Free Consent: Creating a contract hinges on both parties genuinely agreeing to the same terms. This mutual consent, characterized by its freedom, is a crucial aspect of a valid agreement. According to Section 10 of the Indian Contract Act, 1872, free consent is deemed essential for the contract’s complete validity. Consent is considered free when it isn’t hindered by obstacles. Without genuine consent or a clear and real object of consent, a contract cannot exist. If consent is present but not truly free, the contract is typically voidable at the option of the party whose consent was compromised.
A mere assertion that consent was not freely obtained is insufficient. It’s necessary to identify specific issues, such as fraud, which encompasses false assertions, active concealment, promises without genuine intention, or any other deceptive acts. To establish fraud, the deceptive act must be committed by one of the parties to the contract, with or without the involvement of their agent, and with the intent to deceive the other party. Notably, there is no obligation for parties to disclose facts that might impact the other party’s consent unless circumstances indicate a duty to speak. Mere silence is not considered fraudulent, unless the situation suggests a duty to communicate, or the silence itself is equivalent to speech.
On the flip side, misrepresentation can be understood in three ways:
- Firstly, it involves stating a fact that, if untrue, would be considered misrepresentation. This happens when the person making the statement genuinely believes it to be true, even though it’s not supported by the information they have.
- Secondly, misrepresentation includes any breach of duty that gives an advantage to the person committing it by misleading another, even without the intention to deceive.
- Lastly, misrepresentation occurs when one unintentionally causes a party to an agreement to make a mistake about the essence of the subject of the agreement.
Previous Year Questions for Free Consent under Law of Contracts
Question: Can you explain in simple terms what misrepresentation is and provide a statement that accurately captures its essentials?
(A) When someone in a contract says something that’s supposed to be true but isn’t, that’s called misrepresentation. It’s like making a positive statement about a fact that turns out to be false.
(B) Saying “misrepresentation” and “false representation” might sound similar, but they’re not exactly the same. They have their nuances and differences.
(C) If one person tricks another into signing a contract by sharing incorrect information, even if it wasn’t on purpose, the misled person usually can’t back out of the deal. It’s about the important facts, especially if the person sharing them knew better.
(D) Picture this: a misrepresentation is when someone in a contract makes a negative statement about a fact, but it turns out to be true. It’s not about lying, but it can still affect the deal.
Correct Option: A
Question: Which of the following statements best describes an action that involves deceit or fraud?
(I) Fraud occurs when someone intentionally deceives others, regardless of whether they hope to gain a personal advantage or harbor ill will towards the other party.
(II) Think of fraud as a deliberate act of deception, where someone tricks another person to gain an unfair advantage, essentially benefiting at the expense of the deceived party.
(III) Fraud typically involves a person deliberately and actively misrepresenting a fact, playing an active role in the deception.
(A) (I), (II) are correct.
(B) (I) correct.
(C) (I), (II), (III) are correct.
(D) (I) and (II) are correct but (III) is incorrect.
Correct Option: C
Question: Which of the following statements is correct?
A) Fraud is like an innocent mistake, while misrepresentation involves intentional wrongdoing.
B) The key distinction between fraud and misrepresentation lies in the person’s belief. In fraud, the person making the suggestion knows it’s not true, whereas in misrepresentation, they genuinely believe it to be true.
C) Both fraud and misrepresentation don’t involve a simple mistake in stating facts that misleads the other party.
D) Fraud and misrepresentation can be seen as unintentional errors, rather than deliberate wrongdoing.
Correct Option: B
Question: If Mr. A sells a car to his childhood friend, Mr. Y, knowing that the car has some issues, and before the purchase, Mr. Y tells Mr. A, “If you don’t say anything, I’ll assume the car is in perfect condition,” and Mr. A remains silent, what would be Mr. A’s responsibility in this situation?
(A) When A remains silent, it’s considered as if they have spoken, making it a form of misrepresentation.
(B) A may not be held responsible for fraud, but they can be held accountable for misrepresentation.
(C) A could be held liable for both fraud and misrepresentation.
(D) If A’s silence is treated as if they have spoken, it could be deemed fraudulent, emphasizing the significance of their unspoken communication.
Correct Option: D
Question: Which of the following statements allows a party to avoid a contract?
(A) If one party secures agreement through deception.
(B) If one party secures agreement by conveying false information.
(C) A contract formed through both fraud and misrepresentation is not automatically considered null and void, nor is it easily voided.
(D) When staying silent about certain information is considered deceitful, but the other party, whose agreement was obtained deceptively, either finds out the truth or could have discovered it through reasonable effort.
Correct Option: D