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Contract Law > 22-Vitiating Factors > Flashcards

22-Vitiating Factors Flashcards

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1
Q

Vitiating factor definition

A

Makes a contract void or voidable

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2
Q

Makes a contract void or voidable

A

Definition of vitiating factor

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3
Q

What are two vitiating factors that make a contract voidable?

A

1) Misrepresentation

2) Economic duress

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4
Q

What are the four elements to misrepresentation?

A

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

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5
Q

A false statement of material fact made by a party to a contract that induces the other party to enter the contract

A

Definition of misrepresentation

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6
Q

What case demonstrates that for a statement to be regarded as misrepresentation it does not have to be written or verbal?

A

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.

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7
Q

Spice Girls v Aprilia (2000)

A

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.

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8
Q

What case demonstrates that silence cannot constitute misrepresentation IF there is no duty to disclose info.

A

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.

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9
Q

Fletcher v Krell (1873)

A

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.

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10
Q

In which three circumstances can silence constitute misrepresentation?

A

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)

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11
Q

What case demonstrates that:

Change of circumstance can constitute a misrepresentation?

A

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.

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12
Q

With v O’Flanagan (1936)

A

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.

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13
Q

What case demonstrates that:

Making of a half-truth can = misrepresentation?

A

Dimmock v Hallett (1866)

Facts: seller of land stated there were tenants but did not disclose that they were all leaving-considered misrepresentation.

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14
Q

Dimmock v Hallett (1866)

A

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.

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15
Q

What case shows that:

Silence in making a contract through confidential relationship can = misrepresentation?

A

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.

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16
Q

Tate v Williamson (1866)

A

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.

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17
Q

What case demonstrates that in a contract of good faith all material facts should be disclosed?

A

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.

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18
Q

Lambert v Co-op Insurance (1975)

A

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.

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19
Q

When can a statement of future intention be regarded as a fact?

A

If at the time of making the statement it is what the person intends to do.

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20
Q

What case demonstrates that:

The statement must be one of fact rather than opinion for their to be misrepresentation?

A

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

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21
Q

Bisset v Wilkinson (1927)

A

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.

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22
Q

What case demonstrates that falsifying a statement of intention is = to misrepresenting a fact?

A

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.

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23
Q

Edgington v Fitzmaurice (1885)

A

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.

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24
Q

Which case contrasts with Bisset v Wilkinson (1927) in that the statement was regarded as fact rather than opinion?

A

Edgington v Fitzmaurice (1885)

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25
Q

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?

A

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.

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26
Q

Attwood v Small (1838)

A

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.

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27
Q

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?

A

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.

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28
Q

Redgrave v Hurd (1881)

A

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.

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29
Q

INDUCES THE OTHER PARTY TO ENTER THE CONTRACT

What case demonstrates that:
The reasonable person is irrelevant in this circumstance?

A

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.

30
Q

Museprime Properties v Adhill Properties (1990)

A

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.

31
Q

What are the different types of misrepresentation?

A

Innocent

Negligent

Fraudulent

32
Q

Definition of innocent misrepresentation

And where does the definition come from?

A

A false statement made with an honest belief it is true.

Misrepresentation Act 1967

33
Q

A false statement made with an honest belief it is true.

A

Definition of innocent misrepresentation

34
Q

What are the two types of negligent misrepresentation?

A

Under common law (Hedley Byrne 1964)

Under statute (Misrepresentation Act 1967)

35
Q

Definition of negligent misrepresentation

A

A false statement made by a party that believed it was true but had no reasonable grounds for believing it to be true.

36
Q

A false statement made by a party that believed it was true but had no reasonable grounds for believing it to be true.

A

Definition of negligent misrepresentation

37
Q

s2(1) Misrepresentation Act 1967

A

Provides that there does not need to be a relationship between the parties for negligent misrepresentation.

38
Q

Provides that there does not need to be a relationship between the parties for negligent misrepresentation.

A

s2(1) Misrepresentation Act 1967

39
Q

Under the Misrepresentation Act 1967 whom is the burden of proof on in negligent misrepresentation?

A

The defendant, they have to prove that there were reasonable grounds to believe the statement was true.

40
Q

What is one benefit for a claimant making a claim from statute rather than common law for negligent misrepresentation?

A

A relationship does not have to be established-unlike in Hedley Byrne (1964)

41
Q

What case demonstrates innocent misrepresentation?

A

Leaf v International Galleries (1950)

Facts: Picture of a Salisbury Cathedral that turned out not to have been by a famous artist.

42
Q

Leaf v International Galleries (1950)

A

Example of innocent misrepresentation

Facts: Picture of a Salisbury Cathedral that turned out not to have been by a famous artist.

43
Q

What case is an example of negligent misrepresentation?

A

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.

44
Q

Esso Petrol v Mardon (1976)

A

Example of negligent misrepresentation

Facts: Esso petrol made sales estimates for a station which they did not change despite alterations to the station location.

45
Q

What case is an example of fraudulent misrepresentation?

A

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.

46
Q

Cherrilow Ltd v Richard Creagh (2011)

A

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.

47
Q

FRAUDULENT MISREPRESENTATION

What case demonstrates even an overly optimistic view can be regarded as fraudulent misrepresentation?

A

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.

48
Q

Greenridge Luton One v Kempton Investments (2016)

A

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.

49
Q

What type of remedy is rescission?

A

Equitable remedy

50
Q

In what situations will rescission not be available?

A

1) restitution to pre-contract impossible
2) contract is affirmed (innocent party carries on)
3) delay
4) a 3rd has gained rights over property

51
Q

When rescission is not available

1) restitution to pre-contract position impossible

What case for this?

A

Clarke v Dickson (1858)

Facts: C misled into becoming a partner but firm had become a Ltd company so no rescission available.

52
Q

Clarke v Dickson (1858)

A

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.

53
Q

WHEN REMEDY OF RESCISSION NOT AVAILABLE

2) Contract is affirmed

What case to demonstrate this?

A

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.

54
Q

Long v Lloyd (1958)

What does this case support regarding remedies for misrepresentation?

A

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.

55
Q

RESCISSION NOT AVAILABLE IN THESE CIRCUMSTANCES

3) Delay

What case supports this principle?

A

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.

56
Q

Leaf v International Galleries (1950)

A

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.

57
Q

Rescission is not available

4) a 3rd party has gained rights over the property

What case supports this?

A

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.

58
Q

Lewis v Averay (1972)

A

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.

59
Q

s2(2) Misrepresentation Act 1967

A

Provides that a court can offer damages instead of rescission for Negligent or Innocent misrepresentation.

60
Q

Provides that a court can offer damages instead of rescission for Negligent or Innocent misrepresentation.

A

s2(2) Misrepresentation Act 1967

61
Q

s2(1) Misrepresentation Act 1967

A

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.

62
Q

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.

A

s2(1) Misrepresentation Act 1967

63
Q

What case demonstrates a circumstance where a court might exercise the provisions in s2(2) Misrepresentation Act 1967?

A

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.

64
Q

Sindall v Cambridgeshire County Council (1993)

What does this case demonstrate regarding rescission of a contract?

A

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.

65
Q

What are the three different ways a contract may not be valid because one party is forced into it?

A

1) Under influence
2) Duress
3) Economic duress

66
Q

Economic duress

Case example

A

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.

67
Q

Atlas Express v Kafco (1989)

A

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.

68
Q

What case demonstrates that there must be pressure for economic duress to be found?

A

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.

69
Q

The Universe Sentinel (1983)

A

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.

70
Q

What case demonstrates that pressure can be illegitimate even when it is lawful?

A

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.

71
Q

Progress Bulk Carriers v Tube City (2012)

A

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.

Contract Law (10 decks)

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