Abstract
This study examines the vitiating factors in contract law, which undermine the validity of agreements otherwise meeting the formal criteria of contract formation. It explores how elements like misrepresentation, mistake, undue influence, and duress render contracts void or voidable, with rescission or damages as potential remedies. Indian contract law, paralleling English common law, contextualizes these doctrines under statutory provisions, such as Sections 15, 16, 17, 18, 20, and 22 of the Indian Contract Act, 1872. By juxtaposing doctrinal principles with landmark case law, this paper emphasizes the balance between fairness and contractual certainty. It also highlights the judiciary’s role in mitigating exploitation and safeguarding free consent, ensuring the equitable application of contractual obligations
Key Words- Duress, Misrepresentation, Mistake, Undue Influence, Indian Contract Act
Introduction
In common law, agreements between parties that meet the requirements of contract formation generate contractual rights and obligations; but only presumptively.[1] These rights and obligations may be defeated, in whole or in part, by recognized vitiating factors such as misrepresentations, mistake, duress and undue influence. A ‘vitiating element of contract’ is the technical term for the things which make a contract void or voidable. The standard remedy is rescission, but damages may also be available. By contrast, the standard remedy for breach of contract is damages, with repudiation available for serious breach only.[2] There is a constant need to achieve a balance between certainty and fairness in the law of contract. In this respect, vitiating factors tend to focus on the latter. However, because of the consequent danger that contracts might be unravelled unnecessarily by the application of such factors, there is a need for doctrinal as well as conceptual clarity.[3] The main vitiating factors in the law of contract are: misrepresentation, mistake, undue influence and duress.
- Misrepresentation– A misrepresentation is an untrue or misleading statement[4] of fact which induces a person into a contract. The misled party may normally rescind the contract, and may be awarded damages as well. There are three categories of misrepresentation: fraudulent, negligent and innocent.
- Mistake– A mistake is an erroneous belief (at the time of contracting) that certain facts are true. If raised successfully, an allegation of mistake may lead to the contract being declared void ab initio or voidable; but to be effective the mistake must be “operative”. There are three types of contractual mistake: unilateral mistake, mutual mistake and common mistake.
- Undue influence– Undue influence is an equitable doctrine whereby a person takes advantage of a position of power over another person. This inequality in bargaining power may vitiate the weaker party’s consent.
- Duress– Duress in contract law involves illegitimate threats of a physical nature. Provided the threat is a contributing reason why a person enters an agreement, even if not the main reason, the agreement may be avoided.
[1]Mindy Chen-Wishart, The Nature of Vitiating Factors in Contract Law, in Philosophical Foundations of Contract Law (Gregory Klass, George Letsas, & Prince Saprai eds., 2015)
[2]Hong Kong Fir Shipping v Kawasaki Kisen Kaisha 1961] EWCA Civ 7
[3]G.H. Treitel, The Law of Contract (9th ed. 1995).
[4]R v Kylsant [1932] 1 K.B. 442