22-Vitiating Factors Flashcards
Vitiating factor definition
Makes a contract void or voidable
Makes a contract void or voidable
Definition of vitiating factor
What are two vitiating factors that make a contract voidable?
1) Misrepresentation
2) Economic duress
What are the four elements to misrepresentation?
1) a false statement
2) of material fact
3) made by a party to a contract
4) that induces the other party to enter the contract
A false statement of material fact made by a party to a contract that induces the other party to enter the contract
Definition of misrepresentation
What case demonstrates that for a statement to be regarded as misrepresentation it does not have to be written or verbal?
Spice Girls v Aprilia World Service (2000)
Facts: When negotiating a contract. Spice Girls did not disclose that Geri had our notice in to leave the group.
Spice Girls v Aprilia (2000)
False statement does not have to be written or verbal to be considered misrepresentation.
Facts: When negotiating a contract. Spice Girls did not disclose that Geri had put notice in to leave the group.
What case demonstrates that silence cannot constitute misrepresentation IF there is no duty to disclose info.
Fletcher v Krell (1873)
Facts: Woman applied for job that in Victorian times she would not have been allowed to take for being divorced. But they did not ask and she did not tell.
Fletcher v Krell (1873)
Silence not constitute misrepresentation IF there is no duty to disclose such info.
Facts: Woman applied for job that in Victorian times she would not have been allowed to take for being divorced. But they did not ask and she did not tell.
In which three circumstances can silence constitute misrepresentation?
a) Change of circumstance (With v O’Flanagan 1936)
b) Making of half-truth (Dimmock v Hallett 1866)
c) Confidential relationships (Tate v Williamson 1866)
What case demonstrates that:
Change of circumstance can constitute a misrepresentation?
With v O’Flanagan (1936)
Facts: Doctor selling his practice gave accurate revenue but which later changed and he did not disclose this change-considered misrepresentation.
With v O’Flanagan (1936)
Change of circumstance can = misrepresentation
Facts: Doctor selling his practice gave accurate revenue but which later changed and he did not disclose this change-considered misrepresentation.
What case demonstrates that:
Making of a half-truth can = misrepresentation?
Dimmock v Hallett (1866)
Facts: seller of land stated there were tenants but did not disclose that they were all leaving-considered misrepresentation.
Dimmock v Hallett (1866)
Demonstrates that making of half-truth can = misrepresentation
Facts: seller of land stated there were tenants but did not disclose that they were all leaving-considered misrepresentation.
What case shows that:
Silence in making a contract through confidential relationship can = misrepresentation?
Tate v Williamson (1866)
Facts: financial adviser told client to sell land for half its value. Adviser then purchased the land himself-considered breach of trust and therefore misrepresentation.
Tate v Williamson (1866)
Failing to disclose info in a contract through a confidential relationship can = misrepresentation.
Facts: financial adviser told client to sell land for half its value. Adviser then purchased the land himself-considered breach of trust and therefore misrepresentation.
What case demonstrates that in a contract of good faith all material facts should be disclosed?
Lambert v Co-op Insurance (1975)
Facts: woman did not disclose her husbands conviction for conspiracy to steal when renewing her insurance-found to be misrepresentation.
Lambert v Co-op Insurance (1975)
All material facts must be disclosed in a contract of ‘utmost good faith’
Facts: woman did not disclose her husbands conviction for conspiracy to steal when renewing her insurance-found to be misrepresentation.
When can a statement of future intention be regarded as a fact?
If at the time of making the statement it is what the person intends to do.
What case demonstrates that:
The statement must be one of fact rather than opinion for their to be misrepresentation?
Bisset v Wilkinson (1927)
Facts: seller of farmland gave a rough estimate of how many sheep his farmland could sustain, genuinely believing it to be true-not misrepresentation.p
Bisset v Wilkinson (1927)
It must be a statement of fact rather than opinion to be considered misrepresentation.
Facts: seller of farmland gave a rough estimate of how many sheep his farmland could sustain, genuinely believing it to be true-not misrepresentation.
What case demonstrates that falsifying a statement of intention is = to misrepresenting a fact?
Edgington v Fitzmaurice (1885)
Facts: directors of a company falsely stated that they would use claimants investment to upgrade buildings but that was never the intention-misrepresentation.
Edgington v Fitzmaurice (1885)
A statement of intention that is false is = misrepresentation
Facts: directors of a company falsely stated that they would use claimants investment to upgrade buildings but that was never the intention-misrepresentation.
Which case contrasts with Bisset v Wilkinson (1927) in that the statement was regarded as fact rather than opinion?
Edgington v Fitzmaurice (1885)
Regarding ‘inducing the other to enter the contract’
What case demonstrates that a party must have relied on a statement rather than their own judgement for there to have been misrepresentation?
Atwood v Small (1838)
Facts: seller of a mine made false statement about earnings, but this wasn’t relied on by the buyer because buyer had their own report done which happened to be wrong to.
Attwood v Small (1838)
Induces other party to enter contract.
Statement must have been relied on rather than own judgement for misrepresentation.
Facts: seller of a mine made false statement about earnings, but this wasn’t relied on by the buyer because buyer had their own report done which happened to be wrong to.
INDUCING THE OTHER PARTY TO ENTER A CONTRACT
What case demonstrates that:
Even if buyer could have verified info given, if they relied on statement then this is misrepresentation?
Redgrave v Hurd (1881)
Facts: seller made a false verbal statement about the accounts. Buyer didn’t review account but relied on statement-considered misrepresentation.
Redgrave v Hurd (1881)
INDUCES OTHER PARTY TO ENTER CONTRACT
Even if buyer could have verified info given-if they relied on statement this is misrepresentation.
Facts: seller made a false verbal statement about the accounts. Buyer didn’t review account but relied on statement-considered misrepresentation.
INDUCES THE OTHER PARTY TO ENTER THE CONTRACT
What case demonstrates that:
The reasonable person is irrelevant in this circumstance?
Museprime properties v Adhill Properties (1990)
Facts: purchaser of property relied on inaccurate statements about rent but D attempted defence of reasonable person not accepting such estimates-defence failed.
Museprime Properties v Adhill Properties (1990)
INDUCES THE OTHER PARTY TO ENTER CONTRACT
Reasonable person is not relevant in these circumstances.
Facts: purchaser of property relied on inaccurate statements about rent but D attempted defence of reasonable person not accepting such estimates-defence failed.
What are the different types of misrepresentation?
Innocent
Negligent
Fraudulent
Definition of innocent misrepresentation
And where does the definition come from?
A false statement made with an honest belief it is true.
Misrepresentation Act 1967
A false statement made with an honest belief it is true.
Definition of innocent misrepresentation
What are the two types of negligent misrepresentation?
Under common law (Hedley Byrne 1964)
Under statute (Misrepresentation Act 1967)
Definition of negligent misrepresentation
A false statement made by a party that believed it was true but had no reasonable grounds for believing it to be true.
A false statement made by a party that believed it was true but had no reasonable grounds for believing it to be true.
Definition of negligent misrepresentation
s2(1) Misrepresentation Act 1967
Provides that there does not need to be a relationship between the parties for negligent misrepresentation.
Provides that there does not need to be a relationship between the parties for negligent misrepresentation.
s2(1) Misrepresentation Act 1967
Under the Misrepresentation Act 1967 whom is the burden of proof on in negligent misrepresentation?
The defendant, they have to prove that there were reasonable grounds to believe the statement was true.
What is one benefit for a claimant making a claim from statute rather than common law for negligent misrepresentation?
A relationship does not have to be established-unlike in Hedley Byrne (1964)
What case demonstrates innocent misrepresentation?
Leaf v International Galleries (1950)
Facts: Picture of a Salisbury Cathedral that turned out not to have been by a famous artist.
Leaf v International Galleries (1950)
Example of innocent misrepresentation
Facts: Picture of a Salisbury Cathedral that turned out not to have been by a famous artist.
What case is an example of negligent misrepresentation?
Esso Petrol v Mardon (1976)
Facts: Esso petrol made sales estimates for a station which they did not change despite alterations to the station location.
Esso Petrol v Mardon (1976)
Example of negligent misrepresentation
Facts: Esso petrol made sales estimates for a station which they did not change despite alterations to the station location.
What case is an example of fraudulent misrepresentation?
Cherrilow Ltd v Butler-Creagh (2011)
Facts: D acres as an intermediary claiming only he had exclusive rights to purchase a property on behalf of C which was not true.
Cherrilow Ltd v Richard Creagh (2011)
Example of false misrepresentation
Facts: D acres as an intermediary claiming only he had exclusive rights to purchase a property on behalf of C which was not true.
FRAUDULENT MISREPRESENTATION
What case demonstrates even an overly optimistic view can be regarded as fraudulent misrepresentation?
Greenridge Luton One Ltd v Kempton Investments (2016)
Facts: D claimed that a flat they were selling had no service charge arrears when in fact it did.
Greenridge Luton One v Kempton Investments (2016)
Demonstrates that even an over optimistic view can constitute fraudulent misrepresentation.
Facts: D claimed that a flat they were selling had no service charge arrears when in fact it did.
What type of remedy is rescission?
Equitable remedy
In what situations will rescission not be available?
1) restitution to pre-contract impossible
2) contract is affirmed (innocent party carries on)
3) delay
4) a 3rd has gained rights over property
When rescission is not available
1) restitution to pre-contract position impossible
What case for this?
Clarke v Dickson (1858)
Facts: C misled into becoming a partner but firm had become a Ltd company so no rescission available.
Clarke v Dickson (1858)
1) restitution to pre-contract position is impossible.
Facts: C misled into becoming a partner but firm had become a Ltd company so no rescission available.
WHEN REMEDY OF RESCISSION NOT AVAILABLE
2) Contract is affirmed
What case to demonstrate this?
Long v Lloyd (1958)
Facts: C bought lorry from D that repeatedly broke down but was not afforded rescission as they had already agreed to half repair bills.
Long v Lloyd (1958)
What does this case support regarding remedies for misrepresentation?
Regarding circumstances when rescission is not available
2) contract is affirmed
Facts: C bought lorry from D that repeatedly broke down but was not afforded rescission as they had already agreed to half repair bills.
RESCISSION NOT AVAILABLE IN THESE CIRCUMSTANCES
3) Delay
What case supports this principle?
Leaf v International Galleries (1950)
Facts: Painting of Salisbury cathedral which turned out not to be by famous artist was only realised 5 years after purchase.
Leaf v International Galleries (1950)
Rescission not allowed in these circumstances
3) Delay
Facts: Painting of Salisbury cathedral which turned out not to be by famous artist was only realised 5 years after purchase.
Rescission is not available
4) a 3rd party has gained rights over the property
What case supports this?
Lewis v Averay (1972)
Facts: C tried to claim for a car he sold in exchange for a cheque that bounced. By this point a 3rd party was innocently in possession of car.
Lewis v Averay (1972)
Rescission not available in these circumstances
4) 3rd party has gained rights over property
Facts: C tried to claim for a car he sold in exchange for a cheque that bounced. By this point a 3rd party was innocently in possession of car.
s2(2) Misrepresentation Act 1967
Provides that a court can offer damages instead of rescission for Negligent or Innocent misrepresentation.
Provides that a court can offer damages instead of rescission for Negligent or Innocent misrepresentation.
s2(2) Misrepresentation Act 1967
s2(1) Misrepresentation Act 1967
Gives right to damages for negligent misrepresentation-this is in addition to damages in s2(2) but must be offset against that if it is.
Gives right to damages for negligent misrepresentation-this is in addition to damages in s2(2) but must be offset against that if it is.
s2(1) Misrepresentation Act 1967
What case demonstrates a circumstance where a court might exercise the provisions in s2(2) Misrepresentation Act 1967?
If rescission is inequitable
Sindall v Cambridgeshire County Council (1993)
Facts: Value of land recently purchased from Council had dropped in value meaning it was inequitable for C to rescind for this-only for the damages which were separate-sewer pipe.
Sindall v Cambridgeshire County Council (1993)
What does this case demonstrate regarding rescission of a contract?
Example of damages under s2(2) Misrepresentation Act 1967 in lieu of rescission.
Facts: Value of land recently purchased from Council had dropped in value meaning it was inequitable for C to rescind for this-only for the damages which were separate-sewer pipe.
What are the three different ways a contract may not be valid because one party is forced into it?
1) Under influence
2) Duress
3) Economic duress
Economic duress
Case example
Atlas Express v Kafco (1989)
Facts: Having signed a lucrative deal to supply goods to Woolworth’s the suppliers contract with the courier turned out to cause it to be loss making-but under threat of economic duress they signed anyway.
Atlas Express v Kafco (1989)
Example of economic duress
Facts: Having signed a lucrative deal to supply goods to Woolworth’s the suppliers contract with the courier turned out to cause it to be loss making-but under threat of economic duress they signed anyway.
What case demonstrates that there must be pressure for economic duress to be found?
The Universe Sentinel (1983)
Facts: Workers threatened to strike for higher wages on a ship but in this case it was seen as economic duress.
The Universe Sentinel (1983)
There must be pressure for economic duress to exist.
Facts: Workers threatened to strike for higher wages on a ship but in this case it was seen as economic duress.
What case demonstrates that pressure can be illegitimate even when it is lawful?
Progress Bulk Carriers v Tube City (2012)
Facts: Ship owners who initially accepted paying damages for a ships faults later withdrew that promise when the ship lenders were under pressure to use it-economic duress.
Progress Bulk Carriers v Tube City (2012)
Economic duress does not have to be unlawful to be considered duress.
Facts: Ship owners who initially accepted paying damages for a ships faults later withdrew that promise when the ship lenders were under pressure to use it-economic duress.
