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CONSENTCONSENT

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Meaning of consentMeaning of consent

According o section 13 two or moreAccording o section 13 two or morepersons are said to consent when theypersons are said to consent when they

agreeagree upon the same thing in the sameupon the same thing in the samesense. This means thatsense. This means that there should bethere should beperfect identity of mind. consensus adperfect identity of mind. consensus adidem) regarding the subject matter of theidem) regarding the subject matter of the

contractcontract

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FREE CONSENTFREE CONSENT

To make a contract valid not only consent isTo make a contract valid not only consent isnecessary but the consent should also be free.necessary but the consent should also be free.

Section 14 says the consent is said to be freeSection 14 says the consent is said to be freewhen it is not caused by any of the following :when it is not caused by any of the following :

(a) Coercion(a) Coercion--sec 15sec 15

(b) Undue influence(b) Undue influence sec 16sec 16

(c) Fraud, Misrepresentation(c) Fraud, Misrepresentation sec 17,18sec 17,18(e) Mistake(e) Mistake sec 20,21sec 20,21

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FRAUDFRAUD

Section 17

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MEANING OFFRAUDMEANING OFFRAUD

Intentional misrepresentationIntentional misrepresentation

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Definition under lawDefinition under law

section 17section 17 According to section 17 fraud means and includes any ofAccording to section 17 fraud means and includes any of

the following actsthe following acts

Committed by a party to a contract or by any one with hisCommitted by a party to a contract or by any one with hisconnivance or by his agent with intent to deceive anotherconnivance or by his agent with intent to deceive anotherparty thereto or his agent or to induce him to enter intoparty thereto or his agent or to induce him to enter intocontract:contract:

(a)(a) A suggestion as to fact of that which is not true by oneA suggestion as to fact of that which is not true by onewho does not believe it to be truewho does not believe it to be true

(b)(b) AnAn activeactive concealment of a fact by one havingconcealment of a fact by one havingknowledge or belief of the fact.knowledge or belief of the fact.

(c)(c) Any other act fitted to deceiveAny other act fitted to deceive

(d)(d) A promise made without any intention of performing itA promise made without any intention of performing it

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ContCont

False StatementFalse Statement

Active ConcealmentActive Concealment

Intentional NonIntentional Non--performanceperformance Intent to DeceiveIntent to Deceive

Act or Omission (Sec. 55)Act or Omission (Sec. 55)

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Essential of fraudEssential of fraud

There must be a representation and it must beThere must be a representation and it must befalse.false.

The representation must relate to a factThe representation must relate to a fact

The representation was made to induce theThe representation was made to induce theother party to contractother party to contract

The other party must have relied upon theThe other party must have relied upon the

representationrepresentation The other party must have suffered a lossThe other party must have suffered a loss

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Effect ofFraudEffect ofFraud

He may avoid the contract and may ask for theHe may avoid the contract and may ask for thedamages suffered because of the non fulfillmentdamages suffered because of the non fulfillmentof the contractof the contract

He may insist for the performance of theHe may insist for the performance of thecontract .contract .

Burden of ProofBurden of Proof

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Cases ofFraudCases ofFraud

In November 2008 Munaf Kalia (Chief Executive OfficerIn November 2008 Munaf Kalia (Chief Executive OfficerofofKhanani and Kalia International (Pvt.) Ltd.Khanani and Kalia International (Pvt.) Ltd.), Yusuf), YusufKalia, and associates, were charged for illegallyKalia, and associates, were charged for illegally

transferring funds from Pakistan to Afghanistan.transferring funds from Pakistan to Afghanistan.

BOP Scandal: corruption at the BOP amounts toBOP Scandal: corruption at the BOP amounts toRs76.178 billion. While the bank shows profits from 2005Rs76.178 billion. While the bank shows profits from 2005to 2008 on paper, it is actually running in loss.to 2008 on paper, it is actually running in loss.

NICL scandal.NICL scandal.

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MisrepresentationMisrepresentation

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MeaningMeaning

Misrepresentation is a false representationMisrepresentation is a false representationmade innocently without any intention ofmade innocently without any intention ofdeceiving the other party .It may includedeceiving the other party .It may includetwo thingstwo things

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Definition under LawDefinition under Law

Section 18Section 18

According to section 18, misrepresentation means and includes:According to section 18, misrepresentation means and includes:

The positive assertion in a manner not warranted by the informationThe positive assertion in a manner not warranted by the informationof the person making it, of that which is not true, though heof the person making it, of that which is not true, though he

believes it to be true;believes it to be true;

any breach of duty which without an intent to deceive, gains anany breach of duty which without an intent to deceive, gains anadvantage to the person committing it , or anyone claiming underadvantage to the person committing it , or anyone claiming underhim, by misleading another to his prejudice or to the prejudice ofhim, by misleading another to his prejudice or to the prejudice of

any one claiming under him;any one claiming under him;

Causing, however, innocently a party to an agreement to make aCausing, however, innocently a party to an agreement to make amistake as to the substance of the thing which is the subject ofmistake as to the substance of the thing which is the subject ofagreement.agreement.

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Misrepresentation in the following casesMisrepresentation in the following cases

Unjustified Statement :Unjustified Statement : the positive assertionthe positive assertionmeans an absolute, full and clear statement of fact.means an absolute, full and clear statement of fact.

Breach of Duty:Breach of Duty:

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Essentials of MisrepresentationEssentials of Misrepresentation

The following things are necessary to proveThe following things are necessary to provemisrepresentation:misrepresentation:

It must be made innocently and believing it to be true.It must be made innocently and believing it to be true.

It must be made without any desire to deceive the other party.It must be made without any desire to deceive the other party.

The other party must suffer loss.The other party must suffer loss.

The other party cannot discover the truth by ordinary diligence.The other party cannot discover the truth by ordinary diligence.

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Effects of MisrepresentationEffects of Misrepresentation

The following remedies are available to aggrievedThe following remedies are available to aggrievedparty:party:

He can avoid contract.He can avoid contract.

He can accept the contract and ask the other party forHe can accept the contract and ask the other party forrestoration.restoration.

Aggrieved party will lose the rights in the followingAggrieved party will lose the rights in the followingcases:cases:

If consent was given with the knowledge of misrepresentation.If consent was given with the knowledge of misrepresentation.

If third party has acquired rights in the subject matter of contract inIf third party has acquired rights in the subject matter of contract ingood faith and for value.good faith and for value.

If aggrieved party could discover the truth with ordinary diligence.If aggrieved party could discover the truth with ordinary diligence.

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Burden of ProofBurden of Proof

Aggrieved partyAggrieved party

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Contracts ofUtmost Good FaithContracts ofUtmost Good Faith

Contract ofInsuranceContract ofInsurance

Contract of purchase of sharesContract of purchase of shares

Contract of sale of landContract of sale of land

Contract of partnershipContract of partnership

Contact of family settlementsContact of family settlements

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Difference between fraud andDifference between fraud and

misrepresentationmisrepresentation

Fraud Misrepresentation

In fraud the false statement is madeIn fraud the false statement is madedeliberately with a clear intention ofdeliberately with a clear intention of

deceiving the other partydeceiving the other party

There is no intention to deceive or toThere is no intention to deceive or togain any undue advantagegain any undue advantage

n fraud the injured party besidesn fraud the injured party besidesavoiding the contract may also claimavoiding the contract may also claimthe damages.the damages.

It makes the other contract onlyIt makes the other contract onlyvoidable at the option of the partyvoidable at the option of the partywhose consent has been so causedwhose consent has been so caused

Fraud may amount to an offence ofcheating. It is a criminal act.

Misrepresentation does not amount toan offence of cheating. It is not acriminal act.