Business Management · Sources of Indian law and valid contracts

Free Consent, Legality and Object of Contracts

Updated 11 October 2026

Consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. A contract caused by coercion, undue influence, fraud or misrepresentation is voidable. A bilateral mistake of essential fact makes it void. A contract must have a lawful object and consideration. Check consent first, then legality, then whether the agreement is expressly declared void.

Understand Free Consent, Legality and Object of Contracts

A contract needs more than an offer and acceptance. The parties must agree on the same thing in the same sense. This is consent. Under the Indian Contract Act, 1872, consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.

The first four are about pressure or false information. Coercion (s.15) is committing, or threatening to commit, an act forbidden by the Indian Penal Code, or unlawfully detaining, or threatening to detain, property, to the prejudice of any person, with the intention of causing someone to enter into an agreement. It does not matter whether the Indian Penal Code is in force in the place where the coercion is used. Undue influence arises when one party is in a position to dominate the will of the other and uses that position to gain an unfair advantage. Examples are parent and child, doctor and patient, or a person whose mind is affected by age or illness. Fraud (s.17) is a false statement or act made deliberately, or recklessly, to deceive someone into the contract. It also includes active concealment of a fact, a promise made without any intention of performing it, and any other act fitted to deceive. Misrepresentation (s.18) is a false statement made innocently, with honest belief, which still misleads. It also covers a breach of duty, without intent to deceive, that gains an advantage by misleading another, and causing a party to make a mistake about the subject matter of the agreement.

If consent is not free because of these four, the contract is voidable at the option of the party whose consent was affected. They may cancel it or choose to keep it. Until cancelled, it is valid. For undue influence, the court may set the contract aside absolutely or on terms (s.19A). A party who rescinds must restore any benefit received under the contract (s.64). Under the s.19 proviso, a party whose consent was caused by misrepresentation, or by silence amounting to fraud under s.17, cannot rescind if they could have discovered the truth with ordinary diligence. This bar does not apply where the party was induced by fraudulent positive statements or acts. That party can still rescind even if the truth was discoverable. Silence alone is not fraud unless there is a duty to speak or the silence is equivalent to speech, so read the facts carefully.

Mistake works differently. If both parties are mistaken about a fact that is essential to the agreement (bilateral mistake of fact, s.20), the agreement is void. A contract is not voidable merely because it was caused by one party's mistake about a matter of fact (s.22). A unilateral mistake leaves the contract valid and enforceable. Under s.21, a mistake about a law not in force in India (foreign law) is treated like a mistake of fact, so s.20 applies to it. A mistake about a law in force in India gives no relief, and the contract stays valid and enforceable.

The second half of the topic is legality. The consideration and the object must be lawful (s.23). They are unlawful if they are forbidden by law, would defeat a law, are fraudulent, injure a person or property, or are immoral or against public policy. An unlawful agreement is void. The Act also expressly declares some agreements void, each in its own section. Examples are restraint of marriage (s.26), restraint of trade (s.27), restraint of legal proceedings (s.28), uncertain meaning (s.29), wagering agreements (s.30), and agreements to do impossible acts (s.56). This is not a complete list. An agreement without consideration is generally void too (s.25, subject to its exceptions), and an agreement is void where part of a single consideration, or one of several considerations, is unlawful (s.24). Impossible acts are not part of the s.23 list.

Key rules to remember

Free consent: Consent is free unless caused by coercion, undue influence, fraud, misrepresentation or mistake; This is the test. Name which of the five factor applies, then state the effect.
Effect of coercion, undue influence, fraud, misrepresentation: Contract is voidable at the option of the affected party; Valid until the affected party rescinds. On rescission, the party must restore any benefit received (s.64). For undue influence, the court may set the contract aside absolutely or on terms (s.19A). Fraud may also attract damages.
Effect of mutual mistake of essential fact: Both parties mistaken about an essential fact → agreement is void (s.20); A contract is not voidable merely because one party was mistaken about a fact (s.22). It stays valid and enforceable. A mistake about Indian law gives no relief and the contract stays valid (s.21). A mistake about a law not in force in India is treated like a mistake of fact, so s.20 applies (s.21).
Fraud vs misrepresentation: Fraud = intention to deceive (s.17); misrepresentation = honest belief (s.18); Fraud includes active concealment and a promise made with no intention to perform. Misrepresentation also covers an innocent breach of duty that gains an advantage. Fraud can also give a right to claim damages. Pure misrepresentation mainly gives the right to rescind.
Lawful object and consideration: Unlawful if forbidden by law, defeats law, fraudulent, injures person or property, or immoral or against public policy; This is the content of section 23. An unlawful agreement is void. The void agreements listed in the next row come from other sections.
Agreements expressly declared void: Restraint of marriage (s.26), restraint of trade (s.27), restraint of legal proceedings (s.28), uncertain meaning (s.29), wagering (s.30), impossible acts (s.56); Use these as common examples, not a complete list. Others include an agreement without consideration (s.25, subject to its exceptions) and an agreement where part of the consideration is unlawful (s.24). Exceptions exist too, such as the sale of goodwill for restraint of trade.

How to solve Free Consent, Legality and Object of Contracts questions

Use the same sequence for any scenario question. It keeps your answer structured and earns method marks.

1Read the facts and identify what the complaining party says went wrong: pressure, a false statement, a relationship of trust, or a wrong belief.
2Match it to one factor: coercion, undue influence, fraud, misrepresentation or mistake. Give the legal definition in a sentence.
3Apply each element of the definition to the facts. For fraud, check for a false statement, knowledge or recklessness, and intention to deceive. For undue influence, check for a dominant position and an unfair advantage.
4State the effect: voidable at the option of the affected party, or void for mutual mistake of essential fact.
5State the remedy or consequence, such as rescission, restitution of benefits received, or damages where available.
6If the question mentions the purpose of the contract, test it for lawful object and consideration, then check the list of agreements expressly declared void.
7Write a one-line conclusion that answers the question asked.

Quickest way: Two-question screen

When to use it: Use for MCQs and short scenario questions where you have under two minutes.

Ask: was the consent obtained wrongly? If yes, the contract is voidable. Then pick the label by asking whether the cause was a threat, a position of trust, a deliberate lie or an innocent false statement.
If both parties shared a wrong belief about an essential fact, answer void. If only one party was mistaken, the contract stays valid and enforceable.
If consent was fine, ask: is the object or consideration unlawful or in the void list? If yes, answer void.
Eliminate any option that calls an unlawful agreement merely voidable.

Common mistakes in Free Consent, Legality and Object of Contracts

Saying a contract obtained by fraud is void.
Students link wrong conduct with the word void.
Fix: Fraud, misrepresentation, coercion and undue influence make the contract voidable at the option of the affected party. Void is for mutual mistake and unlawful or expressly void agreements.
Treating any mistake as making a contract invalid.
The word mistake sounds like it should help the mistaken party.
Fix: Only mutual mistake about an essential fact makes the agreement void (s.20). A unilateral mistake (s.22) and a mistake of Indian law (s.21) leave the contract valid and enforceable. A mistake about foreign law is treated like a mistake of fact under s.20.
Confusing fraud with misrepresentation.
Both involve false statements.
Fix: Look at the state of mind. If there was intention to deceive or reckless disregard for truth, it is fraud. This includes active concealment and a promise made with no intention to perform. If the person honestly believed the statement, it is misrepresentation.
Applying undue influence without showing a dominant position.
Students stop at an unfair bargain.
Fix: First show the relationship or position that lets one party dominate, then show the unfair advantage obtained.
Calling coercion a threat of any kind.
Everyday meaning of coercion is broader than the legal one.
Fix: Quote the definition: committing or threatening to commit an act forbidden by the IPC, or unlawfully detaining or threatening to detain property, used to obtain consent. It is immaterial whether the IPC is in force where the coercion occurs.
Forgetting that exceptions exist to void agreements such as restraint of trade.
Students memorise the list without the exceptions.
Fix: Add the standard exception when the facts fit, for example restraint on the seller of goodwill within reasonable limits.

Worked examples

Example 1

Asha sells her car to Ravi and tells him it has never been in an accident. She honestly believes this because the previous owner told her so. Ravi later finds the car was badly damaged earlier. Can Ravi cancel the contract? Name the factor and the effect.

Show the solution

Identify the issue: a false statement of fact induced Ravi to buy.
Test for fraud: fraud needs intention to deceive or reckless disregard for truth. Asha honestly believed her statement, so there is no intention to deceive.
So the factor is misrepresentation, an innocent false statement of a material fact.
Effect: the contract is voidable at Ravi's option.
Ravi may rescind, subject to the usual limits such as the loss of the right if the contract has been affirmed or the truth could have been found with ordinary diligence.

Answer: It is misrepresentation, not fraud. The contract is voidable and Ravi may cancel it, with restitution of what each party received.

Example 2

A and B agree that A will pay ₹5,00,000 to B for a plot of land that both believe exists. Unknown to both, the land was washed away by the river before the agreement. Is the agreement enforceable?

Show the solution

Identify the issue: a wrong belief about a fact, shared by both parties.
Check that the fact is essential: the existence of the subject matter is essential to a sale of land.
Because both parties are mistaken about an essential fact, s.20 (bilateral mistake) applies.
Effect: the agreement is void, not voidable. Neither party needs to cancel it.
Under s.65, a person who has received an advantage under an agreement that is discovered to be void must restore it. Any money already paid would have to be returned.

Answer: The agreement is void for mutual mistake about an essential fact (s.20), so it is not enforceable. Any ₹5,00,000 paid must be returned under s.65.

Exam tips

Give the definition before applying it. Examiners award marks for the legal test, then for application.
Always state the effect in exact words: voidable or void. Never leave it as invalid.
In fraud versus misrepresentation questions, quote the state of mind clearly in one line.
For legality questions, run through the list of unlawful objects and the list of agreements expressly declared void, in that order.
Use the facts given. Do not introduce extra facts that the question does not state.

Practice questions from Sources of Indian law and valid contracts

Free Consent, Legality and Object of Contracts: frequently asked questions

What is the difference between fraud and misrepresentation?

In fraud, the person making the statement intends to deceive or is reckless about the truth. In misrepresentation, the person honestly believes the statement, though it is false. Both make the contract voidable, but fraud can also support a claim for damages.

Is a contract caused by undue influence void or voidable?

It is voidable at the option of the party who was influenced. The court may set it aside, sometimes on terms such as returning benefits received.

What makes an agreement void for unlawful object?

Under s.23, an agreement is unlawful if its consideration or object is forbidden by law, would defeat a law, is fraudulent, injures a person or property, or is immoral or against public policy. Such an agreement is void.

Which agreements does the Act expressly declare void?

They include agreements in restraint of marriage (s.26), trade (s.27) or legal proceedings (s.28), agreements whose meaning is uncertain (s.29), wagering agreements (s.30) and agreements to do impossible acts (s.56). Some have exceptions, so check them in your notes.