Indian contract act, 1872
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CAPACITY TO CONTRACT
(IV) Misrepresentation (Section 18) . Misrepresentation means and 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 (2) any breach of duty which, without an intent to deceive, gains an advantage 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; . (3) causing, however, innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Example 1: A' believed the engine of his motor cycle to be in an excellent condition. 'A' without getting it checkedin a workshop, told to 'B' that the motor cycle was in excellent condition. On this statement, 'B' bought the motor cycle, whose engine proved to be defective. Here, 'A's statement is misrepresentation as the statement turns out to be falise.
Coercion:The contract is voidable at the option of the party whose consent has been obtained by the coercion. Undue Influence: Where the consent is induced by undue in uence, the contract is either voidable or the court may set it aside or enforce it in a modified form. Fraud: The injured party can repudiate the contract and claim damages. Misrepresentation: The injured party is entitled to repudiate the contract or sue for restitution but cannot claim the damages.
Mistake: Mistake may be de ned as innocent or erroneous belief which leads the party to misunderstand the others. Mistake may be either Bilateral or Unilateral. Bilateral mistake is when both the parties to a contract are under a mistake. Unilateral mistake is when only one party to the contract is under a mistake. Effect of mistake on validity of a contract:Mistake is some unintentional act, omission or error, arising from unconsciousness, ignorance or forgetfulness, imposition or misplaced con dence. It may be of two kinds .
(i) Mistake of Law: A mistake of law does not render a contract void as one cannot take excuse of ignorance of the law of his own country. But if the mistake of law is caused through the inducement of another, the contract may be avoided. Mistake of foreign law is excusable and is treated like a mistake of fact. (ii) Mistake of fact: Where the contracting parties misunderstood each other and are at cross purposes, there is a bilateral or mutual mistake. Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Example: A offers to sell his Ambassador Car to B, who believes that A has only Fiat Car, agrees to buy the car. Here, the two parties are thinking about different subject matter so that there is no real consent and the agreement is void.
Which considerations and objects are lawful, and those which are not (Section 23): The consideration or object of an agreement is lawful, unless- 1. It is forbidden by law, or 2. Is of such a nature that, if permitted, it would defeat the provisions of any law, or 3. Is fraudulent, or 4. Involves injury to the person or property of another, or 5. The court regards it as immoral; or 6. Opposed to public policy . 2
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