What is the effect of Coercion on the Validity of the Contract?

Coercion mean forcibly compelling a person to enter into a contract, that is, the consent of the party is obtained by use of force or under a threat. According to Section 15 of the Indian Contract Act defines coercion as Coercion is (a) the committing or threatening to commit, any act forbidden by the Indian Penal Code, or (b) 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.

The effects of coercion as explained in the Sections 19 and 72 of the Indian Contract Act. According to Section 19, When the consent is obtained through coercion, the agreement is the contract voidable at the option of the party whose consent was not free(also known as the aggrieved party).

Thus, it can also be said that, it is the aggrieved party that decides about avoiding the contract, that is, he cannot be compelled to perform his promise. For example, A threatens to kill B if he refuses to sell his scooter for Rs. 1,000 to A. B sells his scooter to A and receives the payments. Thus, here B’s consent was not free and if B decides to avoid the contract then he will have to return Rs. 1,000 which he had received from A.

According to Section 72 of the Act, A person to whom money has been paid anything delivered under coercion, must repay or return it. For example, a railway company refused to deliver certain goods to the consignee, except upon the payment of some illegal charges for carriage. The consignee paid the illegal charges in order to obtain the goods. Thus, he is entitled to recover so many amounts of the charges as were illegal and excessive.