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CMA Foundation · Fundamentals of Business Laws and Business Communication · Capacity of Parties, Free Consent

Ramesh, a trader in Surat, refuses to return the goods of Kishore, which he holds, unless Kishore signs an agreement to sell him a plot at a low price. Kishore signs. Which statement is correct under the Act?

The agreement is voidable at Kishore's option. Unlawfully detaining property to make someone enter into an agreement is coercion under Section 15, and Section 19 makes a contract caused by coercion voidable at the option of the party whose consent was so caused.

  1. AThe agreement is void ab initio because there was no consent
  2. BThe agreement is voidable at Kishore's option, as consent was caused by coercion through unlawful detention of propertyCorrect
  3. CThe agreement is valid because Ramesh did not commit any offence against a person
  4. DThe agreement is voidable at Ramesh's option

Explanation

Section 15 includes unlawfully detaining, or threatening to detain, any property with the intention of causing a person to enter into an agreement. Under Section 19, consent caused by coercion makes the contract voidable at the option of the party whose consent was so caused, here Kishore. It is not void, and the coercing party cannot avoid it.

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