Chapter 9 - Revised

Question 1

What does is mean to set aside a contract?

Answer 1

To be released from a contract and returned to a pre-contract position.

Question 2

What is the narrow meaning of Mistake? What action could be taken if a mistake has been made?

Answer 2

difference between legal mistake and non-legal mistake

> errors is judgment are not legal mistakes. why? need contract certainty.

legal. mistakes as to the terms of contract and as too assumptions concerning important facts of a contract

Void: as if the contract never came into existence

treat it as voidable: the contract exists until otherwise set aside by court

The court can rescind/rescission: set aside contract; undo or revok a contract and return parties fo per-contract position as much as possible

or implement rectification: court corrects the contract to accurately reflect agreement

Question 3

what are 3 types of mistakes as to terms?

Answer 3

WI NO MIS

(a) words are used inadvertently
(b) written contract does not accurately reflect original agreement
(c) misunderstanding as to the meaning of the words of a contract

Question 4

What is an example of words used inadvertently? What is the test for inadvertent words?

Answer 4

contract may be voidable at the option party

example: inadvertently using the wrong figure. ie. accidentally wrote down wrong number.

1. if it is reasonable for the second party to rely on those words than the contract will be binding to the mistake. ie. is it reasonable to believe the mistake > would it have been clear that a mistake was made
   = contract may be voidable

Question 5

How could a mistake be made where the contract does not accurately reflect the original agreement?

Answer 5

Could have been an error in recording terms. if the agreement does not reflect the original intended agreement

the court can be asked to rectify the agreement to accurately reflect the intent.

> note there are going to be pretty narrow grounds for a court grant rectification. The following grounds must be met:

a - have to show that there was a complete agreement free of ambiguity and not conditional on further adjustments
b - parties did not engage in further negotiations to amend the contract
c - the change in the written document appears to be a error in recording
d - when document was signed the defendant knew of should have known and the plaintiff did not
e - any subsequent attempt to enforce the written document would be equivalent of fraud

Question 6

How could a mistake be be made as to the meaning of the words of a contract

Answer 6

(c) misunderstanding as to the meaning of the words of a contract
3. misunderstanding as to the meaning of the words. (you meant something different). court will ask what would a reasonable 3rd party believe that a mistake was made.

circumstances were court would rectify:
a - mistake is mutual and honest
b - mutual mistake and careless

Question 7

What are mistakes arising from assumptions about subject matter?

Answer 7

a) mistakes as to the existence of subject-matter
> the goods are no longer in existence at the time of performance

b) mistake as to the value or quality of the subject matter.
> where still in existence but quality radically different than what was agreed. (contaminated lands…but if they had a chance to inspect…it is hard to enforce this mistake) has to be very substantial mistake. courts will consider
> whether the price is subject to fluctuations
> did the plaintiff have the opportunity to inspect, investigate and view. if they did award is less likely

Question 8

What is a mistake about the identity of a party to a contract?

Answer 8

Mistakes about the identity of a party to the contract are unilateral mistakes. usual involve fraud where an innocent party has been tricked. Maybe by mail or internet.

The contract will be void.

Question 9

What is a mistake about the nature of a signed document?

Answer 9

Non Est Factum

its not my doing.

When a mistake is made by signing a document unintentionally. Is very hard to defend and difficult to avoid liability for being careless.

Question 10

What are representations vs contract terms?

Answer 10

_statements of fact or opinion made during the formation of contract (_this car can go another 300k…if not documented doesn’t matter) not a term

Terms: obligations which govern the contractual relationship (example: goods supplied, cost of goods)
when you breach term than you breach the contract

Question 11

How do you classify as terms or as representations?

Answer 11

factors to consider:
1. the stage of negotiations

2. written contract > if it was a term it would have been included
3. special skills or knowledge > if party making a statement has special skills that are relied upon they are more likely to be terms
4. importance of the statement

Question 12

in the doctrine of misrepresentation what are three types?

Answer 12

fraudulent
innocent
negligent

Question 13

what is fraudulent misrepresentation

Answer 13

false statement made with knowledge it was false or with reckless disregard for its truth which is intended to be acted upon

ie. induce party into contract based on financial statement that is know to be inaccurate

proving that another party knew a statement was false is difficult to prove. need very good evidence

Question 14

innocent misrepresentation

Answer 14

representations made which turn out to be false where the party made the statement honesty and to the est of their knowledge

requirements

1. misrep must be a statement of fact, not opinion
2. misstatement is false
3. statement must be inducement to the contract (material or important)
4. statement must be intended to be acted upon

“if party had known of the misrepresentation would they have entered into the contract anyway.

Question 15

What is the general rule for misrepresentation?

Answer 15

general rule is caveat emptor > buyer beware. is purchasers obligation to check into what they are buying

exceptions:

1) purchase of stocks
2) insurance contracts > considered contracts of the utmost good faith. you must be upfront and honest. being untruthful may be a bar from carrying out contract
3) negligent misrepresentation

Question 16

do mistakes in performance go both ways?

Answer 16

Yes, if you get more that what entitled to court will make you pay it back

Question 17

What is undue influence?

Answer 17

domination of one party over the mind of another to such a degree as to deprive the latter of the will to make an independent decision.

court will look at certain factors to determine:
> dominant position
> position of trust
> pressure
> age
> exploitation by one party
> inequality of bargaining power

consideration of the relationship is key

Question 18

When proving undue influence who has the burden of proof?

Answer 18

victim must prove dominance
> but must act promptly
> contract becomes voidable at option of victim

There is a presumption in specific relationships: ie. adult and child; solicitor and client, doctor and patient; trustee and beneficiary

Question 19

What is a common scenario where undue influence arises?

Answer 19

ie. spouse signing a guarantee; marriage contracts; separation agreements; wills
> may require independent legal advice (ILA)

Question 20

What is duress?

Answer 20

where a party if forces or pressured against there will to enter into a contract against their will by threats or violence or imprisonment or threats of property

have to show that duress was the main reason you entered into contract

economic duress is not available in Ontario. > market forces are not duress

for duress the contract would be voidable