Chapter 4 Free Consent & Void Agreements Flashcards
What is consent and free consent?
● Consent:
When two persons agree upon same thing in same sense, then they are said to consent.
No consent, no agreement.
● Free consent:
Consent is said to be free if it is not caused by:
a) coercion, or
b) undue influence, or
c) fraud, or
d) misrepresentation, or
e) mistake.
What is coercion?
1- Committing any act forbidden by Pakistan penal code, or
2- Unlawful detaining any property,
3- With intention to make other person enter into agreement, or agree to to certain terms & conditions.
( Party rescinding the contract will have to prove that coercion was exercised ).
Give examples of “where undue influence is presumed and where it is not”?
● Where presumed:
Employer & employee, police officer & accused, tax officer & tax payer, parent & child, guardian & minor, advocate & client, trustee & beneficiary, fiance’ & fiance’e, doctor & patient, medical attendant & patient and a family member & an enfeebled old man.
● Where not presumed:
Husband & wife, creditor & debtor, landlord & tenant and principal & agent.
What is misrepresentation?
A person believes and gives a statement to be true, but which is false.
And he obtain advantage through breach of duty, without an intention to deceive.
What is fraud?
Act done to make contact with other party by deceiving him. It includes:
1- False statement.
2- Active concealment.
3- Empty promise.
4- Fitted act.
5- Declared Act.
In which situation, keeping silence is considered fraud?
1- When silence is equivalent to speech.
2- When there is duty/legal obligation to disclose such fact( e.g., parent & child,etc ).
List down “essentials of fraud.”
1- By party to the contract.
2- False representation .
3- Representation as to fact.
4- Acted upon it.
5- Suffered loss.
( Contract become voidable at option of aggrieved party, and such party can also claim damages if h suffers some loss).
In which cases, aggrieved party cannot rescind the contract in misrepresentation/fraud?
*( he = aggrieved party ).
1- If he had the means of discovering truth through ordinary diligence.
2- If he did not act on the basis of misrepresentation/ fraudulent statement.
3- If he takes benefits under contract after becoming aware of misrepresentation/fraudulent representation.
4- If an innocent third party acquires interest in the property in good faith for consideration.
5- If parties cannot be restored to their original position.
What is mistake?
Mistake means believing something to be true at time of contract, which is not true. Mistake can be:
1- Mistake of fact, or
2- Mistake of law.
List down “void agreements.”
1- Uncertain agreements.
2- Illegal agreements.
3- Impossible agreements.
4- Agreement with incompetent persons.
5- Agreements without consideration.
6- Agreements in Restraint of marriage.
7- Agreements in Restraint of trade.
8- Agreements in Restraint of legal proceedings.
9- Wagering agreements.
What are the exceptions of “agreement in restraint of trade?”
1- Sale of goodwill.
2- Agreement between partners.
( can restrict to carry similar business for reasonable time).
( Existing partners cannot carry any other business).
What are the exceptions of agreement in the restraint of legal proceedings?
1- Agree to refer dispute between them to arbitration.
2- Parties can make out-of-court settlements or may submit arbitration to court.
3- Agree that they’ll not file an appeal in upper court.
4- Agree to choose any one court to file suit.
What are exceptions to wagering agreements?
1- Prize competitions( game of skill).
2- No remedy allowed in case of breach of contract.
