Page 59 - DMGT102_MERCANTILE_LAWS_I

Unit 4: Free Consent

Notes
Example: A man, N called in person at a Jeweller’s shop and chose some jewels which the
jeweller was prepared to sell him as a casual customer. He tendered in payment a cheque which
he signed in the name G – a person with credit. Thereupon N was allowed to take away the
jewels which N pledged with B who took them in good faith. Here the contract between N and
the jeweller is valid. The pledgee B has a good title. Although the jeweller believed the person
to whom he was handing over the jewels was G, he in fact contracted to sell and deliver to the
person who came into his shop.
Thirdly, a contract may be avoided where there is a unilateral mistake as to quality of
performance.

Example: A held an auction for the sale of some lots of hemp and some lots of tow.
B thinking that hemp was being sold, bid for a lot of tow for an amount which was out of
proportion to it, and was only a fair price for hemp. B could avoid the contract.

4.8 Mistake of Law

It may be (i) mistake of law of the land, or (ii) mistake of foreign law. In the first case, the rule is

“Ignorantia juris non-excusat”.
Meaning of “ignorantia juris non-excusat”. It means ignorance of law is no excuse. A contract is
not voidable because it was caused by a mistake as to any law in force in India. Thus, where A
and B make a contract grounded on the erroneous belief, that a particular debt is barred by the
Limitation Act; the contract is not voidable. (s.21) Further, “A mistake as to a law not in India has
the same effect as a mistake of fact”.
Mistake of foreign law. The above maxim – “ignorance of law is no excuse” is inapplicable to
foreign law. The mistake of foreign law is to be treated as a mistake of fact.

Consequences of mistake on contracts. Mistake renders the contract void and as such in case of
a contract which is yet to be performed the party complaining the mistake may repudiate it, i.e.,
need not perform it. If the contract is executed the party who received any advantage must return
it or make compensation for it as soon as the contract is discovered to be void.

Task Peter, by way of misrepresentation, leads Deepak erroneously to believe that 100
quintals of indigo are made annually at Peter’s factory, Deepak examines the accounts

of the factory and finds that only 50 quintals of indigo have been made. Afterwards,
Deepak buys the factory. Deepak now wants to avoid the contract on the ground of
misrepresentation. Advise him giving reasons.

Differences between Coercion and Undue Infl uence

Coercion Undue Infl uence
Consent obtained by committing or threatening Consent obtained from denomination of the will of
to commit an act forbidden by law. the other
Physical character. It involves mostly use of Use of moral Force/ Pressure to obtain consent .
physical or violent force
Directed against a person or his property Threat against person himself and not against his
property
No relationship need to exist b/w parties Some sort of relationship b/w the parties to contract

May be committed outside India Should have been committed in India if it is to be
taken into notice of Indian Law

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