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Contract and Tort Law > Invalidity of Contracts: Infringement of fundamental principles, mandatory rules, mistake,fraud,duress > Flashcards

Invalidity of Contracts: Infringement of fundamental principles, mandatory rules, mistake,fraud,duress Flashcards

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1
Q

Where can the two types of externally invalid contracts be found

A

-Book II-7:101 (1)

-Contracts infringing fundamental principles (II-7:301)
-Contracts infringing mandatory rules (II-7:302)

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2
Q

What are the two types of externally invalid contracts

A

-Contracts infringing fundamental priciples
-Contracts infringing mandatory rules

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3
Q

Do fundamental principles only encompass non-mercantile (economic) values?

A

No !

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4
Q

Which article describes the factors which influence decision of the court where the mandatory rule does not expressly provide for the nullity of the contract?

A

-Art II-7:302 (3) DCFR

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5
Q

What are the possible outcomes after an offer is made

A
  • Revoked by the offeror (II-4:202) = offer cancelled, no offer
    -Rejected by the offeree (II-4:203) –> invalid
    -Accepted by the offeree (II-4:205)–> contract concluded
    -Expired (II-4:206)–> offer lapses, invalid
    -Unless II-4:207
    -Modified by the offeree(II-4:208)–> new offer
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6
Q

What was the main question of law in the Shroeder v. Macaulay case?

A

Was the contract valid?
Was it contrary to public policy (non-mercantile values)?

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6
Q

Explain the facts of the Schroeder v. Macaulay

A

-Macaulay(unknown songwriter) signed a five year exclusive agreement at schroeder’s
-no payment unless music was publisised
-No right to termination
-Music publishers have no obligation to publish his music

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7
Q

What was the judgment in the Shroeder v. Macaulay case?

A

–> The contract is not valid
-> because it is contrary to public policy
–>too damn oppressive
–> too one sided
–> hampers promotion of trade

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8
Q

Explain the facts of the Davis Contractors v. Fareham

A

-Initially a building contract was agreed upon for 78 houses to be completed in 8 months at a cost of 92,000 pounds
-but construction actually took 22 months
–> so cost 115k

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9
Q

What was the judgment in the David Contractors v. Fareham case

A

-Still possible to perform the contract
-no frustration

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10
Q

Explain the judgement in the Davis Contractors v. Fareham case

A

–> Just because a contract becomes more difficult (less profitable) to perform does not mean its frustration
–> it’s not automatically unfair to hold company to the obligation
–>Frustration only happens when there’s a big change in the obligation,
–>making what was promised something completely different from what was agreed upon.

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11
Q

What is the overarching theme of the Davis Contractors v. Fareham case

A

-Frustration

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12
Q

Describe the facts of The Bad Harvest Case

A
  • the defendant entered into a contract to sell sugar beet seeds for future years
    Under the agreement, the defendant was obligated to sell 20,000 kg to the plaintiff annually.
    In 1912, the defendant sold a lesser quantity of seeds.
    -The reason for this was the exceptionally severe drought in 1911.
    Seeds were distributed proportionally among all customers.
    -force majeure?
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13
Q

What was the issue in The Bad Harvest Case?

A

-Is this a case of force majeure?

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14
Q

What was the judgment in The Bad Harvest Case

A

Yes! There was force majeure
–> can distribute seeds
–> exceptional circumstance (drought)

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15
Q

Explain the judgment in the Bad Harvest Case

A

-Principle of good faith
-Exceptional circumstances

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16
Q

Explain the facts of the Jean Didier v EDF- Exemption from liability + force majeure

A

Company concluded a contract for the supply of current with
French public utility EDF
There was a national strike leading to interruptions in the supply
The company sued for 784,230 Franks

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17
Q

What was the main issue of law in the Jean Didier v. EDF case?

A

-Is this a case of forece majeure? Was there necessity in the interruption of the supply?

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18
Q

Explain the judgment in the Ste Heliogravure Jean Didier v. EDF case?

A

-Strike does make it a case of force majeure
-The situation would be very different if the strike had happened within the French public utility company ITSELF.
-if that was the case they were obliged to provide temporary workers
-If the strike affected the whole of public then it wouold have been a case of force majeure

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19
Q

What was the judgment in the Ste Helogravure Jean Didier v. EDF Case?

A

-This was a case of force majeure

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20
Q

Explain the facts of the St John Shipping Corp v. Joseph Rank Ltd case

A

-St. John Shipping Corporation owned a ship

21
Q

Define frustration

A

-Law recognises that a contractual obligation has become incapable of being performed
-because the circumstances in which performance would be achieved
-would render the situation radically different from what was agreed on
-Not just hardship/ suffering
-radically different terms

22
Q

List the grounds of termination

A
  1. NO consensus= NO contract
  2. Infringement of fundamental principles–> immediately void (II 7:301)
  3. Infringement of mandatory rule (II 7:301)
    4.Avoidance= contract retroactively ceases to exist (II 7:212)
    5.Right of withdrawal (II 5:101) + restitution (5:105(2))
  4. Termination due to non-performance (III. 3:501)= restitution
  5. Change of circumstances (III.1:110)= termination or modification
23
Q

List the cases which grapple with the idea of non- consensus

A

Raffles v. Whichelhaus
Hartog v. Colin and Shields
Hannah Blumenthal

24
Q

Describe the facts of the Raffles v. Whichelhaus case

A
  • R sells cotton to W,
    -the cotton is transported from Bombay in December
    -But W refused to accept the goods because thought they agreed to send the shit over on another ship called Bombay which sailed in September
    -R demands performance by W (buyer)
25
Q

What was the judgment in the Raffles v. Whichelhaus case

A

-Sided with W

26
Q

Explain the judgment of the Raffles v. Whichelhaus case

A

because there wasn’t a mutual understanding or overlap in what parties wanted
-NO CONSENSUS
- no contract to begin with

27
Q

Explain the facts of the Hartog v. Colin and Shields Case

A

-C&S mistakenly offers to sell H Argentine hare skins for a price per pound
-H accepts
-C&S refuses to perform, it meant to sell hare skins for a price per piece

28
Q

What was the judgment in the Hartog v. Colin and Shields Case

A

-No contract therfore C& S justified

29
Q

Explain the judgment in the Hartof v. Colin and Shields Case

A

-no contract (no consensus) because it is

-customary in the hare skins trade to give prices per piece and not per pound

30
Q

Explain what avoidance of contract delineates

A

-Voiding a contract
–> making it void

31
Q

List the grounds for avoidance of contract

A
  1. Fraud (7:205)
  2. Mistake (7:201)
    3.Coercion or threats (7:206)
  3. Unfair exploitation (7:207)
32
Q

Where can the grounds for avoidance of contract be found

A
  1. Book 2 (7:205–>7:207)
33
Q

Where can the effects of voiding a contract be found

A

-Art. II 7:212

34
Q

Explain the effects of voiding a contract

A

-Contract retroactively ceases to exist

35
Q

What are the criteria needed to be fulfilled in order to avoid a contract

A
  1. Give notice of the avoidance (Art 7:209)
  2. Right to avoid is lost in the event of:
    a. Notice given after unreasonable lapse of time (Art. II 7:210)
    b. Confirmation of the contract (7:211)
36
Q

Explain the facts of the Shark Meat Case

A
  • Contract of sale: 214 barrels of X which is shark meat in norwegian
    -but the intention of BOTH parties was to buy and sell whale meat
    -Seller wanted to avoid contract because of mistake
37
Q

Explain the judgment of the court in the Shark Meat case

A
  • common intention prevails over the mistakenly used term
    -so still contract for whale meat
38
Q

Explain the effects pf avoidance

A
  • pronounced null and void after it is technically concluided
    -contract is valid until it is avoided (7:212(1))
39
Q

Explain the facts of the threatened wife case

A
  • Wife guarantees that the debts of her husband’s firm will be paid
    -Wife tries to avoid guarantee
    -Debuty bank director threatened her that criminal proceedings would be brought against her husband for (threat)
    -fake bills
40
Q

What topic is the threatened wife case concerned with

A

-Coercion and threats

41
Q

What is the main question of law in the threatened wife case

A

Was the treat(of legal action) legally justified for her to sign the guarantee?

42
Q

What does one have to asses when determining whether the threat is justified?

A

1.Determine if the person making the threat genuinely needs the result they’re after
2.is the threat a reasonable way to achieve the threater’s goal (e.g: signature 4 bank guarantee) to:
-reasonably minded ppl
-consider all circumstances 4 context

42
Q

What are the two categories of dependence which can be exploited under the DCFR

A

Book II- 7:207
- Trust
-Economic duress/ urgent needs
(needing that moolay)

43
Q

Explain the facts of the Steamship Rolf case

A

-Value of Rolf and cargo was 363k francs
- they accidentally run aground on san
-Tugboat dude agrees to help for 18k francs
-out of necessity the SS Rolf crew agreed

44
Q

What was the judgment of the Steamship Rolf case

A
  • Agreement declared void
    -tugboat exploited the other ships dire circumstances
    -operation itself worth 4k
    -involved no risk
    -not time consuming
45
Q

Explain the facts of the Atlantic Baron Case

A

-Builders of the ship ‘The Atlantic Baron’ demand a 10% increase in price when the value of the dollar drops by 10%
-threaten not to deliver the ship
-owners desperate (very lucrative contract) so they say yes
-but then they claim the 10% back

46
Q

What was the main issue of law in the Atlantic Baron Case?

A
  • Were the owners under economic duress (economic pressure)?
47
Q

What was the judgment in the Atlantic Baron Case?

A

-No economic duress !

48
Q

Explain the judgment in the Atlantic Baron case?

A

-> No objection of owner
–> no signs that they had other reservations
–> secret mental reservation not enough
–> didn’t make it material

49
Q

What are the two overarching ways a contract might be invalid

A
  • Internally invald
    –> something about it iself
    1. no consensus
    2. fraud/mistake/coercion/unfair exploitation

Contract and Tort Law (6 decks)

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