Chapter 5 Free Consent

Consent is said to be free when not caused by mistake, misrepresentation, undue influence, fraud, or coercion.

Learning Objectives

• Free Consent Defined• Coercion• Undue Influence• Transactions with Pardanashin Women• Undue Influence Distinguished from Coercion• Misrepresentation• Fraud• Does Silence Amount to Fraud?• Fraud Distinguished From Misrepresentation• Mistake

Free Consent DefinedThe term ‘consent’ indicates meeting of minds i.e., contracting parties understand the same thing in the same sense. As a general rule also no contract arises in the absence of consent. In English Law this is known as ‘consensus-ad-idem’ i.e., meeting of minds of the parties to a contract. Thus, consent involves identity of minds in respect of the subject matter of the contract. Consent is said to be free when it is not caused by coercion, undue influence; fraud; misrepresentation; mistake. (S 15)For maintaining the validity of a contract not only consent is necessary but it must be a free consent altogether.

Flaws in Consent and Their Effect on Validity of the Contract

Coercion (Voidable)

Undue Influence (Voidable)

Fraud (Voidable)

Misrepresentation

(Voidable)

Mistake (Void)

CoercionCoercion means forcing or compelling (physically or mentally) a person to enter into a contract. The consent to an agreement is said to be caused by coercion when it is obtained by use of force or under a threat.Legal Definition‘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 any agreement. (S 15)The fundamental object of causing coercion is to induce or compel a person to enter into a contract.ExampleA on board an English ship on the high seas, induces B to enter into an agreement by an act amounting to criminal intimidation under the IPC. A afterwards sues B for breach of contract at Kolkata. A has employed coercion.

• What amounts to Inducing Coercion• The analysis of the definition of ‘coercion’ given under

Section 15 shows that the following four actions would amount to inducing coercion in the eyes of law:

• Committing any act forbidden by the Indian Penal Code• Threatening to commit any act forbidden by the IPC• Unlawful detaining of any property• Threatening to detain any property This is an A level

header • TS this is B level head

What amounts to Inducing Coercion?

The analysis of the legal definition of ‘coercion’ shows that the following four actions would amount to inducing coercion:

• Committing any act forbidden by IPC• Threatening to commit any act forbidden by the

IPC• Unlawful detaining of any property• Threatening to detain any property

Acts outside the Purview of Coercion

Often a doubt arises on the types of actions that would amount to coercion. Does mere warning or threat to filing suits also come under the ambit of forcing a person into a contract?No. Following are the actions that are not deemed as coercion in their legal interpretation.

• Threat to File a Suit. A doubt often arises whether a threat to file a suit amounts to coercion or not. In this relation it must be noted that a threat of civil or criminal prosecution does not constitute coercion since the same is not an act forbidden by the Indian Penal Code. However, a threat to file a suit on false charge is forbidden by the Indian Penal Code and, therefore, amounts to coercion.

• Threat to Commit Suicide. A ‘suicide’ and a ‘threat to commit suicide’ are not punishable under the IPC. An attempt and abetment to suicide are, however, offence under IPC and, therefore, punishable under it. Now the question arises if a person obtains the consent of the other by threatening to commit suicide, would this amount to coercion or not? Such consent is also said to be caused by coercion.

Effect of Coercion and Burden of Proof

• The ultimate effect of coercion is that it renders the contract voidable at the option of the (aggrieved) party whose consent was so obtained.

• When the consent to an agreement is caused by coercion, the agreement is a contract voidable at the option of the party whose consent was so caused.

(S 19)• In other words, the party whose consent is obtained by coercion can put an

end to the contract, if he so chooses.However, if the aggrieved party decides to avoid the contract, he has to restore any benefit received by him under the contract, to the other party from whom it had been received. (S 64)Burden of ProofThe burden of proof that the consent was caused by coercion indeed lies on the party who wants to rescind the contract on the ground of coercion. Thus, it is for the aggrieved party to prove that its consent was not free.

Undue InfluenceThe term ‘undue’ means excessive or beyond what is expected or required while the term ‘influence’ refers a person’s indirect power over other people, events or things. Hence, when a person makes excessive or improper use of his power over another person and obtains his consent, the former is said to have used undue influence. ‘A contract is said to be induced by ‘undue influence’ where the relations subsisting between the parties are such that one of the parties was in a position to dominate the will of the other and used that position to obtain an unfair advantage over the other.’ [S 16(i)]Prerequisites of Undue InfluenceThe above definition highlights the following two essential elements of ‘undue influence’.

• The relationship between the parties is such that one of them is in a dominant position, and

• The dominant party uses his position to obtain an unfair advantage over the weaker party.For an undue influence to occur, both the above mentioned factors should be concurrently present. The presence of one without the other will not make for invalidation of consent on the ground of undue influence.

Presumption of Domination of Will

From the definition given under Section 16 (i) it is clear that to exercise undue influence it is necessary to prove that one of the contracting parties was in a position to dominate the will of the other. As per Section 16(ii) a person is deemed to be in a position to dominate the will of another in the following circumstances:

• Where he holds a real or apparent authority over the other. Instances of such relations are relations between father and son, master and servant, police officer and culprit, etc.

• Where he stands in a fiduciary relationship to the other. Fiduciary relationship refers to relationship based on trust and confidence. Bond of trust and confidence presents a very good opportunity to the person in whom confidence is placed to exploit it for his own benefits. Instances of this category of affairs are relations between:

Doctor and patient Trustee and beneficiary Solicitor and client Spiritual advisor (guru) and his devotee Woman and her confidential managing agent Parent or guardian and child

Presumption of Domination of Will

• Where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, mental or physical distress. It is a common observation that a ‘person in mental distress’ can be easily persuaded to give consent to a contract, which may be unfavourable to him. Accordingly, if a contract is made with him by taking advantage of his distress, it is voidable on the ground of undue influence. Hence, the law gives protection to such persons.

Effect of Undue Influence

• The effect of undue influence is that it renders a contract voidable at the option of the aggrieved party. Thus, if the consent of a party is induced by undue influence, the party can put an end to the contract if it so chooses. Section 19A substantiates the above effect of undue influence as under.

• When consent to an agreement is caused by undue influence, 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 benefits there under, upon such terms and conditions as the Court may seem just.

Transactions With Pardanashin Women

The expression pardanashin implies complete seclusion; the state of being private and away from other people. Thus, a pardanashin woman is one who observes complete isolation from people other than her family members due to custom of her community. It may, however, be noted that a woman does not become pardanashin simply because ‘she lives in some degree of seclusion’. The concept legally means a woman who is totally “secluded from ordinary social intercourse”.

• Accordingly, a woman who goes to a court and gives evidence, who fixes rents with tenants and collects rents, who communicates when necessary in matters of business, with men other than members of her own family, would not be regarded as pardanashin woman [Ismail Mustafa vs Hafiz Boo].

• The law grants a special protection to such pardanashin women on the ground of their being ignorant so far as the worldly knowledge goes [Kalibaksh Singh vs Ram Gopal Singh]. A contract with a pardanashin woman is presumed to have been induced by undue influence.

Transactions With Pardanashin Women

A pardanashin woman can avoid the contract unless the other party can prove that she freely consented to the contract. The principles to be applied to transactions with pardanashin woman are founded on equity and good conscience and accordingly, a person who contracts with a pardanashin woman has to prove the following points.

• the terms of the contract were fully explained to her • she understood the implications of the contract • she had free and independent advice and • it was an intelligent and voluntary act based on her

intelligence.

Undue Influence Distinguished From Coercion

S. No.

Point of difference

Coercion (force) Undue Influence

1.Mode of

Operation

It involves the physical force

or threat.

It involves moral or mental

pressure.

2.Relationship

between the

parties

Existence of relationship

between the parties is

immaterial.

Some kind of relationship

between the parties is absolutely

necessary.

3.Nature of act Coercion encompasses

committing or threatening to

commit an act forbidden by

IPC or detaining or

threatening to detain any

property of another person.

Committing or threatening to

commit any illegal act is not the

subject matter of undue

influence.

Undue Influence Distinguished From Coercion

4.Presumption

by law

The law under no

circumstances presumes the

use of coercion. 

Law in certain types of

relationships can presume

undue influence e.g., in case of

a contract with a pardanashin

woman.

5.Rights

available

The contract is voidable at the

option of the party whose

consent has been obtained by

coercion. But any benefit

received by the aggrieved party

has to be restored to the other

party under Section 64.

In case of undue influence, the

Court has the discretion to

direct the aggrieved party to

return the benefit in whole or in

part, or rescind the contract

without any such direction.

Undue Influence Distinguished From Coercion

6.Nature of liability Coercion not only

renders the contract

voidable (at the option

of the aggrieved party),

the party exercising it

exposes itself to

criminal liabilities too.

Undue influence involves no

criminal liability except an

action on the contract.

7. Third partyCoercion may proceed

from even a stranger.

It is always employed by one

contracting party upon the

other.

MISREPRESENTATION

Misrepresentation refers to a misstatement of fact made by one party to the other, which, whilst not being a term of contract, induces the other party to enter the contract. A contract, the consent to which is induced by misrepresentation, is voidable, i.e., valid until avoided.According to Section 18 'Misrepresentation' means and includes-

• 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;

• Any breach of duty which without an intent to deceive, gains an advantage of the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him;

• Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing, which is subject of the agreement.

Essentials of Misrepresentation

• There should be a representation or assertion, made innocently, believing it to be true and without an intent to deceive the other party.

• The representation or assertion should be of facts material to the agreement. A mere expression of opinion or hearsay, or commendation (i.e., reasonable praise) cannot be regarded as misstatement of facts even if the same turn out to be untrue.

• The statement must be untrue or turned out to be untrue but was made with an honest belief in its truth.

• The person to whom the misrepresentation was made must have relied on it in the sense that it must have induced him to enter in to the contract.

• A party cannot complain of misrepresentation if ‘he had the means of discovering the truth with ordinary diligence’ .

Classification of Misrepresentations• The above provision classifies acts of misrepresentation into the following three groups.• Unwarranted Statements of Material Facts• Where a person makes a positive statement of material facts not warranted by his

information say without any reasonable ground, believing it to be true though it is not true, such act amounts to misrepresentation [Section 18 (1)]. For example, A, while selling his to B tells him that his scooter runs 40 kmpl. B honestly believes the statement to be true though A did not have any basis for his claim. Later it is transpired that the mileage is just 30 kmpl. The statement made by A is misrepresentation.

• Breach of Duty which brings Advantage to the Person Committing it• When a person commits a breach of duty which, without an intent to deceive, brings an

advantage to him or anyone under him by misleading another to his prejudice or to the prejudice of anyone claiming under him it amounts to misrepresentation. [S18 (2)]

• The above provision presupposes:• That the representor owes a duty to the representee in respect of the statement;• That the representor makes a statement innocent or negligent;• That the representee is misled to his prejudice; and• That the representor derives some benefit and causes loss to the other party.

Breach of duty is also there where a party legally bound to disclose certain information does not do so. Misrepresentation may arise from concealment or suppression of such information.

• Inducing Mistake about Subject matterInducing mistake about the subject matter of the agreement innocently constitutes yet another form of misrepresentation. If one of the contracting parties leads the other, however innocently, to commit a mistake as to the nature or quality of the subject matter, there is misrepresentation. The cases of concealment or suppression of vital information may also fall under this group. This is so because the concealment or suppression of material facts by one party may induce other party to commit a mistake about the subject matter of the agreement.

Illustrations of Misrepresentation

Example 1The directors of a company, while acting within their authority, discounted on the company's behalf a bill of exchange with a bank. On due date the bank failed to realize the amount of the bill. The company denied liability on the bill. It was held that the bank was entitled to recover the amount of the bill from the company.Example 2In the negotiations for a marriage contract, the relatives speaking for the girl failed to disclose that she was suffering from epilepsy. The engagement was held to be voidable on the ground of misrepresentation of a very material fact having been concealed [Haji Ahmad Yar Khan vs Abdul Gani Khan].

Effect of MisrepresentationIf a contract is induced by misrepresentation, the aggrieved party has the following two alternate rights:

• It may rescind the contract, or• It may continue with the contract• When party rescinds the contract

The aggrieved party can avoid a contract on the ground of misrepresentation. However, this right is not available to it in the following two cases:– Where it (aggrieved party) had the means of discovering the truth with

ordinary diligence (as per exception to Section 19)For example: A, by misrepresentation leads B erroneously to believe that five hundred tons of sugar is produced annually at A's factory. B examines the accounts of the factory, which should have disclosed, if ordinary diligence had been exercised by B, that only 300 tons of sugar had been produced. After this B buys the factory. The contract cannot be repudiated on account of A's misrepresentation.

Effect of Misrepresentation

• Where he is not, in fact, misled by the misrepresentation [as per explanation to Section 19]. For example, A person bought shares in a company on the faith of its prospectus, which contained an untrue statement that one Grieve was a director of the company. The representee’s claim to set aside the contract and for damages was dismissed: the statement was "immaterial" as the representee had never heard of Grieve.

• He may act upon the contractThe aggrieved party, if it deems fit, may choose to act upon the contract and may insist that it be put in the same position in which he would have been, if the representation made had been true. For example, A, while selling his Cyber café that contains 20 computers to B, describes that all the computers are in working condition. A personally believes this. Later on, B finds that two of the computers are not functional. In the circumstance B may either avoid the contract, or may insist on its being carried out after A agrees to get the non-functional computers repaired.

Damages for Misrepresentation

Misrepresentation generally does not entitle the aggrieved party to claim damages. However, damages can be claimed in case of misrepresentation, in the following cases:

• Where the prospectus of a company inviting the public to subscribe for shares in the company contains a misstatement about a material fact, and someone relying on the prospectus subscribes shares and thereby suffers losses, he (the injured party) can claim damages from the promoters or directors of the company.

• Where an agent commits a breach of warranty of authority, he exposes himself to pay damages to the injured party.

• Where the relationship between the parties is that of a confidential nature (e.g., relationship between a doctor and patient) and one party suffers loss due to misrepresentation made by another party, the former can claim damages from the latter caused by such misrepresentation.

Burden of Proof

To avoid a contract on the ground of misrepresentation, the representee needs only to explain that the misrepresentation was made and that it was capable of inducing the contract. The burden then passes to the representor to prove that the representee would have entered into the contract anyway, even if the misrepresentation had not been made.

FRAUDFraud indicates willful misrepresentation. Legal Definition of Fraud'Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract.

• The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

• The active concealment of a fact by one having knowledge or belief of the fact;

• A promise made without any intention of performing it;• Any other act fitted to deceive; and• Any such act or omission as the law specially declares to be fraudulent.

(S 17)

Essential Elements of Fraud

The analysis of the legal definition makes it evident that the following elements must be present in the act in order to constitute it fraud:

• False and willful representation or assertion• executor of Representation: Party to the contract or a stranger• Intention to Deceive• Representation Must Relate to a Fact• Active Concealment of Facts• Promise Made Without Intention of performing it• Representation must have Actually Deceived the other Party• Any Other Act Fitted to Deceive• Any such act or omission that the law specially declares as void• The Party Misled must have suffered some Loss

Does Silence Amount to Fraud?

A person normally cannot be held liable for fraud when he simply observes silence over certain material facts relating to the subject matter of the contract. The explanation to Section 17 provides: Mere silence as to facts likely to affect the willingness of a person to enter in to a contract is not fraud, unless

• The circumstances of the case are such that, it is the duty of the person keeping silence to speak; or

• Silence, is, in itself, equivalent to speech.Hence ordinarily, mere silence is no fraud, even if its result is to conceal facts likely to affect the willingness of a person to enter a contract. The analysis of the explanation to Section 17 (mentioned above), shows that silence also amounts to fraud in the following two cases

• Where it is the duty of the person keeping quiet to speak, and • Where the silence is equivalent to speech

Where 'it is the duty of the person keeping silence to speak'

Duty to speak arises in contracts of uberrimae fidei i.e., utmost good faith. • These are contracts in which the law imposes a special duty to disclose all material facts. Failure to

disclose such facts will amount to fraud and render the contract voidable at the option of the injured party. Examples of contracts uberrimae fidei are:

• Contracts of insurance. In all contracts of insurance, it is the duty of the assured to disclose to the insurer all material facts concerning the risks to be undertaken. If an assured misstates or conceals material facts (e.g., prolong illness etc.) it will render the contract voidable at the option of the insurer.

• Contracts of family settlements. Where members of a joint family make agreements for the settlement of family property, each member of the family must make full disclosure of every material fact within his or her knowledge.

• Fiduciary relationship. Duty to reveal truth also arises where one contracting party reposes trust and confidence in the other. A, father, for example, while selling a horse to his son who has just come of age, must tell him if the horse is unsound, for the son is likely to rely upon his father. The relationships between a guardian and ward, trustee and beneficiary, and solicitor and client, etc. fall under this category.

• Contract of share allotment. Where a company invites the public to subscribe for its shares, the promoters and directors are under statutory obligation to disclose all material information regarding the company.

• Others . Full disclosure of material facts must also be made in contracts of marriage engagement, sale of immovable property, guarantee, etc.

Where Silence is Equivalent to Speech

The silence of a person is equivalent to speech when he keeps silent irrespective of an enquiry made by the other person in a positive manner. The person so maintaining silence is no less guilty of fraud. For example, A sells a TV set to B for a price. The set apparently seems to be faultless. Even then B says to A, ’If you don't deny it, I shall assume that the TV set is not defective.’ A keeps mum. Here A's silence is equivalent to speech. And if B subsequently discovers any latent defect in the set, it amounts to fraud.

Consequences of Fraud

When consent to a contract is induced by fraud, the aggrieved party usually has the following remedies:

• He can rescind the contract by filing a suit in a court of law and prove the fraud. [S 19]

• He may, if thinks fit, insist that the contract be performed, and that he be put in the position in which he would have been if the representation made had been true [S 19].Example: A fraudulently informs B that A's estate is free from burden. B thereupon buys the estate. The estate is subject to a mortgage. B may either avoid the contract, or may insist on it being carried out and the mortgage debt redeemed. [Illustration (c) to S 19].

• The party defrauded can also claim damages for the loss sustained by him if it is capable of assessment. Fraud is a civil wrong, hence compensation is payable.

Fraud Distinguished From Misrepresentation

Fraud and misrepresentation have many points in common. For instance in both the cases, (i) consent of one of the parties is not free; (ii) there is a false representation of facts; (iii) contract is voidable at the option of the aggrieved party etc.Yet the two differ in a number of respects. The following Table summarizes their points of difference.

Fraud Distinguished From MisrepresentationS. No.

Point of Difference

Fraud Misrepresentation

1.Nature of act Fraud is  an intentional wrong.

The person making the false

representation does not

believe it to be true.

Misrepresentation is an innocent

wrong. The person behind the

false representation believes it to

be true.

2.Intention to

Deceive

There is intention to deceive

the other (contracting) party.

There is no such intention.

3.Silence In some cases silence may

amount to fraud e.g., in the

cases of contracts requiring

utmost good faith.

Silence can never be construed as

an act of misrepresentation.

Fraud Distinguished From Misrepresentation

4.Remedies

available

The party defrauded can

rescind (i.e., cancel) the

contract. Moreover, a person

who suffers loss as a result of

fraud can recover damages.

Misrepresentation merely

entitles the aggrieved party

to rescind the contract.

Damage cannot be claimed

under misrepresentation.

5.Defence

available

Excepting fraud by silence, the

defendant (the person

committing fraud) cannot take

the plea that the aggrieved party

had "the means of discovering

the truth with ordinary diligence".

A person accused of

misrepresentation can be met

with the defence that the

misrepresentee had the "means

of discovering the truth with

ordinary diligence".

LOSING RIGHT TO RESCIND A CONTRACT INDUCED BY COERCION, UNDUE INFLUENCE, FRAUD, MISREPRESENTATION

We have seen that a contract induced by coercion, undue influence, misrepresentation, or fraud is voidable at the option of the party whose consent was so caused. However, an aggrieved party loses this right in the following circumstances:

• Where the aggrieved party after becoming aware of his right of rescission:-– Expressly affirms the contract; or– Acts in such a manner which shows that he has accepted it; or– Takes a benefit under the said contract• Where the parties cannot be restored to their original position e.g., where

the subject matter of the contract has been destroyed or consumed.• Where the aggrieved party fails to exercise its right to rescind the contract

promptly i.e., within a reasonable time.• Where before the contract is rescinded, the third party acquires some right

in the subject matter of the contract of bona fide value.

MISTAKE

• The term 'mistake' literally means incorrect, or wrong idea or opinion about something caused by lack of attention, skill, or knowledge etc.

• In context of the law of contracts, it may be defined as the erroneous belief or misunderstanding in the minds of the contracting parties concerning the law or facts about the contract.

• Mistake usually, takes place when the concerned parties are not well acquainted with the terms or subject matter of the agreement, and they take the terms in a different sense.

• An agreement made under a mistake is not valid for there is no consent.

Types of Mistake

The mistakes in relation to contracts may be of two types, namely:

• Mistake of Law • Mistake of Fact

Mistake of Law may be further classified into:Mistake of Law of Country; andMistake of Foreign Law

Similarly, Mistake of Fact may be classified as:Bilateral Mistake; andUnilateral Mistake

Mistake of Law

A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact. (S 21)

Accordingly, mistake of law as stated earlier, may be (a) mistake of law of country, or (b) mistake of foreign law.

• Mistake of Law of the Country As per Section 21, if there is a mistake of law of the country, the contract is binding. It is because everyone is deemed to have knowledge of law of the country and there will be no excuse if he ignores the national law (Ignorantia juris non-excusat). Thus, a mistake of Indian law will not invalidate the contract.For example, A and B make a contract grounded on the erroneous belief that a particular debt is time barred by the Indian Law of limitations. The contract is valid and not voidable.

• Mistake of Foreign Law A person while entering into a contract with a foreigner should refer to the law of that country. However, in this case the maxim “ignorance of law is no excuse” does not apply; the mistake of foreign law is treated as a mistake of fact. Accordingly, mistake of foreign law renders the contract void.

Mistake of Fact

Mistake of fact arises when the parties enter in to a contract without understanding the terms and conditions of the contract properly. It may occur either on the part of either party or both the parties. Accordingly, mistake of facts may be classified further as (a) Bilateral Mistake; or (b) Unilateral mistake

• Bilateral Mistake Where both the contracting parties are under a mistake of fact material to the formation of the contract, it is called a bilateral mistake of fact. In such a situation there is no agreement at all, there being complete absence of consent. Bilateral mistake of material facts renders an agreement void ab initio.Section 20 provides, ‘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.’ Thus, for declaring an agreement void under this Section, the following three conditions must be satisfied:

• Both the parties must be mistaken. Here parties to the agreement assume that a certain state of things exist which does not actually exist, or in their utter ignorance, the agreement means one thing to one and a different to the other, and they enter into the contract subject to the assumption or under that ignorance. For example: A having two sets of air conditioners, one imported and another domestic, offers to sell the domestic one to B. B not knowing that A has two air conditioners, thinks of the imported one and agrees to buy it. In this case, there is no consent whatsoever and hence the agreement is void.

Mistake of Fact

• Mistake must be of Fact . As per Explanation to Section 20, ‘An erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.’ For example A buys a second hand TV set from B believing it to be worth Rs 5,000 and pays Rs 5,000 for it. While in fact it was only worth Rs 2,000. The contract remains valid. A cannot blame B for charging exorbitant price for the goods. In fact, he himself is responsible for ignoring the true value of the TV set and the contract cannot be avoided on the ground of mistake.

• The fact about which the parties are mistaken must be essential to the agreement. The fact to which mistake relates must be essential for the formation of the contract. In express words, mistake of only such facts renders the agreement void that goes to the very root of the agreement. For example, A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void. [Illustration (b) to Section 20].