Chapt 6: Vitiating Factors

Question 1

Types of vitiating factors (4)

Answer 1

Incapacity, Restraint of trade clause, Illegality and Misrepresentation

Question 2

Incapacity: The Minors

Explain the General position and what happens if it is executed.

Answer 2

General position is that contract with minors is generally unenforceable. (There are exceptions)

If minors have performed their obligations already (Executed) He will not be able to claim the money paid and goods sol, whether or not is it necessary or benefit him.

Question 3

3 types of Minor contract (Executory)

Answer 3

Valid contract, Voidable contract and Ratifiable contract.

Question 4

What about valid contracts?

Answer 4

The contract must benefit the minor. If yes, it binds both the minor and adult.

Cover contracts such as:
1. Contract for Necessaries (Good&Services)

2. Beneficial contract for employment, apprenticeship and education.
3. Loan

Question 5

Explain valid contract for necessaries (Good&services)

Answer 5

Based on S3 of sales of good act, adults need to prove:
1. Goods are suitable to the condition in life of minor.

2. Must show that minor has an actual need for the goods.
3. Show that overall benefits the minor.

Based on S3(2) of SOGA,
in return must pay a reasonable price.

Question 6

Explain Valid contract for education, employment.

Answer 6

Just need to show that benefits the minor.

Question 7

Explain voidable contract.

Answer 7

It binds both minor and adult. UNLESS, the minor repudiates while still being a minor or reasonable time after attaining majority.

Question 8

Explain Ratificable contract

Answer 8

Only bind adults. UNLESS, the minor ratifies the contract after attaining majority, then both minor and adults are bind.

Question 9

Vitiating factor: Restraint of trade clause. Explain, what is the general position and Elements for it to be valid.

Answer 9

General Position: ROTC is unenforceable, it will be void.

However, 3 elements to fulfil for it be valid:
1. Convenentee has a legitimate interest to protect such as trade secret, trade contact.

2. The ROTC must be reasonable in the scope of time duration, Geographical area and subject matter.
3. It must be in public interest. The public interest refers to the having healthy competition in market.

Question 10

Vitiating Factor: Misrepresentation.

How to answer the question?

Answer 10

1. Is the elements for actionable misrep fufiled?
2. What is the type of Misrep and remedies for each.
3. Did they rescind to void or not?
4. Any bars to rescission?

Question 11

Misrep: Elements for enforceable misrep?

Answer 11

1. false statement of fact?
2. Statement must be communicated by representor to representee prior to contract.
3. Induce and relied upon by representee to alter his position such as entering into contract.

Question 12

Explain: False statement of fact.

Answer 12

it must be an existing or past fact.
It must be false.
Silence does not generally amount to misrep.
However, there are exceptions to it.

Question 13

Exceptions to the general rule of silence not amounting to misrep.

Answer 13

1. Half-truth.
2. change in a circumstance prior to contract
3. Fiduciary contract (Insurance)

Question 14

Does the representee having an opportunity to verify truth but did not, be deprived of claiming misrep?

Answer 14

No!!

Question 15

What are the 3 Types of misrepresentation

Answer 15

1. Fraudulent misrep
2. Negligent misrep
3. Innocent misrep

Question 16

Explain Fraudulent misrep and what’s the remedies?

Answer 16

Statement made with dishonesty and lied. Did not believe for it be true. Don’t care whether if it is true or false.

Remedies: Rescission and common law damages.

Question 17

Explain Negligent misrep and what’s the remedies?

Answer 17

Statement made: Honestly believe for it to be true. But had no reasonable grounds for it be true.

Based on S2(1) of misrep, states that burden of proof on representor to show that it has reasonable grounds for it to be true and still honestly believe it to be true till the time contract was made. If proved = Innocent misrep.

Remedies: Rescission or damages in lieu (S2(2) of misrep)
and statutory damages.

Question 18

Explain Innocent Misrep and what remedies?

Answer 18

Statement made:
Honestly believed it was true and has reasonable ground to believe for it to be true.

Remedies: Rescission or damages in lieu (s2(2) of Misrep act)
and Indemnity

Question 19

step 4 of analysing misrep question:

Answer 19

Once rescinded contract is unenforceable and void.
both parties would return to the position prior to the contract.

If not rescinded, contract is voidable

Question 20

What are the bars to rescission?

Answer 20

1. Lapse of reasonable time
2. if the contract has been affirmed by representee even after knowledge of misrep.
3. Impossible to return to prior position before contract was made.