Coercion under Indian Contract Act | Law Optional Notes for UPSC PDF Download

Coercion in Contract Law

Coercion in contract law refers to the use of threats or actual harm to compel someone into entering a contract. If coercion is involved in the formation of a contract, the agreement will not be legally enforceable.

• Non-disclosure: Deception may occur when one party fails to disclose important information to the other party. Failure to disclose facts often results in an unenforceable agreement.
• Unconscionability: If a contract contains terms that are considered extremely unfair, the contract cannot be enforced.

Understanding Coercion under the Indian Contract Act

• For a contract to be valid, both parties must enter into it willingly. However, if one party is coerced into the contract, meaning threats were used to obtain their acceptance, the contract is not valid. This principle of Coercion applies to specific terms within a contract and the contract as a whole. Essentially, this requires that the parties consent to the entire contract and all its individual terms.
• If coercion is found to be involved in the contract's formation, the agreement is typically voided. Contract rescission results in the cancellation of the agreement, releasing both parties from their obligations as outlined in the contract.

Defending Against Coercion

• Unclean hands concept serves as a defense mechanism against coercion tactics in agreements.
• It implies that a party cannot be held accountable for coercion if the other party was equally guilty of the same act.
• Alternatively, it suggests that both parties pressured each other to enter into the agreement.

Coercion under Indian Contract Act

Coercion in Contracts: In the realm of contracts, coercion involves one party exerting undue pressure on another to enter into an agreement. Even if both parties are at fault, the contract can be voided if coercion is proven. This means that no genuine consent can exist in a legal contract. If coercion is established, a party can claim that they should not be bound to fulfill the terms of the agreement.

Is legal help required for coercion cases?

• Legal Consultation: If an individual suspects they have been coerced into an agreement, seeking legal counsel is advisable. A lawyer can help analyze the terms of the contract and determine if coercion was involved or if the agreement was entered into willingly.
• Enforceability of Contracts: Contracts are legally binding agreements, implying that parties are obligated to fulfill their contractual duties upon entering into an agreement. However, exceptions exist, such as when the contract is deemed legally unenforceable.
• Reasons for Unenforceability: Various factors can render a contract unenforceable. One common scenario is when a party lacks legal capacity, meaning they are unable to enter into a contract due to reasons like being a minor or having a mental disability.
• Coercive Situations: Engaging in a contract under coercion, a form of intimidation, can render the agreement unenforceable. For instance, if a company refuses to deliver a product until additional payment is made, coercion is at play.
• Other Scenarios of Unenforceability: Apart from coercion, other circumstances may invalidate a contract, including:
  • Undue Influence: This occurs when one party takes advantage of another due to a special, pre-existing relationship. For example, a parent pressuring their adult child into a contract constitutes undue influence.
  • Misrepresentation: If false statements are made during contract negotiations, such as providing misleading information about a product's quality, the contract may not be enforceable.
  • Nondisclosure: When one party fails to disclose crucial information to the other party, resulting in misinformation, the contract may be deemed unenforceable.
  • Unconscionability: Contracts with terms that are considered extremely unfair or unreasonable cannot be enforced due to unconscionability.

Landmark Judgements on Coercion under the Indian Contract Act

• Chikham Amiraju v. Chikham Seshamma: In this case, a man of Hindu faith coerced his wife and son into signing a release deed for properties belonging to his brother by threatening suicide. The court ruled that the threat of suicide constituted coercion, making the deed voidable under Section 15 of the Indian Contract Act.
• Askari Mirza v. Bibi Jai Kishori: Here, an individual facing criminal charges entered into an agreement with another party, abandoning the prosecution due to fear of the legal consequences. The court held that the threat of criminal prosecution does not necessarily violate the Indian Penal Code, thus validating the consent given.