Section 19 of Indian Contract Act
19. Voidability of agreements without free consent.— When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
A party to a contract whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Exception.— If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation.— A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
Illustrations
(a) A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B.
(b) A, by a misrepresentation, leads B erroneously to believe that, five hundred maunds of indigo are made annually at A’s factory. B examines the accounts of the factory, which show that only four hundred maunds of indigo have been made. After this B buys the factory. The contract is not voidable on account of A’s misrepresentation.
(c) A fraudulently informs B that A’s estate is free from in cumbrance. B thereupon buys the estate. The estate is subject to a mortgage. B may either avoid the contract, or may insist on its being carried out and the mortgage debt redeemed.
(d) B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the existence of the ore from A. Through A’s ignorance B is enabled to buy the estate at an under-value. The contract is voidable at the option of A.
(e) A is entitled to succeed to an estate at the death of B; B dies: C, having received intelligence of B’s death, prevents the intelligence reaching A, and thus induces A to sell him his interest in the estate. The sale is voidable at the option of A.
19A. Power to set aside contract induced by undue influence.— 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 benefit thereunder, upon such terms and conditions as to the Court may seem just.
Illustrations
(a) A’s son has forged B’s name to a promissory note. B under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside.
(b) 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 per cent. per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.
Final Thoughts
Introduction
The Indian Contract Act, 1872 governs contracts in India. For a contract to be valid, one of the most important requirements is “free consent”. If the consent is not free and has been obtained through wrongful means, then the law provides relief to the affected party under Section 19 and Section 19A of the Act.
Meaning of Free Consent
As per Section 14 of the Indian Contract Act, consent is said to be free when it is not caused by:
- Coercion
- Undue Influence
- Fraud
- Misrepresentation
- Mistake
If any of these elements are involved, the consent is not free, and such a contract becomes voidable, not automatically void.
Types of Wrongful Acts under Section 19
1. Coercion: Using force or threats to make a person agree to a contract.
2. Fraud: Intentionally deceiving the other party to enter into a contract.
3. Misrepresentation: Providing false statements or wrong facts without the intention to cheat, which still leads the other party to enter into the contract.
Right of the Aggrieved Party
- The person can cancel the contract (make it void).
- If the contract was entered due to fraud or misrepresentation, the person can also insist on performance of the contract, but in such a way that he is put in the position as if the false information was actually true.
Exception to Section 19
If the misrepresentation or fraudulent silence could have been discovered by ordinary diligence, then the contract is not voidable. For example, if the buyer had a chance to check the facts but didn’t do so, he cannot later claim misrepresentation.
Explanation: If the fraud or misrepresentation did not cause the person to agree to the contract, then the contract will not be voidable. There must be a direct link between the wrongful act and the consent.
Important Illustrations
- (a) A lies about the output of his factory to B. B buys it based on this lie. The contract is voidable by B.
- (b) A lies, but B checks the factory records and sees the truth, yet still buys it. Here, the contract is not voidable.
- (c) A hides that his estate has a mortgage. B buys it. B can cancel or ask to redeem the mortgage.
- (d) B hides valuable information about A’s land. A sells it without knowing. A can cancel the contract.
- (e) C hides news of a person’s death to buy estate interest cheaply. The contract is voidable by the seller.
What Section 19A Says?
When consent is caused by undue influence, the contract is voidable at the option of the influenced party. Undue influence means using one’s position or power over another person to obtain an unfair advantage in a contract.
Meaning of Undue Influence
As per Section 16 of the Act, undue influence occurs when:
- One party is in a position to dominate the will of the other.
- Such a position is used unfairly to gain a benefit in the contract.
Example: Teacher and student, doctor and patient, lawyer and client, parent and child, etc.
Remedies Under Section 19A
- The court can cancel the contract completely (set aside).
- If the influenced party received any benefit under the contract, the court may allow the contract to be set aside on reasonable terms (for example, return of money).
Important Illustrations
- (a) A’s son forges B’s name. B threatens A to recover the money. A signs a bond. The court may cancel the bond.
- (b) A money-lender gives Rs. 100 but gets a bond of Rs. 200 by influencing B (a poor farmer). The court can cancel the bond and ask B to repay only Rs. 100 with reasonable interest.
Key Differences Between Section 19 and 19A
| Point | Section 19 | Section 19A |
|---|---|---|
| Cause of Wrong Consent | Coercion, Fraud, Misrepresentation | Undue Influence |
| Voidability | At the option of the affected party | At the option of the influenced party |
| Remedy | Cancel or enforce with correction | Set aside fully or on fair terms |
| Intentional Wrong Needed? | Yes, in fraud; No, in misrepresentation | Not always intentional |
Conclusion
Sections 19 and 19A of the Indian Contract Act protect parties from being unfairly forced or tricked into contracts. They ensure that free consent is the foundation of every valid agreement. If someone is misled, threatened, or unfairly influenced, the law gives them the right to cancel the contract and even get compensation or fair terms through the court.
Understanding these provisions is important not only for law students and lawyers but also for businessmen, consumers, and common citizens to ensure fairness and justice in contracts.