31. “Contingent contract” defined.

A “contingent contract” is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

Illustration–
A contracts to pay to B Rs.10,000 if B’s house is burnt. This is a contingent contract.

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Section 31 Contract Act
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17. “Fraud” defined.

“Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive another party thereto 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 is no fraud.
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.

Illustrations-
(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse’s unsoundness. This is not fraud in A.

(b) B is A’s daughter and has just come of age. Here the relation between the parties would make it A’s duty to tell B if the horse is unsound.

(c) B says to A- “If you do not deny it, I shall assume that the horse is sound”. A says nothing. Here, A’s silence is equivalent to speech.

(d) A and B, being traders, enter upon a contract, A has private information of a change in prices which would affect B’s willingness to proceed with the contract. A is not bound to inform B.

*A contracting party is not obliged to disclose each and everything to the other party.

Famous Case related to “Mere silence is no fraud” is Keates v The Earl of Cadogan (1851)

Keates v The Earl of Cadogan (1851)

Source- LawTeacher.net

Whether a landlord has a duty to inform a prospective tenant of the poor quality of the property let.

Facts-
The defendant entered into an agreement with the claimant for the lease of a property for a term of three years. The claimant intended to reside in the property with his family. The property concerned was in an extremely poor structural condition and was likely to collapse at any stage. The defendant however, despite knowing of this condition, did not inform the claimant of it during the negotiations for the lease, nor did the defendant inform the claimant after the claimant had agreed the lease and begun to occupy the property with his family. Ultimately, a large part of the property collapsed and the claimant sought to rescind the contract, or alternatively commence action in tort for his losses.

Issue-
The issue in this circumstance was whether a landlord has an obligation to inform a prospective tenant of the poor state of a property prior to entering into a lease with said tenant.

Held-
It was held that no obligation is placed on a landlord to inform a tenant as to the state of a property prior to entering into a lease. A claim will only arise for a tenant in these circumstances if the landlord gives an express warranty as to the condition of the property or where the landlord actively deceives the tenant as to the property’s condition. The court in this instance found in favour of the defendant.

Law Note: What Is Fraud Under the Indian Contract Act, 1872

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Section 17 Contract Act
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15. “Coercion” defined.

“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.

Illustration-
A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code.
A afterwards sues B for breach of contract at Calcutta.
A has employed coercion, although his act is not an offence by the law of England, and although Section 506 of the Indian Penal Code was not in force at the time when or at the place where the act was done.

Related Law Note: What is Free Consent in Contract

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Section 15 Contract Act
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16. “Undue influence” defined.

(1) A contract is said to be induced by “under influence” where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

(2) In particular and without prejudice to the generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another-
(a) where he hold a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.

(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall be upon the person in a position to dominate the will of the other.

Nothing in the sub-section shall affect the provisions of Section 111 of the Indian Evidence Act, 1872.

Illustrations-
(a) A having advanced money to his son, B, during his minority, upon B’s coming of age obtains, by misuse of parental influence a bond from B for a greater amount then the sum due in respect of the advance. A employs undue influence.

(b) A, a man enfeebled by disease of age, is induced by B’s influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services, B employs undue influence.

(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable, It lies on B to prove that the contract was not induced by undue influence.

(d) A applies to a banker for a loan at a time when there is stringency in the money market, The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced by undue influence.

Related Law Note: What is Free Consent in Contract

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Section 16 Contract Act
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18. “Misrepresentation” defined.

“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 anyone claiming under him; by misleading another to his prejudice, or to the prejudice of anyone 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 subject of the agreement.

Related Law Note: What is Free Consent in Contract

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Section 18 Contract Act
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14. “Free consent” defined.

Consent is said to be free when it is not caused by-
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of section 20, 21, and 22.

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.

Related Law Note: What is Free Consent in Contract

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Section 14 Contract Act
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182. “Agent” and “principal” defined.

An “agent” is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the “principal“.

Law Note: Contract of Agency – Characteristics, Formation and Termination

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Section 182 Contract Act
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201. Termination of Agency.

An agency is terminated by the principal revoking his authority, or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

Law Note: Contract of Agency – Characteristics, Formation and Termination

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Section 201 Contract Act
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189. Agent’s authority in an emergency.

An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss and would be done by a person or ordinary prudence, in his own case, under similar circumstances.

Illustrations-
(a) An agent for sale may have good repaired if it be necessary.

(b) A consigns provision to be at Calcutta, with direction to send them immediately to C, at Cuttack. B may sell the provision at Calcutta, if they will not bear the journey to Cuttack without spoiling.

Law Note: Contract of Agency – Characteristics, Formation and Termination

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Section 189 Contract Act
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185. Consideration not necessary.

No consideration is necessary to create an agency.

Law Note: Contract of Agency – Characteristics, Formation and Termination

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Section 185 Contract Act
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