Presenter:

Iqra Nawaz

(12.Arid.1427)

Arid Agriculture Pakistan

Plan of Presentation

Free consent, coercion (meaning , effects & burden of

proof )

Undue influence (meaning , presumption, burden of

proof, effects) & case study of pardahnashi lady.

Fraud (forms, essentials, silence to fraud, exception,

effects, & its burden of proof)

Misrepresentation (meaning, form, essential, effects,

burden of proof) Contract of utmost good faith & loss of

right of cancellation.

Mistake (meaning & types) brought to you.

Free Consent

Free Consent

A contract without free consent is voidable contract.

Flaw in consent

(Sec 14)

Coercion

(sec15)

Undue

influence

(sec 16)

Misrepresen-

tation

(sec 17,18)

Mistake

(sec 20,21)

Fraudulent or willful

(sec 17)

Innocent or

Unintentional

(sec 18)

Mistake of fact

(sec 20)

Mistake of law

(sec 21)

Case:

An illiterate women executed a deed

of gift in favor of her nephew under the

impression that she was executing a

deed authorizing her nephew to

manage her lands. The evidence

showed that the woman never

intended to execute such a deed of

gift, nor was the deed ever read or

explained to her.

Held the deed was void and

inoperative.

Meaning Of Consent

According to Section 14 two or more

persons are said to consent when they

agree upon the same thing in the same

sense.

This means that there should be perfect

identity of mind regarding the subject matter

of the contract.

Free Consent To make a contract valid not only consent is

necessary but the consent should also be

free.

Section 14 says the consent is said to be

free when it is not caused by any of the

following :

(a) Coercion (sec 15)

(b) Undue influence [sec 16, (1 & 2)]

(c) Fraud (sec 17)

(d) Misrepresentation (sec 18)

(e) Mistake (sec 20,21)

Coercion

Coercion is committing or threatening

to commit any act forbidden by the

Pakistani Penal Code , or the unlawful

detaining or threatening to detain any

property to the prejudice of any

person, whatsoever with the intention

of causing any person to enter into an

agreement.

An example of Coercion

Is Threat To Commit?

Person commits or threatens to commit any

act which is forbidden by the Pakistan penal

code to compel the other party to enter into

a contract, it is a contract made under

coercion.

Example: W threatens to shoot M, if he

does not give his house on rent. M agrees.

The consent of M is obtained by coercion

Threat to Detain Property If a person unlawfully

detains or threaten to

detain the property of

another person to

compel him to enter

into an agreement, the

agreement is voidable

at the option of

aggrieved party.

Example: The govt

threatened to seize to

property of A to

recover fine due from

is son B. A paid to fine

. It was held that fine

was recovered by

coercion.

Threats to the Third Party Threats may be given to third persons who

are near relatives of the person making the

contract, coercion need not be used only by

the contracting party; it can be used by any

person related to the party.

Example: C threaten to kidnap B’s son if he

does not give him Rs. 2 lac. B agrees. The

agreement is made by coercion.

Enforcement of Pakistan Penal

Code

PPC , 1860 is

enforced or not at

the place where

the coercion is

employed if suit is

field in Pakistan

provisions of PPC

will apply.

Effect of Coercion (sec 19, 64, &

72)

The contract is voidable at the option of the party

,whose consent is so obtained by Coercion

When aggrieved party decides to cancel the

contract , he must return the benefit received from

the other party.

The other party to whom money was paid or

anything delivered under Coercion must repay or

return it.

If aggrieved party does not decide to cancel the

contract, it remains a valid contract.

Undue Influence [sec 16 (1 & 2)]

A contract is said to be induced by undue influence where the relations subsisting b/w the parties are such that one of the parties is in position to dominate the will of other and uses the position to obtain an unfair advantageover the other.

Undue influence

Undue influence 16 (1)

Position to dominate:

In order to prove undue influence b/w the parties one

of them must be in a position to dominate the will of

other party. The person in a superior position may

obtain a consent of other party.

Unfair advantage:

in order to prove undue influence is necessary

that the party who is in dominating position must

have used his position to obtain an unfair

advantage from the other party.

Undue influence sec16 (2)

The person who can dominate:

Real or Apparent Authority.

Fiduciary relation.

Mental distress.

Presumption of undue influence

Doctor and patient

Lawyer and client

Guardian and ward

Trustee and beneficiary

Teacher and student

Burden of proof:

In this case burden of proof lies on the

dominating persons

No presumption of undue

influence Husband and wife

Landlord and tenant

Creditor and debtor

Principle and agent

Mother and daughter

Burden of proof:

In this case burden of proof lies on the

weaker party.

Contract with Pardahnashin

Lady

Pardahnashin lady (observe complete

pardah and does not contact with

people other the her family)

Burden of proof:

In this case burden of proof lies on the

other party to prove that no undue

influence was applied by him.

Fraud

Meaning of fraud (Sec. 17)

Fraud may be defined as an intentional

or willful misstatement of facts which

are necessary for formation of the

contract.

Definition under law (sec 17)

Fraud means and includes any of the following acts committing by a party to a contract, or with his connivance, or by his agent with intent to deceive another party there to or his agent, or to induce him , to enter in to the contact:

A suggestion as to fact of that which is not true by one who does not believe it to be true.

An active concealment of a fact by one having knowledge or belief of the fact.

Any other act fitted to deceive. A promise made without any intention of

performing it. Any such act or omission as the law secially

declares to be fraudulent.

Forms of fraud

1. False statement

2. Active

concealment

3. Intentional non-

performance

4. Intention or

deceive

5. Act or omission

Essentials of fraud The false statement or act made by the party must be

false.

The false statement or act was made to induce the

other party to contract.

The statement or act was made to induce the other

party to contract.

The statement or act was made with the knowledge of

it being false.

The false statement or act was made before formation

of the contract.

The aggrieved part must have relied upon the false

statement or act.

The fraud must be committed by a party to the contract

or his agent

The aggrieved party was deceived by the fraud.

The aggrieved party must have suffered a loss.

Silence as to fraud

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,

regard being had to

them, it is the duty of the

Person keeping silence

to speak, Or unless his

silence is, in it self,

equivalent to speech.Concealment by mere silence is not fraud

Exception to “Silence as to fraud”

Duty to speak

Silence is equivalent to speech

Effect of Fraud

He can cancel the contract.

He can accept the contract and ask for its

performance.

He can avoid the performance of the contract.

He can demand his to be restore where it existed

before the fraud.

He can sue for damages.

If silence amount to fraud, aggrieved party cannot

cancel the contract if he could discover the truth

with ordinary diligence.

If fraud does not induce aggrieved party to enter in

to contract is not voidable.

Burden of proof

The Burden of proof that fraud was

committed lies on the party who want

to set aside the contract on basis of

fraud.

Misrepresentation

Misrepresentation (SEC18)

The term misrepresentation means false

representation of a fact made innocently or

non-disclosure of material fact without any

intention to deceive the other party.

According to Section 18, misrepresentation

means and includes:

The position assertion.

Any breach of duty.

Causing, however, innocently.

Forms of Misrepresentation

Positive Assertion.

The positive assertion means an absolute, full and

clear statement of a fact. There is misrepresentation

when a person makes a clear statement of facts about

the contract without any reasonable justification,

believing it to be true though it is not true.

Inducing Mistake.

The subject matter of every agreement must clearly

be understood by all the parties to the contract. If one

party induces the other party, though innocently, to

commit a mistake regarding the nature or quality of

subject matter of the agreement, it is considered as

misrepresentation.

Forms of Misrepresentation

Breach of Duty:

A breach of duty which gives an advantage to the

person committing it and causes loss to the other party

is a form of misrepresentation. If it is committed without

intention to deceive the other party. Where one party is

under legal obligation to disclose all material facts to the

other party but the concerned party does not disclose it.

Inducing mistake:The subject matter of every agreement must clearly be

understood by all the parties to the contract. If one party

induces the other party, though innocently, to commit a

mistake regarding the nature or quality of subject matter

of the agreement, it is considered as misrepresentation.

Essentials of

Misrepresentation It must be made innocently and person making it

honestly believes it to be true.

It must relate to the fact essential to the contract. Mere

expression of opinion is not misrepresentation.

The statement made must be true.

It must induce the other party to enter into a contract.

It must be made without any desire to deceive the other

party.

The other party must suffer a lose

The other party cannot discover the truth by ordinary

diligence.

Effects of Misrepresentation

He can rescind the contract.

He can accept the contract and ask the other party for

restoration

Aggrieved party loses the right: If consent was given with the knowledge of

misrepresentation

If third party acquired rights in the subject matter of the

contract in good faith and for value.

If aggrieved party could discover the truth with ordinary

diligence

Burden of Proof

The burden of proof that

misrepresentation was used lies on

the party who wants to set aside the

contract on ground of

misrepresentation.

Contracts of utmost good faith

Fiduciary relationship

Contract of insurance

Contract of purchase of shares

Contract of sale of land

Contract of partnership

Contract of guarantee

Contract of marriage engagement

Contract of family settlements

Loss of right of cancellation

Affirmation

Restitution not possible

Lapse of time

Rights of third party

Mistake

Defined as incorrect belief which leads

one party to misunderstand the other.

Types of Mistake

Mistake of fact:

◦ Bilateral mistake

◦ Unilateral mistake

Mistake of law:

◦ Mistake of Pakistani law

◦ Mistake of foreign law

Mistake of fact

Bilateral Mistake◦ Existence of Subject

matter

◦ Identity of Subject Matter

◦ Ownership of Subject

matter

◦ Quantity of subject

matter

◦ Quality of subject matter

◦ Possibility of

performance

Unilateral mistake

◦ Valid contract

◦ Voidable contract

◦ Void agreement

Identity of party

Nature of contract