NOTE M. (p. 495.)

Indian Contract Act on Fraud, etc. (a).

10. All agreements are contracts (b) if they are made by the free Indian consent of parties competent to contract, for a lawful consideration Contract and with a lawful object, and are not hereby expressly declared to be void.

13. Two or more persons are said to consent when they agree upon the same thing in the same sense.

14. Consent is said to be free when it is not caused by

(1) coercion, as defined in section fifteen, or

(2) undue influence, as defined in section sixteen, or
(3) fraud, as defined in section seventeen, or
(4) misrepresentation, as defined in section eighteen, or
(5) mistake, subject to the provisions of sections twenty,
twenty-one, and twenty-two.

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.

15. Coercion is the committing, or threatening to commit, any act forbidden by the Indian Penal Code, or the 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.

Explanation. It is immaterial whether the Indian Penal Code is or is not in force in the place where the coercion is employed.

[This goes far beyond English law, for it does not require that the
coercion should be exercised by or even known to the other party,
nor that the person coerced should be the party whose consent is to
be obtained, or in any way related to him.]
16. Undue influence is said to be employed in the following cases :—
(1) When a person in whom confidence is reposed by

another, or who holds a real or apparent authority
over that other, makes use of such confidence or
authority for the purpose of obtaining an advantage
over that other, which, but for such confidence or
authority, he could not have obtained;

(2) When a person whose mind is enfeebled by old age,
illness, or mental or bodily distress, is so treated as

(a) The illustrations are here omitted. Some of them have been already cited in the text.

(b) See the definitions in s. 2,

note A., p. 648 above.

Act on

Fraud, &c.

to make him consent to that to which, but for such treatment, he would not have consented, although

such treatment may not amount to coercion.

Fraud means and includes any of the following acts committed by a party to a contract or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:

(1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) The active concealment of a fact by one having knowledge or belief of the fact;

(3) A promise made without any intention of performing it;

(4) Any other act fitted to deceive;

(5) Any such act or omission as the law specially declares to be fraudulent.

Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is in itself equivalent to speech.

18. Misrepresentation means and includes

(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true ; (2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;

(3) 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.

[Sub-s. (2) seems hardly in place here. The framers of the draft Civil Cole of New York, from which it is taken (§ 758), appear to have generalized from Bulkley v. Wilford, 2 Cl. & F. 102. That case, however, proceeds rather on the special duty of an agent, see p. 263 above; and the ratio decidendi is expressly that a professional agent shall not take advantage of his own ignorance. There was also evidence and a finding of actual fraud.]

19. When consent to an agreement is caused by coercion, undue influence, 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 seventeen, 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.

20. Where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is

void.

Explanation.-An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement is not be deemed a mistake as to a matter of fact.

21. A contract is not voidable because it was caused by a mistake as to any law in force in British India; but a mistake as to a law not in force in British India has the same effect as a mistake of fact. 22. A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

66

Nothing is said as to the time within which a voidable contract must be rescinded; the obligation to restore any advantage received under the contract is declared in ss. 64, 65; but it does not appear what is to happen if restitution is impossible; as to goods obtained under a voidable contract, the title of a third person who before the contract is rescinded buys them in good faith of the person in possession" is secured by s. 108, exception 3, "unless the circumstances which render the contract voidable amounted to an offence committed by the person in possession or those whom he represents," a limitation which appears to be new; but no general principle is laid down as to rights of third persons intervening. S. 66 provides that "the rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal.”

French

NOTE N. (p. 591.)

Foreign laws on undue influence and allied subjects.

French jurisprudence has sometimes been cited in our Courts as authorities affording useful analogies in cases where it was sought to set aside before Revolution. gifts on the ground of undue influence, especially spiritual influence. (Euvres d'Aguesseau, 1. 284, 5. 514, ed. 1819; Lyon v. Home, 6 Eq. 571.) Without denying the instructiveness of the comparison, it may be pointed out that these French cases proceeded on rather different grounds. Charitable bequests in general were unfavourably looked on as being "inofficious" towards the natural successors. This principle is strongly brought out by D'Aguesseau in the case of the Religieuses du Saint-Sacrement (Œuvres, vol. 1. p. 295):—

Modern

law of captation.

Continental law as to sales at

undervalue.

"Ces dispositions universelles, contraires aux droits du sang et de la nature, qui tendent à frustrer les héritiers d'une succession légitime, sont en elles-mêmes peu favorables; non que ce seul moyen soit peutêtre suffisant pour anéantir un tel legs; mais lorsqu'il est soutenu par les circonstances du fait . . . lorsque la donation est immense, qu'elle est excessive, qu'elle renferme toute la succession . . . dans toutes ces circonstances la justice s'est toujours élevée contre ces actes odieux; elle a pris les héritiers sous sa protection; elle a cassé ces donations inofficieuses, excessives et contraires à l'utilité publique.” In modern French practice a will may be set aside for captation or suggestion. But, as with us, the burden of proof is on the objector to show that the testator's will was not free, and something amounting to fraudulent practice must be proved. "La suggestion ne saurait être séparée," says Troplong, "d'un dol subversif de la libre volonté du testateur . On a toujours été très-difficile en France à admettre la preuve de la suggestion et de la captation." (Droit civil expliqué, Des donations entre-vifs et des testaments, art. 492.)

On the other hand the Code Civil (art. 907, 909-911) contains express and severe restrictions on dispositions by wards in favour of their guardians, and by persons in their last illness in favour of their medical or spiritual advisers. These apply alike to wills and to gifts inter vivos.

The Continental enactments as to the effect of inadequacy of consideration on a sale are derived from the rule of Roman law, namely that a sale for less than half the true value may be set aside in favour of the seller unless the purchaser elects to make up the deficiency in Civil law. the purchase-money: Cod. 4. 44. de resc. vend. 2. "Rem maioris pretii si tu vel pater tuus minoris pretii distraxerit, humanum est ut vel pretium te restituente emptoribus fundum venditum recipias, vel, si emptor elegerit, quod deest iusto pretio recipias. Minus autem pretium esse videtur, si nec dimidia pars veri pretii soluta sit." A

less undervalue was not of itself a sufficient ground: C. eod. tit. 8, 15. The old French law adhered to this rule: Pothier, Obl. § 33.

"On estime communément énorme la lésion qui excède la moitié du Old French juste prix," id. Contr. de Vente, § 330, sqq. Pothier however goes on law. to say that this does not apply to sales of reversionary interests (contrat de vente de droits successifs) nor to other speculative contracts (contrats aléatoires), on account of the difficulty of fixing the true value; nor to sales of moveable property: cp. id. de Vente, § 341. Thus the rule and the exception, as touching immoveable property, were just the reverse of our own law as it stood before 1868. The Code Civil. modern French code fixes the undervalue for which a sale (of immoveable property only) may be set aside at 7-12ths. It adds this important limitation, that a general presumption of undervalue must be raised by the circumstances alleged on behalf of the seller before evidence of the actual existence and amount of the inadequacy can be admitted. There are also certain precautions as to the kind of proof to be allowed. If undervalue to the prescribed extent is established the buyer has the option of submitting to a rescission of the sale or paying up the difference. (Code Civ. 1674-1685.) Nothing is said about sales of reversionary interests, but it has been decided in accordance with the older law that the section does not apply to them: Codes Annotés, 1. 798. "Ne sont pas sujettes à la rescision pour lésion les ventes suivantes La vente de droits successifs, encore qu'elle soit faite à un étranger.' applies in favour of the seller only (art. 1683). seller's possible rights on this score, however express, is inoperative (1674). There are exceptional provisions for the case of “ partage fait par l'ascendant" (1079) and in favour of minors (1305, sqq.)

[inter alia]

And the provision

Any waiver of the

The provisions of the Italian Code are in substance the same as Italian those of the Code Napoléon (Codice Civile, 1529-1537).

Code.

The provisions of the Prussian Code-Allgem. Landrecht, part I. Prussian Tit. II. §§ 58, 59 ("Von der Verletzung über die Hälfte")-ar Code. substantially as follows.

-are

The objection that the purchase-money is disproportionate to the value of the thing sold does not of itself suffice to avoid the contract. "But if the disproportion is so great that the purchase-money exceeds double the value of the thing sold, then this raises a legal presumption (rechtliche Vermuthung), of which the buyer may take advantage, of an error such as to avoid the contract."

The buyer may by his contract waive the benefit of these provisions (§ 65); and the seller cannot in any case dispute the contract on the ground of undervalue.

The reason of this appears to be that the judicial presumption is not of fraud, but of error, and that the vendor cannot be presumed to be in error as to the value of his own property.