Coercion in Contract Law

In terms of contractual law, coercion indicates that threats or actual wrongdoing were used to get someone to sign an agreement. In the unlikely event that coercion has a role in the formation of a contract, it will not be legally binding.

An agreement must have been gladly entered into by the two parties for it to be legally executory. Nevertheless, the agreement cannot be enforceable if one party was coerced into signing it, meaning that threats were used to get their consent.

This norm, which is associated with coercion, applies to both the express terms and the whole agreement. Essentially, this means that parties to a contract have to agree to all of the conditions as well as the agreement as a whole. In the unlikely event that it is discovered that coercion played a role in the agreement's establishment, the understanding will often be revoked.

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This Story also Contains

1. Meaning of the word Coercion
2. Coercion under Section 15
3. Elements of Coercion under the Indian Contract Act 1872
4. Impact of Coercion under Contract Law
5. Case Laws on Coercion under the Indian Contract Act
6. Conclusion

Meaning of the word Coercion

• The act of committing or threatening to commit any act prohibited by the Indian Penal Code, or the unlawful detention or threat of detention of any property, to the detriment of any person whatsoever, with the intent to cause any person to agree, is defined as coercion under Section 15 of the Indian Contract Act, 1872.

• When someone is coerced into doing something against their will or is prevented from doing a certain action, coercion is the use of force, threats, intimidation, or excessive pressure.

• It entails using force or control over another person, frequently in an effort to change that person's behaviour, choices, or actions.

• Coercion may occur in a variety of settings and situations, including personal relationships, the workplace, commercial transactions, and even broader social contexts.

• It is crucial to understand that coercion is typically seen as immoral and illegal as it infringes on a person's autonomy and freedom to make decisions without fear of damage or unfavourable outcomes.

• Within the legal domain, coercion legislation may pertain to particular behaviours that are illegal under the law, such as extortion, blackmail, and violent threats.

Coercion under Section 15

The use of force to persuade someone to sign a contract is known as coercion. Therefore, it is not free consent when force or threats are used to get the assent of the individual being coerced. According to Section 15 of the Act, coercion is:

• Engaging in any activity that the IPC forbids or threatening to engage in any such activity.

• Illegally reserving or threatening to reclaim any property to pressure someone to sign a contract.

Example: If B doesn't sell his house to A for 5 lakh rupees, A threatens to injure him. Given that B's assent was gained by compulsion, even if B sells the house to A, the agreement will not be enforceable.

Elements of Coercion under the Indian Contract Act 1872

1. Illegally reserving or threatening to reserve any property: This component entails using or threatening to illegally reclaim property to compel a party to sign a contract. Depriving someone of their belongings without a valid reason is known as unlawful detention.

2. Any of the following offences are prohibited under the Indian Penal Code, either by act or threat: This aspect deals with circumstances when one party coerces the other party into signing a contract by using or threatening to use force, assault, or any other conduct that is illegal under the law. For an act to be considered coercion, it must be prohibited by the Indian Penal Code.

3. Intention to induce someone to enter into a contract: Any coercion must be used with the express purpose of compelling the target party to sign a contract against their will. Under the Indian Contract Act, coercion may not include the mere use of force or threats made without the aim to force someone to sign an agreement.

Protecting Against Coercion

• An agreement can be intimidated by the threat of "unclean hands," which is a safeguard.

• The main idea behind unclean hands is that one group cannot be subjected to coercion because another group deserves a comparable protest.

• An alternative way to understand this idea is that the agreement was shaped by the constraints placed on the two parties.

Impact of Coercion under Contract Law

• According to the Indian Contract Act, of 1872, Section 19, "An agreement is a contract voidable at the discretion of the party whose consent was thus induced where assent is caused by force, fraud, or misrepresentation.”

• As a result, coercion has the consequence of making the contract voidable at the choosing of the person who was coerced. This implies that the party that was pressured has the option of accepting the contract or rejecting it and having it ruled void.

• If coercion was used to induce the contract, the affected party must use their right to avoid it as soon as reasonably possible after the compulsion has stopped. The contract may become enforceable and legitimate if they carry out their end of the bargain without quickly using their right to withdraw.

• Both parties must return any advantages or consideration they acquired from one another under the terms of the contract if the compelled party decides to avoid it. Essentially, they have to put each other back in the same situation as before the contract was signed.

Case Laws on Coercion under the Indian Contract Act

Askari Mirza v. Bibi Jai kishori

An individual was the subject of a criminal indictment, and fearing the repercussions of being arraigned, he agreed to the next gathering abandoning the indictment. It was decided that the Indian Penal Code does not inherently prohibit demonstrations with the possibility of criminal prosecution. Thus, consent is crucial.

Chikham Amiraju v. Chikham Seshamma

In the present case, a Hindu man makes a suicide threat, prompting his partner and kid to carry out the arrival of many properties for his brother, which they have pledged to be their own. It was decided that the risk of suicide equates to intimidation, and the discharge deed is therefore voidable due to the application of section 15.

Ranganayakamma vs. Alwar Setti (1900)

In this instance, the court stressed that the act of coercion must be the "dominant" factor that persuades someone to enter into a contract for it to be a basis for contract avoidance.

Abdul Razzak Sahib vs. Mahomed Cassum & Co. (1917)

In this instance, the court stressed that the act of coercion must be the "dominant" factor that persuades someone to enter into a contract for it to be a basis for contract avoidance. This case made it clear that wrongful detention of property can also result in coercion, in addition to acts or threats. The court decided that coercion might be implied by threatening to stop someone from engaging in their trade.

Conclusion

It's critical to recognise that coercion is a legally defined term with proof requirements that must be met by the side attempting to break the contract. The contract might not be affected in the same way by simple persuasion or pressure, which does not fall under the legal definition of coercion.