CONTRACT - Vitiating Factors Flashcards
Result of Vitiating Factors
Void
Voidable
Illegal
Unenforceable
Void Contract
No contract was ever made
Voidable Contract
Valid until injured party rescinds
3rd party rights obtained before rescission remain
Illegal Contract
Contract tainted with illegality - courts will do nothing to alter position of parties
Unenforceable contract
Agreements that require contract in writing -
i.e. Consumer Credit Agreement unenforceable if not in writing
Representations Def:
Statements made BEFORE the contract is entered into
Induced the parties
Relied upon
Misrepresentation Def:
MISLEADING representation made by one party to induce the other to enter the contract
Or
Untrue statement of fact
Representation Established if:
Not mere puff Fact not opinion Unambiguous Is material Relied upon
Vitiating Factors
Misrepresentation Mistake Duress and Undue Influence Contrary to Public Policy Illegal Contracts
Statement of opinion CS:
BISSET V WILKINSON
re land to support sheep
Courts held was merely expressing his opinion
Silence (non-disclosure) is not misrepresentation unless:
An Insurance Contract A Part-truth - a lie Has become untrue Required by statute i.e. Companies Act Facts relied upon as important to contract
Non-disclosure considered misrepresentation - relied upon CS:
SPICE GIRLS LTD V APRILIA WORLD SERVICES BV (2002)
Types of misrepresentation (analysis of the state of mind of the party making the statement):
Fraudulent
Negligent
Innocent
Remedy for fraudulent misrepresentation:
Damages and Rescission
Remedy for negligent misrepresentation:
Under the Misrepresentation Act 1967
Damages and Rescission
Remedy for innocent misrepresentation:
Rescission only
if not possible, then damages in lieu of rescission
Fraudulent misrepresentation def:
Statement:
Knew was false
Did not believe true
Did not care (recklessness)
Negligent misrepresentation def:
If reasonable person would not have made it (doesn’t matter if believed true)
Remedy established under Misrepresentation Act 1967
Innocent misrepresentation def:
Not made fraudulently or negligently
Right to rescind (re misrepresentation) lost when:
Restitution impossible
3rd Party has gained rights before rescission
Contract affirmed after discovery of misrepresentation
Considerable lapse of time
Misrepresentation - statement of fact due to specialist skill CS:
ESSO PETROLEUM CO LTD V MARDON (1976)
Re throughput of gallons of petrol for leased petrol station
No representation from sales trade puff - def:
Generalised non specific product claim
Claim that no reasonable man would ever believe
