Have you ever heard about coercion before?
What is Coercion?
According to Cambridge Dictionary, coercion can be determined as the use of force to persuade someone to do something that they are unwilling to do. Literally, coercion can be understand as an action of convincing someone to do something using force or threat that subsequently puts someone to immediate fear of the effect in order to urge that person to do something against their will. For example, pointing a gun at someone’s head or put a knife to their throat is an actual physical threat.
Coercion in THE Contract ACT 1950
All the agreements are contract if they’re made with the free consent of the party
Section 10 of the Contract Act 1950
What is meant by ‘free consent’ in Section 10 of the Contract Act 1950?
Consent is said to be free when it is not caused – by coercion as defined by S.15 of the Act
Section 14 (a) of the Contract Act 1950
The definition of coercion in contract is provided in Section 15 in the Contract Act 1950.
Coercion is the committing, or threatening to commit, any act forbidden by the 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.
Section 15 of the Contract Act 1950
The section restrict the coercion to committing, or threatening to commit, any act forbidden by the Penal Code and unlawful detaining, or threatening to detain, any property, to prejudice of any person. Based on Section 15 of the Contract Act 1950, the act or threaten must be take with the intention of causing a person to entered into agreement.
The Element of Coercion in Contract
To determine if there is coercion in the contract, there are three elements need to be identify. The element was based on the Section 15 of the Contract Act 1950.
- The coercion must be committing of an act forbidden by the Penal Code.
- The coercion must be the unlawful detaining or threatening to detain any property.
- The act of coercion must be carried out with the intention of causing any person to enter into an agreement.
CASE LAW
Kesarmal s/o Lecthman Das v Valliappa Chettiar [1954] MLJ 119
Fact: A transfer of property was made under ‘the orders of the Sultan, issued in the presence of 2 Japanese office during Japanese occupation of Malaysia.
The court held that the transfer of land contract was not valid as the consent given was under a threat and not free.
Per Ian Chin J
There are two ways of committing coercion as defined by s.15 of the Contract Act 1950, one of which is the threatening of an act forbidden by the Penal Code (FIRST LIMB), while the other is the unlawful detention or the threatening of such to the prejudice of any person (SECOND LIMB), with the intention of causing any person to enter into an agreement.
On the FIRST LIMB- it was held that defendants failed to show the court any of the act of the plaintiff is a threat to commit any act forbidden by the Penal Code. The reason given was commercial pressure/economic blackmail does not amount to coercion because the agreement to the price was an exercise of free will.
On the SECOND LIMB- the argument by the defendant that plaintiff’s refusal to supply the bars at the lower price amounted to an unlawful detention of property in order to get the defendant to agree to the higher price.
Held: Plaintiff’s refusal did not amount to unlawful detention of property because plaintiff was exercising his legal right of its own property.
Section 73 of the Contract Act 1950
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it
Eusoff Chin J:
“It would be difficult to give effect to s.73 illustration (b) if the word ‘coercion’ is to be given the meaning as defined in s.15 of the Act. They appear to be in conflict with each other. Therefore the word ‘coercion’ in the context of s.73 of the Act should be given its ordinary and general meaning since there is nothing under s.15 which says that the word ‘coercion’ should apply throughout the Act. The definition of ‘coercion’ in s.15 should only apply for the purpose contained in s.14, as s.14 of the Act specifically says so.”
EFFECT
When consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
Section 16(1) of the Contract Act 1950
REMEDIES
When a person at whose option a contract is voidable rescind it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party such contract, restore the benefit, so far as may be, to the person from whom it was received.
Section 16(1) of the Contract Act 1950
SarahShamsoL 