Law Of Contract Seminar

Effect of Coercion in a Contract and its Remedies

FREE CONSENT Sec 10, Free consent is an essential

component in a contract. Said to be free when not caused by:-1. Coercion[Sec 15]2. Undue influence[Sec 16]3. Fraud [Sec 17]4. Misrepresentation[Sec 18]5. Mistake[Sec 20,21,22]

Coercion

“According to 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”

Act Forbidden by the IPC

“It has been said that if a person commits an act which has been forbidden by the IPC to obtain the consent of the other to an agreement, the consent in such a case is obtained by Coercion”1

1. Ranganayakamma v. Alwar Setti, I.L.R. (1889) 13 Mad. 214

Unlawful Detention of Property

“According to Section 15, Coercion would also be caused by 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”

Essar Steel Ltd v. Union Of India, (2006) 1 GLH 609 (Guj):(2006) 1 Guj LR 436Andhra Sugars Ltd v. State of A.P,A.I.R 1968 S.C.599

“Duress” under English Law

It consists in Actual Violence or threat of Violence to a person. Only includes fear of Loss to life or bodily harm including imprisonment, but not a threat of damage to goods..

Threat to Goods is no Duress … In this the Common Law recognizes only threat to man’s person and not to his goods to constitute duress.1

1. Skeate v. Beale. (1840) 11 A. & E. 983

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 property

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

Always proceed from a party to the contract.

REMEDY AND CONCLUSION• Voidability of contract-Sec 19• Right to claim compensation

“No other acts are explained in the definition of Coercion like Narcotics Act,1985 and Domestic Violence Act,2005”