A free pass is taken when the other team: steps (the player is not out of play), contacts (the player is out of play), obstructs (the player is out of play), holds the ball (the player is not out of play), throws the ball over a third (no-one is out of play) or steps offside (the player is not out of play, I think).
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The one the ref says so can and also the person who has been "contacted" or obstructed from the opposition. Also if a "C" player has a free pass and the opposing player has to stand down for the next pass, so C can put the ball on the ground and the next available player in the team can take that pass also while C gets back into position.
You could get a free pass in Netball if someone steps, replays the ball, goes offside, the ball is thrown over a third etc.
A penalty pass is given if a player contacts or obstructs an opposing player down the court. However if this happens in your goal circle you will be awarded a penalty pass or shot where you can choose to either pass the ball or take a shot