Defects of consent, good faith and contractual terms Flashcards
defects of consent
when a party’s intention to be bound by a contract has not been properly expressed
what are the causes of defects of consent
- legality- void
- capacity- void/ voidable
- mistake- voidable
- misrepresentation- voidable
- undue influence- voidable
- duress- voidable
the difference between void and voidable
void= juridical act is never valid; automatically applied (by court); the contract cannot be enforced by either of the party
voidable= juridical act is initially valid, co not void in itself; may be avoided (annulled); avoidance is retroactive (cancellation of a contract and the return of the parties to the positions they had before the contract)
legality
contracts must not be prohibited by law or be against public policy or good morals
Illegal contracts are void
examples:
- a contract to commit a crime
- a contract which is damaging to the country’s foreign relations
- a contract endangering public safety
- an immoral contract (sell of human organs)
- an agreement to defraud the public/ corruptiom
capacity
contracts entered into by incapables may be avoided or are sometimes even void.
most important grounds: mental impairment and minors
minors- English law
the age of legal capacity= 18
no statutory representative
exceptions:
- contracts for necessaries:
- requires at a relevant certain point in time
- certain ‘condition in life’
- pay a reasonable price
- employment if they are to the minor’s benefit
minors- French law
can enter into legal transactions
can be anulled when it brings an economic disadvantage to the minor
minors- German law
legal incapacity- < 7 yrs
limited legal capacity- 7-18:
- no consent of parents- if the minor obtains ‘legal benefits’
- consent of parents- not only a ‘legal benefit’
mistakes- requirements civil law
- contract
- misapprehension- has to be essential
- causal link
- apparent importance
- situation- one of the 3 categ:
- the mistake is caused by incorrect info given by the other party
- the mistake is caused by non-disclosure by the other party
- common mistake (both parties did not know) - risk- it could have been avoided or not
- inexcusable mistake:
-expertise of the party
- cost of acquiring the relevant info by the other party
- whether the other party could reasonable acquire the info for itself
mistakes under English law
no general duty
Caveat emptor- let the buyer beware- a purchaser must investigate and ask questions, the seller does not have the duty to provide info
misrepresentation- English law
a spoken or unwritten statement of fact which induces a party to conclude a contract
silence= no misrepresentation
3 conditions:
- not silence
- inducement to enter the contract
- reliance in the statement
types of misrepresentation
A. Fraudulent- knows that it is making a false statement
- remedies: rescission + damages
B. Negligent- carelessly makes a representation while having no reasonable basis to believe it to be true
- remedies: rescission + damages
C. Innocent- made without fault, believed its statement to be true and reasonably believed it was true
- remedies: rescission, rarely damages
undue influence/ abuse of circumstances
one party abuses of their personal influence or authority over the other party to make them enter a transaction
duress
requirements:
- illegitimate threat
- the threat must be such that a reasonable person would be influenced by it and typically imminent
physical as well as economic
threat with legal remedies is not unlawful
review of contractual content
types of clauses:
- obligations and conditions
- attribution of outside events (force majeure)
- remedies and limitation
- termination
- general (notice, applicable law, jurisdiction)
common use of standard contractual terms: terms and conditions
