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Coercion (Contract Law)


Coercion (Contract Law)
Coercion (Contract Law)

Content:-



What Constitutes 'Coercion'?


Coercion encompasses the following:



(i) Engaging in or threatening to engage in any act prohibited by the Indian Penal Code, or


(ii) Illegally confining or threatening to confine any property to the detriment of any individual, with the intent of inducing that individual to enter into an agreement.



Examples of Coercion


(i) Raghunath is coerced into arranging his daughter's marriage to Dharam Singh, under threat of harm to Raghunath's son by Dharam Singh. Such a marriage would be considered voidable at Raghunath's discretion due to coercion.



(ii) Kishna threatens to harm Lalu unless Lalu sells his house to Kishna at a significantly reduced price. Such a sale would be voidable at Lalu's discretion since it was coerced.



(iii) Anurag, acting as an agent, threatens to withhold the books of accounts from his principal unless the principal agrees to absolve him of previous irregularities. The release obtained under coercion would not be valid but would be voidable.

 
 

Implications Beyond the Direct Party


It's important to note that the threat need not be directed solely at the promisor; it can extend to anyone, as indicated by the language used in Section 14, specifically "to the prejudice of any person, whatsoever".



Example


Shaligram threatens to harm Jaggoo's son, Laddoo, if Jaggoo refuses to sell his Fiat car to Ghanshyam for Rs 5,000. Despite the fact that the coercion comes from a third party unrelated to the transaction, the sale, obtained under coercion, remains voidable.



Jurisdictional Implications in Cases of Coercion


Furthermore, it's worth clarifying that the presence of the Indian Penal Code (IPC) in the jurisdiction where the coercion occurred is not a prerequisite [Explanation to Section 15].



Example

Johnson and Joseph are aboard a French ship on the high seas, where the IPC does not apply. Taking advantage of this, Johnson criminally intimidates


Joseph into making an agreement. Later, when Joseph backs out, Johnson files a lawsuit against him in a Delhi court for breach of contract.



The contract is not legally enforceable since it was induced through criminal intimidation, which is a criminal offence under the IPC. Whether the coercion occurred on the high seas aboard a French ship, where the IPC doesn't apply under International Law, is irrelevant in this context.


What matters is that the person (Johnson) wouldn't face prosecution under the IPC for criminal intimidation, but the contract remains voidable nonetheless.




Would threatening to commit suicide amount to coercion?


To reach a conclusive determination on this matter, we must first examine whether suicide itself constitutes a crime punishable under the Indian Penal Code (IPC). It's evident that a successful suicide is not punishable under the IPC because a deceased individual is beyond the law's reach. 



However, an unsuccessful attempt to commit suicide is indeed punishable. In the case of a suicide attempt, the act itself is not punishable if successful, but failure to carry out the act is.



Thus, it's evident that threatening to commit any act forbidden under the IPC constitutes coercion. Since attempting suicide is a criminal offense, threatening to do so would also constitute a criminal offense under the IPC. Consequently, such coercion would render any agreement obtained through it as voidable.

 
 

In the case of Ammiraju vs Seshamma [(1917), 41 Mad. 33, where a release deed was obtained from a wife and son under the threat of suicide, the transaction was deemed unenforceable in court due to coercion.



Hence, it's established that any contract obtained under coercion is considered voidable (not void), but solely at the option of the aggrieved party (Section 19). Therefore, only the aggrieved party, and not the other party, has two available options to choose from, depending on which is more advantageous:



(a) Request to have the contract set aside, or


(b) Insist on the performance of the contract by the other party.



Coercion vs. Duress


In English law, the term 'duress' is considered the closest equivalent to 'coercion'. However, it's important to note that 'duress' has certain limitations and narrower scope compared to the broader concept of 'coercion'. These limitations include:



(i) Duress can only be exerted against the other party involved in the contract or their family members; it cannot be applied against any other individual, unlike coercion.



(ii) Duress can only be employed by the promisee (the other party in the contract) or by their agent. In contrast, coercion can be exercised not only by the other party to the contract but also by any other person, regardless of their relationship to the contract.



(iii) Duress is typically associated with bodily violence and imprisonment of individuals, whereas coercion encompasses the unlawful detention of goods as well.

 
 


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