Legal Reasoning Questions for CLAT | QB Set 67

Under the Indian Contract Act, 1872, consent is considered free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. Coercion occurs when a person commits or threatens to commit an act forbidden by law, or unlawfully detains property, to force another person into an agreement. Undue influence arises when one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage. Fraud involves intentional deception, such as knowingly making a false statement or actively concealing an important fact. Misrepresentation occurs when a person makes an incorrect statement honestly, believing it to be true, and the other party relies on it while entering the contract.

When consent is caused by coercion, undue influence, fraud or misrepresentation, the contract is generally voidable at the option of the affected party. This means that the affected party may either cancel the contract or choose to continue with it. However, the circumstances of each case must be examined carefully. The relationship between the parties, their intention, the nature of the threat or statement and the effect on the affected party are relevant in determining whether consent was truly free.

Questions

1. Arjun threatens to damage Meera’s shop unless she sells her valuable painting to him at one-fourth of its market price. Fearing immediate loss to her property, Meera signs the agreement. Which factor has affected Meera’s consent?

A) Fraud
B) Misrepresentation
C) Coercion
D) Mistake

2. Dr Rohan has been treating elderly Mr Verma for several years. Mr Verma depends entirely on him for medical advice. Dr Rohan persuades Mr Verma to sell him a plot of land at an extremely low price by claiming that the sale is necessary for his treatment. Which principle is most applicable?

A) Coercion
B) Undue influence
C) Mistake
D) Misrepresentation

3. Kavita sells a house to Neha after covering serious cracks in the walls with temporary panels. Kavita knows that the cracks make the house unsafe but deliberately does not reveal them. Neha purchases the house after inspecting it. What has affected Neha’s consent?

A) Mistake
B) Undue influence
C) Misrepresentation
D) Fraud

4. Sameer tells Priya that a piece of land measures 2,000 square feet because that is what the previous owner had informed him. He honestly believes the information to be correct. The land actually measures only 1,600 square feet, and Priya purchases it relying on Sameer’s statement. Which factor is involved?

A) Misrepresentation
B) Fraud
C) Coercion
D) Undue influence

5. Anil signs a loan agreement after being unlawfully confined in a room by the lender’s employees. After being released, Anil approaches the court and seeks cancellation of the agreement. What is the legal position?

A) The agreement is automatically valid because it was signed
B) The agreement is void from the beginning
C) The agreement can be cancelled only by the lender
D) The agreement is voidable at Anil’s option

Answers And Explanations

1. C) Coercion

Arjun threatened to damage Meera’s property to force her to enter the agreement. A threat involving an unlawful act or unlawful interference with property amounts to coercion. Therefore, Meera’s consent was not free.

2. B) Undue Influence

Dr Rohan was in a position to dominate Mr Verma’s will because of the relationship of trust and dependence between them. He used that position to obtain an unfair advantage by purchasing the land at an extremely low price. This amounts to undue influence.

3. D) Fraud

Kavita knowingly concealed a serious defect in the house by covering the cracks. Active concealment of a material fact with the intention of inducing another person to enter a contract amounts to fraud.

4. A) Misrepresentation

Sameer made an incorrect statement but honestly believed it to be true. Since there was no intention to deceive Priya, the statement amounts to misrepresentation rather than fraud.

5. D) The Agreement Is Voidable At Anil’s Option

Anil’s consent was obtained through unlawful confinement, which amounts to coercion. A contract caused by coercion is voidable at the option of the affected party. Therefore, Anil may seek cancellation of the agreement.