The doctrine which states that people have the right to legally bind them is known as freedom of contract. Freedom of contract is a judicial concept which holds that contracts are based on mutual agreement and free choice. Therefore, contracts are not be hampered by external control such as governmental interference. This is the principle which supports that people are able to fashion their relations by private agreements, when opposed to the assigned roles of the feudal system.
Freedom of contract embraces two closely connected, but two different concepts. Firstly, it indicates that contracts were based on mutual agreement. Secondly, it emphasizes that the creation of a contract was the result of a free choice unhampered by external control including the government or the legislature.
Law of Freedom of contract is the freedom of individuals and corporations to form contracts without government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing. The freedom to contract is the underpinning of laissez-faire economics and is a cornerstone of free market libertarianism.
An agreement is valid only it is the result of the “free consent” of all the parties to it. Section 13 of the Act defines the meaning of the term ‘consent’ and Section 14 specifies under what circumstances consent is ‘free’.
Section 13 “Two or more person are said to consent when they agree upon the same thing in the same sense.”
Section 14 “This Section lays down that consent is not free if it is caused by
- undue influence
so, we can say that free consent is the consent which is give in absence of Coercion , undue influence, Freud, Misrepresentation or Mistake
Coercion is define in section 15 or the contract Act 1872 as flows
“Coercion is the committing or threatening of commit any act forbidden by the penal code or 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.”
Effects of Coercion: A contract brought about by Coercion is void able at the option of the party whose consent was so caused
2. Undue influence
Undue influence is define in section 16 or the contract Act 1872 as flows
“One parties is in a position to dominate the will or the other and he uses the position to obtain an unfair advantage over the other is called Undue influence.”
Effects of undue influence: A contract brought about by undue influence is void able at the option of the party whose consent was so caused.
Freud is define in section 17 or the contract Act 1872 as flows
“The term “Freud” includes all acts committed by a person with a view to deceive another person. “To deceive” means to “induce a man to believe that a thing a true which is false.”
Finally we can say that Freud is the Misrepresentation without intention.
Effects of Freud: A contract brought about by Freud is void able at the option of the party whose consent was so caused.
Misrepresentation is define in section 17 or the contract Act 1872 as flows
Misrepresentation means and includes
a) Unwarranted Assertion: The positive coercion in a manner not warranted by the information of the person making it of that which is not true, though he believe it to be true.
b) Breach of Duty: Any breach of duty which, without intent to deceive, gains an advantage to the person committing it or anyone claming under him by misleading another to his prejudice or to the prejudice of any one claming under him.
c) Innocent Mistake: Causing however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Effects of Misrepresentation: A contract brought about by Misrepresentation is void able at the option of the party whose consent was so caused.
Mistake may be defined as a erroneous belief concerning something consent cannot be said to be “Free” when an agreement is entered into under a mistake. An agreement is valid as a contract only when the parties agree upon the same thing in the same sense.
Mistake is two kinds
a) Mistake of Law
b) Mistake of Fact
A) Mistake of Law: Mistake of Law is a mistake in the point of law an agreement affected by mistake in law is void.
b) Mistake of Fact: Mistake of Fact is the Mistake to the fact of the subject matter of the contract Mistake of Fact again three kinds
- i. Common Mistake
- ii. Mutual Mistake
- iii. Unilateral Mistake
Common Mistake: Common Mistake is the Mistake of the both parties of the contract in the something. The effect of Common Mistake is that the agreement is void.
Mutual Mistake: Mutual Mistake is the Mistake of the both parties of the contract in the in the different thing. The effect of Mutual Mistake is that the agreement is void.
Unilateral Mistake: Unilateral Mistake is the Mistake of the one parties of the contract. The effect of Unilateral Mistake is that the agreement is voidable.