Indian contract act, 1872
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(C) Contract by disqualified persons: Besides minors and persons of unsound mind, there are also other persons who are disquali ed from contracting, partially or wholly, so that the contracts by such person are void. Incompetency to contract may arise from political status, corporate status, legal status, etc. The following persons fall in this category: Foreign Soverigns and Ambassadors, Alien enemy, Corporations, Convicts, Insolvent etc. following persons fal
"two or more persons are said to consent when they agree upon the same thing in the same sense." Definition of 'Free Consent' (Section 14) Consent is said to be free when it is not caused by: 1. Coercion, as de ned in Section 15; or .2. Undue In uence, as de ned in Section 16; or 3. Fraud, as de ned in Section 17; or 4. Misrepresentation, as de ned in Section 18 or 5. Mistake, subject to the provisions of Sections 20, 21, and 22.
(I) Coercion (Section 15) "Coercion' is the committing, or threatening to commit, any act forbidden by the Indian 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 an agreement." Il Undue in uence (Section 16) According to section 16 of the Indian Contract Act, 1872, "A contract is said to be induced by 'undue in uence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and he uses that position to obtain an unfair advantage over the other"
a) Dominant Position b) the use of it to obtain an unfair advantage. Example: A, a man enfeebled by disease or age, is induced by B's in uence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services. B employs undue influence.
Power to set aside contract induced by undue in uence- (Section 19A) When consent to an agreement is caused by undue in uence, the agreement is a contract voidable at the option of the party whose consent was so caused.Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any bene t thereunder, upon such terms and conditions as to the Court may seem just.
(111) Fraud (Section 17) (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 tted to deceive; (5) any such act or omission as the law specially declares to be fraudulent.
Mere silence is not fraud A party to the contract is under no obligation to disclose the whole truth to the other party. 'Caveat Emptor' i.e. let the purchaser beware is the rule applicable to contracts. There is no duty to speak in such cases and silence does not amount to fraud. Silence is fraud: 1. Duty of person to speak: Where the circumstances of the case are such that it is the duty of the person observing silence to speak. For example, in contracts of uberrimae dei (contracts of utmost good faith) - fiduciary Relationships - Contact of insurance Marriage contract-settlement of family matters
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