Indian Contract Act Section 19 — Voidability of agreements without free consent
CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS
Commercial / Corporate
Summary
When consent to an agreement is obtained through coercion, fraud, or misrepresentation, the agreement becomes a contract that is voidable. This means the party whose consent was obtained in this way has the option to treat the contract as invalid and walk away from it.
A party whose consent was obtained through fraud or misrepresentation may instead choose to insist that the contract be performed. In that case, they can require that they be placed in the position they would have been in if the false representations had actually been true.
There is an exception to voidability. If the consent was caused by misrepresentation or by silence that amounts to fraud under section 17, the contract is not voidable if the party whose consent was so caused had the means to discover the truth with ordinary diligence. In other words, if the party could have found out the truth by making reasonable efforts, they cannot later claim the contract is voidable on that ground.
The explanation clarifies that a fraud or misrepresentation which did not actually cause the consent of the party concerned does not make the contract voidable. If the party would have given their consent regardless of the fraud or misrepresentation, the contract remains valid.
Official Text
When consent to an agreement is caused by coercion,1*** fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true. Exception.—If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation.—A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable. Illustrations 2[