Lecture 4 - Contract Misrepresentation and termination

Question 1

Misrepresentation =

Answer 1

Untrue pre-contract statement which induces other party to enter into contract before contract signed. Not necessarily term of the contract, but if it is, have rights for breach of contract

Question 2

Even if misrepresentation not term of contract..

Answer 2

Injured party still has action for misrepresentation

Question 3

Main remedy for fraudulent/ negligent misrep =

Answer 3

Rescission (cancellation) and/ or damages

Question 4

Fraudulent misrep

Answer 4

Knowing/ not caring if statement true or not

Question 5

Negligent misrep

Answer 5

Believing statement to be true at time, but without reasonable grounds

Question 6

Innocent misrep

Answer 6

Believing it to be true and with reasonable grounds.

Question 7

Misrep must be

Answer 7

Statement of fact, no opinions, sales puffs, statement of law or silence

Question 8

Inducement

Answer 8

If statement is sufficiently serious to influence/ persuade other party to enter into contract and relies on it (sole reason for entering contract)

Question 9

Remedy for innocent misrep

Answer 9

Rescission, but court can award damages instead (at their discretion)

Question 10

Right to rescind lost when (3)

Answer 10

• Restitution impossible
• Action not taken within reasonable time
• Contract is affirmed expressly/ by conduct

Question 11

Exclusion clauses in misrep

Answer 11

Subject to reasonableness test

Question 12

Bad bargains

Answer 12

Not included in law (if think getting good deal on something when not)

Question 13

Common mistake

Answer 13

Both parties make same mistake. Contract is void. Property transferred is recovered

Question 14

Mutual mistake

Answer 14

Both parties make different mistakes. Court applied objective test ‘reasonableness’

Question 15

Unilateral mistake

Answer 15

One party makes mistake, but others know/ should know. Contract is void and cannot be enforced. But damages not usually available.

Question 16

If person signs any document

Answer 16

Bound by those terms

Question 17

Performance termination of contract

Answer 17

Contract must be performed exactly, if not, don’t have to pay.

Question 18

Severance

Answer 18

Break contract down into sections to enforce each seperately

Question 19

Part performance

Answer 19

Parties agree to end contract part way through, payment made for part completed

Question 20

Substantial performance

Answer 20

Substantial performance > Contract virtually completed

Question 21

Prevention of performance

Answer 21

Where one party prevents contract from being performed/ completed. Payment can be claimed for part which has been carried out

Question 22

Time of performance termination

Answer 22

Time is not term unless expressly stated it is, implicit in nature of contract, or made by notice by one party

Question 23

Termination by agreement

Answer 23

Contract can be ended by agreement between parties, but must be fresh consideration for agreeemtn

Question 24

Frustration of contract

Answer 24

Both parties excused from performance. Happens when performance becomes impossible, illegal or radically different

Question 25

Termination by breach of contract

Answer 25

Depends on type of breach. Breach of condition = cancellation of contract. Breach of warranty = claim for damages. Breach of innominate term > court waits to see effect before deciding

Question 26

Damages intended to

Answer 26

Compensate individuals for suffering and restore back to position would have been in had contract been performed correctly, not punish guilty party

Question 27

Remoteness of damage

Answer 27

Not all losses can be claimed. Must arise in natural course of things > what is reasonably forseeable

Question 28

Mitigation of loss

Answer 28

Innocent party has legal obligation to take reasonable steps to minimise loss suffered by breach of contract. If fails to do so, damages refused/ reduced

Question 29

Liquidated damages

Answer 29

Fixed sum expressed in contract to be payable in event of breach. Must be genuine estimate to be permitted

Question 30

Quantum meruit

Answer 30

Court decides how much party should be paid by way of damages if no specific price agreed between parties

Question 31

Specific performance

Answer 31

Court can order someone to complete contract, not just award damages. Usually only granted if damages are not adequate remedy