| Direction: A principle(s) and a fact situation are given in questions decide, only on the basis of the principles. |
| Principle: Two or more persons are said to consent when they agree upon the same thing in the same sense. |
| Coercion: Coercion is the committing, or threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. |
| A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. When consent to a contract is caused by Coercion, then the contract is voidable at the option of the party whose consent was so caused. |
| Facts Aman was in the shipping business and Biju, Cathy and Outt were his arch rivals. Together, the three bought almost 80% stakes in Aman's company. Then they told him that if he didn't sell his company's important assets to them, they would liquidate the company and thus finish it. Under this stress, Aman had no choice but to sell his company's assets. After selling 50% of the assets however, he refused to sell anymore. Biju, Cathy and Outt sue him for breach. |
A) They won't succeed because the contract being caused by coercion is voidable
B) Aman can escape liability only if he decides to hold the contract void
C) Aman has no option but to sell the remaining assets since his rivals have acquired 80% stake in his company
D) Aman is liable for breach of contract and should compensate his rivals
Correct Answer: A
Solution :
Biju, Cathy and Dutt will not succeed in litigation against Aman, because they forced Aman to sell his company's important assets to them, by the act of coercion i.e., they would liquidate the company.
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