding but may be revoked by one party if it is shown to contain flaws. The agreement is nonetheless enforceable and legal if a party with the authority to reject it chooses not to do so notwithstanding the flaw.
Agreeing to a voidable contract in which one party fails to identify the misrepresentation or fraud perpetrated by the other party typically only has a negative impact on that party.
Importance of Free Consent in Contract
Free consent is a crucial component of contract law and is thought to be a necessary condition for the establishment of a legal contract. In contract law, voluntary consent is crucial for the following reasons.
Validity of Contract − The construction of a legitimate contract requires the expression of free consent. The contract may be deemed voidable if one party's consent is not freely given.
Fairness and Equity − Free consent assures that both parties freely consent to the agreement without being coerced or subjected to unfair influence. This encourages equity and fairness in contractual agreements.
Rights of Parties are Protected − In a contract, both parties rights are protected by their free assent. The contract might not accurately reflect the parties' genuine intentions and might not be in their best interests if one party's assent is not given freely.
Promotes Trust − Free consent contributes to the development of trust between the parties to a contract. It is more likely that they will carry out their commitments under the agreement if both parties willingly agree to its terms.
Evidence of Agreement − The existence of free consent is proof that both parties freely and fully understood the terms and conditions of the agreement before entering into it. This could be crucial for settling conflicts or for enforcing the contract in court.
An agreement must have free consent in order to be legally binding. Free consent is crucial, and this cannot be emphasized enough. The Party must freely and gladly consent. It is essential that you agree to the contract voluntarily and without being under any duress. The freedom of the parties' assent is crucial since it could jeopardize the contract's legality. The aggrieved party has the right to void the agreement if the consent was gained or caused by coercion, undue influence, fraud, misrepresentation, or error.
Frequently Asked Question (FAQ)
Q1. What is a voidable contract?
Ans. A contract that can be enforced or rejected by one of the parties is said to be voidable. Until one of the parties cancels or revokes it, it is regarded as being in effect. If one of the parties entered into the agreement under duress, unreasonable influence, fraud, or deception, the contract may be voided or revoked.
Q2. What are the effects of a voidable contract?
Ans. A voidable contract's outcomes are determined by its particulars and the choice of the party with the option to reject it. Both parties are released from their responsibilities if the contract is refused and is handled as though it never existed. Both parties are obligated by the provisions of the agreement if it is upheld.
Q3. What do you understand by void agreement and free consent?
Ans. When an agreement is found to be the result of force, fraud, or misrepresentation, it is voidable at the option of the party whose consent was acquired. If, on the other hand, consent is obtained as a result of a bilateral mistake, the agreement is null and void, and there is 'no consent.'
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