THE INDIAN CONTRACT ACT 1872- Clause -14 to 22 Easy Explanation
CLAUSE 14- Free consent, CLAUSE 15 - Coercion , CLAUSE 16 - Undue influence
The three clauses can be inter-related and be explained in such a manner as, Firstly I will define what exactly is Consent? So, a consent is kind of taking permission or some approval to perform a work.
A Consent is termed as free in this clause, until by the time it has not been Coercion/Forced (Clause- 15) or the approval is not been taken under any kind of influence (Clause-16).
There are certain examples of taking the Permission under influence, Such as
(a) Ex 1 For a child under influence of him, parents give the money for variety of works.
(b) Ex-2 Patients come under influence of doctors and spend alot of money.
(c) Ex-3 Lawyer Charges more percentage of money from the client.
In a Broader perspective we can look it with an example such as, If a doctor is treating a patient who is mentally ill and without consent ,the doctor takes the thumb impression of the patient for some kind of money transaction. Now once that mentally ill person gets fully recovered, he can possibly file a case to the doctor of taking the money without his consent resulting in the arbitrator to check the fee of the doctor, the visits he made, related documents for the case and later come to a decision after considering everything that the action which was taken by the doctor was correct or not.
Clause 17 - Fraud, CLAUSE 18 - Misrepresentation
Fraud is something which is performed intentionally and Misrepresentation is something which is performed unintentionally.
We see this clause with an example-
Suppose a client ask for a item-base contract for 2000m3 , Contractor looks at the quantity and quotes Rs 4500 per m3. After Execution work the contractors find the work he performed was only 1000m3 . On that case if the contractor was prior informed with 1000m3 of work, he could have quoted higher amount for low quantity. In such a case it is not fraud by client side since he did not ask work is only 1000m3 , He just asked for the quotation for 2000m3 work and this can be considered as misrepresentation as contractor don’t have any proof that the client mentioned the work is exactly of the quantity he asked for. [ This was case from client side].
Now we talk about Contractor side,
Consider there is a item based project of estimated 11 crore, The contractor comes up with a bill of 5 crore irrespective of the fact he performed work for more, since the contractor was unable to manage the pour cards for the bill as a proof and came to such a low amount. In this case he can write a letter to the client of the misinterpretation and client should consider the plea.
CLAUSE 19- Voidability of agreements without free consent
It states that, If there is any misinterpretation in a contract and if the party which is a cause of misinterpretation is ready to negotiate the cause, Than it is a Valid contract.
Broadly it can be explained as - There is a Lump-sum contact, and we know that in a lump-sum contract there is no BOQ, But the client wants to make variations in the design of the project leading to misinterpretation of the terms of the Lump-sum guidelines. Here if the client is ready to pay for the variations he is going to do as per example on BOQ basis than it can be considered as a Valid Contract.
Exception Ordinary diligence from the contractor to discover truth.
Example -2 There is a factory which claims to produce 1000 liter of oil per day. Client checks the document and find out the company only produces 500 liter of oil per day. Still after knowing, the client agrees to the contract but after few days they start telling that they are cheated by the factory. This is not valid because the client already have verified everything before.
Hiding of work is considered as Fraud.
CLAUSE 19A - Power to set aside contract induced by undue influence
The Clause states that if the contract is signed under the influence or forcefully by certain party, than you are eligible to set the project aside elsewhere if you are getting any profit by doing the project than it can be done.
CLAUSE 20 - Agreements void where both parties are under mistake as to matter of fact
Mistakes which happen in a project
1) Bilateral - Mistakes done by both the parties.
2) Unilateral - Mistake done by one party only.
Example for Bilateral - Imagine It is asked from head office to use certain type of formwork which the contractor is not aware of the functionality nor the client project team is, If by chance any mistake happens than it is a Bilateral Mistake.
Case 2 - The client wants to buy Tiles from international market and give the consignment to a contractor and if not delivered on time than the contractor have to give liquidity damage, While the ship bringing the consignment sinks in the middle, and at the time the contract is getting signed without knowing the information of the ship, than it is termed as a Void contract and both the parties will have fault in it. As not aware of the things while signing the contract.
CLAUSE 21 - Effect of mistakes as to Law
The clause states that, A contract becomes void if some law which is not valid/enforceable in your country but is valid/enforceable in other country.
Example - Suppose you rent a property in two countries take it India & Singapore, They make a rental agreement in which giving house tax is not mentioned. Than there situations can come up as voidable or in voidable such as :-
(i) Since tax is not mentioned in contract, still you add and give it than it is a Case of Voidable (avoid).
(ii) IF the tax is mentioned on the agreement, than it is Not Void (valid) & is no mistake in giving.
CLAUSE 22 - Contract caused by mistake of one party as to matter of fact
The clause shows two type of Facts,
(i) Essential Fact - When a party not providing essential quality or specifications of the product. In this the contract can get Void.
(ii) Matter of Fact - Something which is associated to the project such as logistics etc.
Example - Consider cement is to be transported from Gujarat to Pune. For which the charges of transportation where applicable. Transporter first says 250 km for the distance between Gujarat to Pune , But later realizes that it is 300km. Cement was transported for three times and the transporter only realized it on the third time . He will be paid only for 250 km the first 2 times and for 300 km the third time . This change in amount won’t make the contract void/voidable.
CLAUSE 23 - What consideration and objects are lawful, and what not
Anything due to which there is harmful effect to the environment or the people of the society, Should be considered in a lawful act.
Example - 1. The earlier alignment of Bandra work sealink would impact fishing occupation of the fishermen in the surrounding area. So they had to change the design as it had environmental impact.
2. A nuclear power plant project which could cause injuries due to hazardous chemicals should be considered.
CLAUSE 24 - Agreements void, if considerations and objects unlawful in part
Example - When tobacco was banned in Maharastra, A brand making paan masala was banned. The workers wanted to use the premises of the manufacturing factory to make something else because tobacco was used only in one part of the factory. They were given permission.
A contract can be lawful if the unlawful activity is segregable and separable from the other activities. Else the entire contract is void.
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