Law of contracts seminar 2nd semesterTopic: Affect of coercion in a contact and the remedies available

Free consent

Under the essentials of a valid contract (sec 10), the parties should enter into a contract with their free consent.

Consent is said to free when it is not caused by – (sec 14)

1.Coercion (sec 15)

2.Undue influence (sec 16)

3.Fraud (sec 17)

4.Misrepresentation (sec 18)

5.Mistake (sec 20, 21 and 22)

Coercion (sec 15)

Act forbidden by the Indian penal code

1. Committing, or threatening to commit any act forbidden by the Indian penal code.

Unlawful detaining of property

1. The unlawful detaining, or threatening to detain any property whatever, with the intention of causing any person to enter into a contract.

Voidability of the contract The term ‘viodability’ is defined under sec 2(i) Sec 19: When consent to an agreement is

caused by coercion, undue influence , fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. If the consent is caused by mistake, the agreement is void.

Features and exceptions of the coercion It is immaterial whether the Indian Penal Code is

or is not in force where the coercion is employed. Threat to suicide is considered as coercion under

sec 309 of IPC If the detention of property is not unlawful, there

is no coercion . Threat to strike or strike doesn’t come under

coercion. Exercise of statutory powers does not come under

coercion. Compulsory sales prescribed by an act is not

included under coercion.

The Law of Unjust Enrichment Sec 72: A person to whom money has been

paid or anything delivered, by mistake or under coercion, must repay or return it.

Landmark judgement of Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548.

The basis of an action for money had and received is the principle of unjust enrichment, and that an award of restitution is subject to a defence of change of position.

This principle cannot be extended to give a right to the state to recover or realise vend fee after the concerned statute realisation or recovery of vend fee has been struck down.

Case study

Violation of Indian penal code1. Askari Mirza v bibi Jai Kishori (1912) 16 IC 3442. Chikham Amirraju v Chikam Seshamma

(1917) 41 Mad 33, 36 Detention of property 1. Esser steel v Union of India (2006) 1 GLH 609 2. Superintending Engineer, Irrigation Dept v

Progressive Engg Co (1197) 4 Andh LD 489 DB Unsuccessful claims of coercion 1. Manapragada Krishna Murthy v Savani

Transaport (p) Ltd AIR 2006 AP 78

Statutory compulsion

1. Co-operative Cane Union’s federation v West UP Sugar Mills Assn AIR 2004 SC 3697

Coercion Duress

Threatening to Commit / Committing to an act forbidden under the IPC

Under Common Law, consists in actual violence or threat of Violence to a person.

Against a person or to his property. Against a person and not to his property1. Skeate v. Beale. (1840) 11 A. & E. 983

May proceed from a person who is not a party to the contract.

Always proceed from a party to the contract.

Conclusion

Cases brought under this particular branch of section 15 of the Contract Act must be of rare occurance.

A contract can be voidable under the option of one or more of the parties thereto, but not the option of others.

Amendment in section 151. Inclusion of other laws such as

domestic violence, narcotics act which forbids certain acts in the definition.