BUSINESS LAW ASSIGNMENT FREE CONSENT SUBMITTED BY: CONTENT 1 SR.NO TOPIC PAGE NO 1 INTRODUCTION 3-4 2 FREE CONSENT 5-13 3 CONCLUSION 14 4 BIBLIOGRAPHY 15 5 END NOTE 16 2 LAW Is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people. Law is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people. Contract law regulates everything from buying a bus ticket to trading on derivatives markets. Property law defines rights and obligations related to the transfer and title of personal (often referred to as chattel) and real property. Trust law applies to assets held for investment and financial security, while tort law allows claims for compensation if a person's rights or property are harmed. If the harm is criminalized in a statute, criminal law offers means by which the state can prosecute the perpetrator. Constitutional law provides a framework for the creation of law, the protection of human rights and the election of political representatives. Administrative law is used to review the decisions of government agencies, while international law governs affairs between sovereign nation states in activities ranging from trade to environmental regulation or military action. Writing in 350 BC, the Greek philosopher Aristotle declared, "The rule of law is better than the rule of any individual." Legal systems elaborate rights and responsibilities in a variety of ways. A general distinction can be made between civil law jurisdictions, which codify their laws, and common law systems, where judge made law is not consolidated. In some countries, religion informs the law. Law provides a rich source of scholarly inquiry, into legal history, philosophy, economic analysis or sociology. Law also raises important and complex issues concerning equality, fairness and justice. In a typical democracy, the central institutions for interpreting and creating law are the three main branches of government, namely an impartial judiciary, a democratic legislature, and an accountable executive. To implement and enforce the law and provide services to the public, a government's bureaucracy, the military and police are vital. While all these organs of the state are creatures created and bound by law, an independent legal profession and a vibrant civil society inform and support their progress. 3 Business law (commercial law, merchantile law) It deals with the rights and obligations of commercial persons and organizations emerging from commercial transactions in respect of commercial property. Every business organization whether a proprietary concern or a partnership firm or a company has to work in a legal environment. It is subject to the business laws in force. Eg: Contract Act, Partnership Act, Sale of goods Act, Companies Act, Negotiable Instruments Act, Competition Act, FEMA, Patents, Designs, Trade Marks, Copyright Laws, Tax Laws, etc Commercial law (sometimes known as business law) is the body of law that governs business and commercial transactions. It is often considered to be a branch of civil law and deals with issues of both private law and public law. Commercial law includes within its compass such titles as agreements, contracts, principal and agent; carriage by land and sea; merchant shipping; guarantee; marine, fire, life, and accident insurance; bills of exchange and partnership. It can also be understood to regulate corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Many countries have adopted civil codes that contain comprehensive statements of their commercial law. 4 FREE COSENT Consent means to agree to something. Free consent means to agree without coercion without being forced or threatened. It is essential to the creation of a contract that both parties agree to the same thing in the same sense. When two or more persons agree upon same thing , they are said to consent. Example:- 1) A agrees to sell his Fiat car 1983 model for rupees 80000. B agrees to buy the same .there is a valid contract since A and B have consented to the same subject matter. 2) A, who owns three Fiat cars, offers to sell one, say “car x”, to B for rupees 90000 . B agrees to buy the car for price thinking that A is selling “car Y”. There is no consent and hence no contract . A and B have agreed not to the same thing but to different things. WHEN IS CONSENT SAID TO BE FREE? For consent to be free, you must be old enough to consent. The age of consent varies according to country, state, and type of contract. Second, in order for consent to be free, you must not be coerced, or forced. And you must not be drunk or drugged or otherwise in a state of body or mind which affects your decision-making ability. According to INDIAN CONTRACT ACT, free consent is said to be free when it is not caused by 1) Coercion, as defined in section 15 2) Undue influence, as defined in section 16 3) Fraud , as defined in section 17 4) Misrepresentation, as defined in section 18 5) Mistake, subject to provisions of section 20, 21, 22 5 Coercion(Section 15) Coercion is i) The commiting or threatening to commit any act forbidden by Indian Penal Code ii) 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 Example:- 1) A hindu widow is forced to adopt X under threat that her husband‟s corpse(dead body) would not be allowed to be removed unless she adopts X.The adoption is voidable as having been induced by coercion. 2) A threatens to kill B if he doesn‟t transfer his house in A‟s favour for a very low price. The agreement is voidable for being the result of coercion. NOTE- it is not necessary that coercion must have been excercised agains the promisor only, it may be directed at any person. Example:- 1. A threatens to kill B(c‟s son)if C doesnot let out of his house to A. the agreement is caused by coercion. Threat to commit suicide-is it coercion- The doubt arises because suicide though forbidden by Indian Penal Code is for obvious reasons not punishable.A dead person cannot be punished. But, since the section 15 declares that commiting or threatening to commit any act is forbidden by Indian Penal Code is coercion. CONSEQUENCES OF COERCION(SECTION 19) When cosent of an agreement is caused by coercion, the agreement is a contract voidable at the option of the party whose consent was so obtained. In other words the aggrieved party can have the contract set aside or if he so desires to insist on its performance by other party. 6 Examples of effect of coercion 1. Anuj executes a transfer bond for the house under fear of assault .it will be a contract voidable at the option of Anuj since his consent was obtained by coercion. 2. A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive. Undue Influence(Section 16) Undue influence is the improper use of any power possessed over the mind of the contracting party. According to section 16 a contract is said to be affected by undue influence when: The relations subsisting between the parties are such that one of the parties is in a position to dominate the will of other and uses that position to obtain an unfair advantage over the other. Following are the parties that can be affected by undue influence a) Doctor and patient b) Lawyer and client c) Guardian and ward d) Trustee and beneficiary e) Teacher and student Example:- 1) A having advanced money to his son B during his minority, upon B coming of age ,obtains, by misuse of parental influence,a bonds from B for greater amount than the sum due in respect of the advance A employs undue influence. 7 2) A man enfeebled by disease or age is induced by B‟s influence over him as his medical attendant to agree to pay B an unreasonable sum for his professional service.B employs undue influence. CONSEQUENCES OF UNDUE INFLUENCE(section 19-A) An agreement caused by undue influence is a contract voidable at the option of the party whose consent was obtained by undue influence. However, any such contract may be set aside either absolutely or if the party who was entitled to avoid it has received any benefit there under upon such terms and conditions as the court deems fit. Example:- A, a money lender advances Rs 100 to B, an agriculturist, and by undue influence, induces B to execute a bond for Rs 200 with interest at 6%/ month. The court may set the bond aside, ordering B to reply Rs 100 with such interest as may seem just. Fraud(Section 17) Misrepresentation of facts may be intentional or innocent. Intentional misrepresentation has been termed as Fraud and innocent misrepresentation has been termed simply as „misrepresentation‟ in the contract act. Definition under law section 17 According to section 17 fraud means and includes any of the following acts, Committed by a party to a contract or by any one with his connivance or by his agent with intent to deceive another party thereto or his agent or to induce him to enter into contract: (a) A suggestion as to fact of that which is not true by one who does not believe it to be true 8 (b) An active concealment of a fact by one having knowledge or belief of the fact.