By Asok Nadhani
5.3 Coercion
i.
Threat : Coercion means fear, intimidation,
physical or mental compulsion and even threat to damage of goods or property.
Ex. A tells his wife that he would
commit suicide, if she did not transfer her personal assets to him. She does so
under this threat. Threat to commit suicide amounts coercion.
ii.
Forbidden
Act : As per Sec. 15, committing
or threatening to commit any forbidden act by the Indian Penal Code is
coercion. So, a threat to commit suicide amounts coercion.
Ex. A threatens B to kill his (B’s) wife if B
does not transfer his business in the name of C. B signs the document of
transfer, here the consent is caused by coercion.
Ex. H, a husband, threaten his wife and son to
commit suicide and compel them to sign in a deed. The deed is enforceable.
iii.
Intention
to induce : Coercion
arises only when the intention is to induce a party to enter into a contract.
iv.
Threats
not amounting to coercion:
(a)
Threat
to file a suit,
(b)
Consent
given on legal obligations,
(c)
Threat
by workers,
(d)
Threat
to detain property by mortgager.
5.3.1 Elements of Coercion
i.
Forbidden
Act: Coercion is exercised
when an forbidden act by Indian Penal Code was committed. It is immaterial
whether Indian Penal Code was in force in the place where the coercion was
committed.
Ex.
A threatens to kill B if B does not release him (A) from a debt which A owes to
B. B releases A from debt under the threat. The release has been brought about by coercion.
Ex. P, 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
ii.
Unlawfully
detained : Coercion is
exercised if some property is unlawfully detained or threatened to detain, to
the prejudice of some person.
Ex.
A young widow was forced to adopt a boy under the threat of preventing the body
or her husband, who had just died, from being removed for cremation. The
adoption is voidable at the option of the widow as it is induced by coercion.
iii.
Coercion
by contracting parties : Coercion
may also be exercised by contracting parties or their agents or third parties.
iv.
Coercion
by Third Party : Coercion
may proceed from or may be directed to a person who is even not a party to
contract.
Ex. X threatens to kill B if he does not sell
his house to B at a very low price. The agreement is caused by coercion though
X is a stranger to the contract.
v. Intention to
induce : Coercion arises only when the intention is to induce a party to
enter into a contract.
Ex. A says to B ‘ I shall not return the
documents of title relating to your wife’s property, unless you agree to sell
your property to me for Rs.2,00,000. B agrees to this with A as A is inducing B to enter into a contract
through coercion. So, B may refuse to sell to A.
5.3.2 Legal consequences of Coercion
i.
Voidable : When a contract is entered by any party
effected by coercion, the contract is voidable at the option of the Party who
was influenced by coercion. (sec.19)
Ex. X, a consignee was forced to pay an
illegal charge to the carriage company in order to release his goods. He is
entitled to recover the amount of charge which is illegally excessive.
ii.
Burden
of proof : The burden of
proof of coercion lies on the Party who wants to relieve himself of the
coercion.
iii.
Refund
of benefit : Any person
receiving money or refund benefit arising out of contract under coercion, must
the money. (sec.72)
iv.
Restoration
of benefit : When a party
rescinds a voidable contract, he shall restore (i.e., pay back) any benefit
received by him under contract, to the person from whom the benefit was
received (sec.64).
For more details, refer to
Mercantile law, by Asok Nadhani, BPB Publications, www.bpbonline.com, bpbpublications@gmail.com
By Asok Nadhani
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