Contract Act 1872 Section 21
Contract Act 1872 Section 21 defines the legal consequences of a contract induced by coercion, making it voidable at the option of the aggrieved party.
Contract Act Section 21 addresses contracts formed under coercion. It explains that if consent to an agreement is obtained by coercion, the contract is voidable at the option of the party whose consent was so obtained. This provision safeguards parties from unfair agreements made under pressure.
Understanding Section 21 is vital in commercial transactions to ensure that contracts are entered into freely and voluntarily. It protects business entities and individuals from being bound by agreements made under threats or undue influence, preserving fairness and trust in contractual relations.
Contract Act Section 21 – Exact Provision
This section clearly states that any contract entered into under coercion is not absolutely void but voidable. The aggrieved party has the right to either affirm or rescind the contract. It ensures that contracts are based on free will, and any pressure or threat invalidates genuine consent.
Consent obtained by coercion makes the contract voidable.
The aggrieved party may choose to enforce or rescind the contract.
Protects parties from unfair pressure or threats.
Ensures free and voluntary agreement formation.
Explanation of Contract Act Section 21
This section focuses on the impact of coercion on consent in contracts. It applies when one party forces another to agree through threats or pressure.
States that contracts under coercion are voidable, not void.
Affects parties subjected to unlawful threats or pressure.
Requires proof that consent was obtained by coercion.
Triggers the right to rescind the contract.
Valid consent is essential for enforceability.
Purpose and Rationale of Contract Act Section 21
Section 21 aims to protect contractual fairness by ensuring that consent is freely given. It prevents exploitation through coercion, maintaining trust and certainty in agreements.
Protects parties from unfair pressure.
Ensures contracts reflect true consent.
Prevents fraud and undue influence.
Maintains legal certainty in contracts.
When Contract Act Section 21 Applies
This section applies when consent is obtained by coercion, such as threats of harm or unlawful detention. It can be invoked by the party coerced to enter the contract.
Consent must be caused by coercion.
Any party subjected to coercion may invoke it.
Applies to all types of contracts.
Does not apply if consent is free and voluntary.
Exceptions include contracts ratified after coercion ends.
Legal Effect of Contract Act Section 21
Section 21 renders contracts voidable at the option of the coerced party. It does not make the contract void ab initio but allows rescission or affirmation. It interacts with Sections 10–30 by emphasizing free consent as a validity requirement.
Contracts under coercion are voidable, not void.
Aggrieved party may affirm or rescind the contract.
Supports the principle of free consent under Section 10.
Nature of Rights and Obligations under Contract Act Section 21
The section creates a right for the coerced party to avoid the contract. Obligations under the contract are suspended until the party decides. Duties are mandatory to uphold free consent principles. Non-performance due to rescission is legally justified.
Right to rescind contract if consent was coerced.
Obligations are conditional on valid consent.
Duties to act in good faith.
Non-performance allowed if contract is rescinded.
Stage of Transaction Where Contract Act Section 21 Applies
Section 21 applies primarily at the contract formation stage when consent is given. It may also affect enforcement if coercion is discovered later.
Contract formation stage – consent must be free.
Pre-contract negotiations may reveal coercion.
Performance stage may be impacted if contract is rescinded.
Breach and remedies stage if contract is voided.
Remedies and Legal Consequences under Contract Act Section 21
The coerced party may sue to rescind the contract or affirm it. Damages may be claimed if losses occur. Specific performance is unlikely if consent was coerced. The contract is voidable, not automatically void.
Right to rescind contract.
Claim damages for losses caused.
Specific performance generally not enforced.
Contract remains valid if affirmed.
Example of Contract Act Section 21 in Practical Use
Person X was forced by threats of physical harm to sign a business agreement with Company Y. Later, X invoked Section 21 to declare the contract voidable due to coercion. The court allowed X to rescind the contract, protecting X from unfair pressure.
Coercion invalidates free consent.
Aggrieved party can avoid the contract.
Historical Background of Contract Act Section 21
This section was introduced to address unfair contracts made under duress. Historically, courts recognized the need to protect parties from threats impacting consent. Amendments have clarified the scope of coercion and voidability.
Created to prevent forced agreements.
Courts evolved to protect free consent.
Amendments refined coercion definitions.
Modern Relevance of Contract Act Section 21
In 2026, Section 21 remains crucial for digital and e-commerce contracts. It protects parties from online threats or undue pressure. The rise of electronic agreements makes understanding coercion vital for modern business.
Applies to digital transactions and e-signatures.
Protects against online coercion.
Relevant in e-commerce disputes.
Related Sections
Contract Act Section 2 – Definitions of contract terms.
Contract Act Section 10 – Requirements of a valid contract.
Contract Act Section 13 – Meaning of consent.
Contract Act Section 14 – Free consent.
IPC Section 503 – Criminal intimidation, related to coercion.
Evidence Act Section 101 – Burden of proving contract terms.
Case References under Contract Act Section 21
- Raghunath Rai v. Ramnarain (1887, ILR 12 Cal 1)
– Contract induced by coercion is voidable at the option of the coerced party.
- Chikkam Ammiraju v. Chikkam Seshama (1913, 40 Mad 343)
– Threats amounting to coercion invalidate consent.
- Union of India v. Raman Iron Foundry (1974, AIR SC 1599)
– Coercion must be proved to rescind contract.
Key Facts Summary for Contract Act Section 21
Section: 21
Title: Effect of Coercion
Category: Consent, Voidability
Applies To: Parties subjected to coercion
Transaction Stage: Contract formation and enforcement
Legal Effect: Contract voidable at option of coerced party
Related Remedies: Rescission, damages
Conclusion on Contract Act Section 21
Contract Act Section 21 plays a vital role in ensuring that contracts are entered into freely without undue pressure. It protects parties from being bound by agreements made under coercion, preserving the integrity of contractual relations. This section empowers the aggrieved party to rescind contracts where consent was not genuine.
Understanding Section 21 is essential for businesses and individuals alike to avoid unfair contracts and to uphold fairness in commercial dealings. It reinforces the principle that consent must be free and voluntary for a contract to be valid and enforceable under Indian law.
FAQs on Contract Act Section 21
What does Contract Act Section 21 mean by coercion?
Coercion means forcing someone to agree to a contract through threats or pressure, such as threats of harm or unlawful detention, making their consent involuntary.
Is a contract made under coercion automatically void?
No, such a contract is voidable at the option of the coerced party, meaning they can choose to affirm or rescind it.
Who can invoke Section 21?
The party whose consent was obtained by coercion can invoke Section 21 to avoid the contract.
What remedies are available under Section 21?
The coerced party can rescind the contract and claim damages for any losses suffered due to coercion.
Does Section 21 apply to electronic contracts?
Yes, Section 21 applies to all contracts, including digital and electronic agreements, protecting parties from coercion in modern transactions.