3): Vitiating Elements Flashcards
What is a misrepresentation?
untrue statement of fact by one party which has induced the other party to enter into the contract
What are the requirements for a misrepresentation to be actionable?
there must be a:
statement of fact: statement of future intention/ reasonably held belief/opinion does not qualify.
Unless the party was in possession of facts which made it clear they misrepresented their opinion/belief
Untrue statement: oral/in writing/by conduct. Silence doesn’t qualify.
inducement: if the party was unaware the statement was made/ that it was untrue/ did not affect the decision to enter into the contract, not actionable.
What are the situations in which silence can amount to misrepresentation?
where the law imposes a duty of disclosure:
contracts requiring good faith
where there is a fiduciary relationship
where there has been a 1/2 truth
where a change of circumstance before completion of contract makes the prior statement untrue
What are the three types of misrepresentation?
- Fraudulent misrepresentation:
statement is made in the knowledge that it is: false/without belief in its truth/ reckless as to whether it is true/false
damages payable + rescission if not barred
- Negligent misrepresentation:
where a party enters into a contract through misrep of another party.
claimant must establish misrep + the loss but the defendant has to prove they were not negligent by showing they had reasonable grounds for belief that the statement was true at the time contract was made
damages payable + rescission if not barred
- Innocent misrepresentation:
honest belief that statement is true based on reasonable grounds but it turns out to be untrue
rescission available if not barred + damages available instead at court’s discretion
What remedies are available for misrepresentation?
Rescission
damages
What is the effect of rescission?
makes contract voidable and allows a party to rescind the contract
property received under contract is returned as well as any consideration paid
How can rescission be barred?
by:
affirmation: party knows about misrep but continues with contract or acts in a way with intention to continue the contract
laps of time: party has taken too long to discover the misrep (ie. undue delay)
fraudulent reps: from date fraud could have reasonably been discovered
non-fraudulent reps: from date of contract
What is the aim of damages?
available for fraudulent/negligent misrep
consequential losses recoverable
wronged party put in financial position they would have been in had the misrep not been made
What is a mistake and what is its effect?
a mistake renders a contract void
- common mistake: where both parties have made the same mistake
only allowed where: mistake is fundamental, if no party is at fault + contract fails to make express provision on the matter
- Cross-purpose mistake: where each party has a different view of the situation
ambiguity impossible to resolve so contract is void
mistakes as to the other party’s attributes (ie creditworthiness) will not render the contract void.
What general principles apply to both types of mistake?
objective principle: court will look at facts objectively
the mistake must precede the contract completion
the mistake must induce the contract: if party is indifferent/not aware of it/ takes risk nonetheless, contract is valid.
the mistake can be of fact and/or law: remedy is restitution in this case
What is an Unfair Contract Term under the Consumer Rights Act 2015 (Sch. 2)?
for contracts between traders + consumers
term is unfair if:
contrary to good faith and open dealing
causes significant imbalance to parties rights + obligations under contract
to the detriment of consumer
if term is found unfair: term not binding on consumer but contract stays valid.
What is duress?
where violence, threats or pressure have been used to coerce a party to enter a contract
contract may be voidable on this ground + rescission available
for duress to be applicable:
threat/pressure must have been made/exerted by contracting party
threat/pressure must be illegitimate/improper and not commercial pressure
threat/pressure must have induced entering into the contract
claimant must have no choice but to enter into the contract
claimant registered their protest at the time/ shortly after contract was made
What is undue influence?
one party abuses their position of trust over the other to take unfair advantage of them + persuade them to enter into the contract
contract voidable on these grounds + rescission available
Actual undue influence: claimant can prove on the facts that they entered into the contract as a result of undue influence
presumed undue influence: there is pre-existing relationship of trust/confidence between the parties AND the transaction requires an explanation
What is illegality?
contract can be illegal:
at the time it is made
because of the way it has been performed
illegal contract is void
+ unenforceable
severance: may be possible to divide illegal parts of contract and enforce legal parts only
