Chapter 12 - Mistake, Chapter 14 - Economic Duress, Undue Influence and Unconscionability Chapter 9 - Capacity Flashcards
What is the difference between ‘Void” vs “Voidable”?
Void: The contract is effectively “gone” from the start. Automatic. No quality of consent, if mistaken to there’s no consent.
Voidable: Parties can elect to rescind (revoke) the contract. If pushed into, there’s little consent.
What are some remedies for Mistakes?
1) Mutual Mistake: void
2) Common Mistake: void (law); voidable (equity)
3) Unilateral Mistake to the term: void (law): voidable (equity)
4) Unilateral Mistake to the identity: depends, but generally voidable only
What are the remedies for
1) Duress
2) Undue influence
3) Restraint of trade illegality
4) Misrepresentation?
1) Duress: voidable
2) Undue influence: voidable
3) Restraint of trade illegality: void
4) Misrepresentation: voidable
What is “Bars to Recession”?
Restituto in integrum impossible: It is impossible to restore parties to their original positions, rescission will not be granted. What is required is substantial restitution.
Affirmation: The contract cannot be rescinded after the party elects to affirm the contract.
What are the 3 types of Mistake?
1) Common: at law/ at equity
2) Mutual
3) Unilateral: at law/ at equity
What is the Doctrine of Mistake?
A party to a contract is bound even though he may have made a mistake in entering into the contract. Chwee Kin Keong v Digilandmall.com.
When both parties are mistaken and no consent.
One party takes advantage to coerce the other to consent.
What are the 3 factors of “Common Mistake at Common Law”?
1) Same mistake that is shared by both parties
2) Two common situations
(a) Non-existence of subject matter (res extincta)
(b) Subject matter already belongs to the buyer (res sua)
3) Contract is void
What are the 3 factors of “Common Mistake in Equity”?
1) No longer exists in the UK, but still does in Singapore
2) Unclear what the test is. More flexible
3) Result: contract is voidable
What is the definition of Mutual Mistake?
1) Parties are dealing at cross-purposes, not under the same mistaken impression.
2) No contract due to no “consensus ad idem). Void.
What is the definition of unilateral mistake?
One part is mistaken, other party is aware of their first’s party mistake.
Unilateral mistake is at common law and at equity
What are the two situations for Unilateral Mistake?
1) Mistake to term
2) Mistake to identity
What are the 3 situations for Unilateral Mistake as to term at common law?
1) Mistake by one party
2) Fundamental mistake
a) Mistake to term of contract (not fact)
b) Mstake as a party\s identitiy
3) Other party knows of the mistake
What is the difference between Actual Knowledge vs Constructive Knowledge?
Actual Knowledge: “Has to have known”/ Admits that they know of the other party’s mistake
Constructive Knowledge: No actual knowledge, but only constructive knowledge, unilateral mistake in equity applies.
Also, an additional requirement of impropriety: Sharp Practice/ Unconscionable (Unethical) conduct
What are the 2 “Formulas” for unilateral mistake to term?
Mistake as to term + actual knowledge = unilateral mistake at common law = contract is VOID
Mistake as to term + constructive knowledge + impropriety = unilateral mistake in equity = contract is VOIDABLE
Why is void vs voidable important?
Void: Void from the VERY start, so blame would not go to 3rd party
Voidable: TOO LATE to void the transaction, blame might go to 3rd party
What are the 2 situations for Unilateral Mistake as to Identity?
1) Parties contracting face-to-face
(a) Presumption that offeror intend to deal with offeree: voidable
(b) Rebut by showing importance of identity, but contrast mistake as to creditworthiness. Void. E.g. Wanting a specific singer.
2) Parties not contracting face-to-face
(a) No such presumption - easier to prove mistake as to identity. Void.
What is Duress?
Exertion of illegitimate pressure which forces a person to enter into a contract.
Effect of finding duress: recission, contract is voidable
What are the 3 categories of Duress?
1) Duress of the person
2) Duress of the goods
3) Economic duress
What is Freedom of Contract?
“…men of full and competent understanding shall have the utmost liberty of contracting, and their contracts, when entered into freely and voluntarily, shall be held sacred and enforced by Courts of Justice.”
What are 2 factors of economic duress?
Unlawful conduct creates fear of economic hardship which prevents the exercise of free will in engaging in a business transaction.
1) Hard to differentiate between economic duress vs legitimate commercial pressure
2) A threat to breach contract, results to modification of contract.
What are 2 factors of economic duress?
Unlawful conduct creates fear of economic hardship which prevents the exercise of free will in engaging in a business transaction.
1) Hard to differentiate between economic duress vs legitimate commercial pressure
2) A threat to breach contract, results to modification of contract.
What are the elements that form Economic Duress?
Economic Duress = Pressure
Pressure:
1) Sufficient to coerce (persuade to do something by using force/ threats
(a) Protest
(b) Alternatives
(c) Independent advice
(d) Prompt action to avoid modification
(e) Response of victim
2) Illegitimacy
(a) Nature of threat
(b) Nature of demand
3) Caused the resultant contract/ modification of contract
What is the difference between Duress vs Undue Influence?
Duress: Threaten you
Undue Influence: Taking advantage of you because of close relations. E.g. Family member
What are the 2 categories of Undue Influence?
Class 1: Actual Undue Influence, the party proved undue influence & the other party had exercised undue influence over him. Can show undue influence.
Class 2: Presumed Undue Influence - Class 2A: Involving relationships where trust and confidence is presumed
- Class 2B Trust and confidence is to be proved
