Article By: Name: Pushkar Gulia, 2nd year ( B.A LLB Hons.), Himachal Pradesh National Law University
Introduction:
The Informed Consent is the backbone of the legally binding agreements which ensure that all parties understand the terms, risks, and implications before commencing of the contract. Without its agreements may turn to void, or subject to the legal challenges, highlighting its crucial role in the contract law and decision-making.
Under the Indian Contract Act, 1872, informed Consent means that a person agrees to a contract knowingly and willingly after fully understanding all its terms, conditions, and further consequences. So, in simple terms for a consent to be valid:
- A person must understand what they are agreeing under the Agreements.
- The consent must be given freely (without pressure, fraud or mistake).
According to section 13 of the Act, Consent means when two or more persons agree upon the same thing in a same sense (Consensus ad idem).
Essential elements of Informed consent in Contracts:
For an agreement to be legally binding/valid, the consent given by the parties must be free, informed and competent. The Indian Contract Act, 1872 emphasize certain essential elements that ensure informed consent. These Include disclosure, understanding of terms, voluntariness and the capacity of the parties.
- Disclosure of the material Information: It means that all relevant/important facts, terms, and conditions related to the contract must be clearly communicated between the parties. According to Indian Contract law, 1872 failure to disclose material facts can lead to misrepresentation or fraud, making the contract voidable. For example: Buying a car from a dealership. The seller must inform the other party about any past accidents, mechanical issues or any other hidden defects in the car. If the seller hides information and the receiving party later find out that the car has serious engine problems, here the receiving party have the upper hand to make the void or take legal action because the consent was not fully informed.
Key aspects of Disclosure:
a) Terms and Conditions must be clear and unambiguous.
b) Any risks, liabilities, or penalties should be explicitly mentioned.
c) Subject Information should not be hidden or misrepresented.
- Understanding of terms: The consenting party must be in a position to fully understand the terms and implications of the contract before agreeing to the contract. A person cannot provide informed consent if they don’t understand what they are agreeing to. A point to be note here is that contracts written in technical or legal jargon may be challenged in court if the other party doesn’t have the expertise to understand them. There is landmark case on this point Lily white V. R. Mannuswamy (1966 AIR 935, SCR (3) 260). Under this case the Plaintiff, Lily White, purchased a railway ticket with a printed condition on the back stating that the railway company would be liable for any loss, damage or injury. She suffered injuries due to the railway’s negligence and sued for compensation. The railway company argued that she had agreed to the terms printed on the ticket, which limited their liability. The Supreme Court of India held that the exclusion clause was unfair and unenforceable because the terms were written in fine print and legal language which makes it difficult for an ordinary person to understand. Further the court emphasized that to make a contract to be valid, the terms must be communicated clearly and in a way that the other party can understand it clearly.
- Voluntariness: It means that a person must be agree to a contract out of their own will, without any form of external pressure, manipulation or any kind of force. In legal terms this ensures that both the parties entering into a contract must be on equal footing, with a freedom to accept or reject the terms without fear of negative consequences. If the consent is obtained through coercion (physical or mental pressure), undue influence (abuse of power), mis-representation (false statement) or fraud, then the contract can be challenged before the court and may be declared voidable by the affected party.
There is Landmark Judgement on Voluntariness: Raghunath Prasad v. Sarju Prasad (1924 AIR 60, 1923 SCR 1), In this case Raghunath Prasad, a moneylender, lent money to Sarju Prasad, a person in a vulnerable condition. As Sarju Prasad was under financial distress, agreed to unfairly high interest rates and some other harsh repayment conditions. Later, he challenged the contract claiming that he was under undue influence when he signed the agreement. Here Privy Council ruled that as the contract was unfair and entered under undue influence because Sarju Prasad had been under a vulnerable position. The court here emphasized that when one party is in a dominant position and the other is in a weaker or dependent state, the agreement must be fair and reasonable. Since the lender took the advantage of that, the contract was declared voidable under the Section 16 of Indian Contract Act, 1872 (Undue Influence).
- Capacities of Parties: Capacity refers to a person’s legal and mental ability to enter into a contract. For a informed consent the individual must understand the nature and consequences of the agreement and be legally qualified to make such kind of commitments. If a person lacking capacity to give the informed consent, and contract signed under such circumstances may be declared void or voidable under the law.
Key aspects of Capacities of parties:
- Age requirements: According to section 11 of the Indian Contract Act 1872, a person must be 18 years or older to enter into a legally binding contract. If a minor enters into a contract, then it is considered as void ab intio (Invalid from the beginning).
- Mental Soundness: A person must be of sound mind at the time of signing of the contract. According to section 12 of the Indian Contract Act, 1872, a person who cannot understand the terms of the contract due to any kind of mental illness, intoxication, or any other condition cannot provide valid consent.
- Not Disqualified by the Law: A person who wishes to enter into a contract should not be legally disqualified from a lawful authority, For Eg: An Insolvent person have no authority to enter into the contract.
Conclusion:
Informed consent is an important part of any legal agreement. It makes sure that everyone involved understands the terms, agrees willingly, and has the legal right to enter into the contract. If consent is not properly given, the contract can be unfair, disputed, or even canceled. The Indian Contract Act, 1872, protects people by requiring clear information, understanding of terms, free choice, and legal ability to agree. These rules help make contracts fair, honest, and legally strong, preventing misuse and building trust between parties.
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