Lecture 4 - Contract Misrepresentation and termination Flashcards
Misrepresentation =
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
Even if misrepresentation not term of contract..
Injured party still has action for misrepresentation
Main remedy for fraudulent/ negligent misrep =
Rescission (cancellation) and/ or damages
Fraudulent misrep
Knowing/ not caring if statement true or not
Negligent misrep
Believing statement to be true at time, but without reasonable grounds
Innocent misrep
Believing it to be true and with reasonable grounds.
Misrep must be
Statement of fact, no opinions, sales puffs, statement of law or silence
Inducement
If statement is sufficiently serious to influence/ persuade other party to enter into contract and relies on it (sole reason for entering contract)
Remedy for innocent misrep
Rescission, but court can award damages instead (at their discretion)
Right to rescind lost when (3)
- Restitution impossible
- Action not taken within reasonable time
- Contract is affirmed expressly/ by conduct
Exclusion clauses in misrep
Subject to reasonableness test
Bad bargains
Not included in law (if think getting good deal on something when not)
Common mistake
Both parties make same mistake. Contract is void. Property transferred is recovered
Mutual mistake
Both parties make different mistakes. Court applied objective test ‘reasonableness’
Unilateral mistake
One party makes mistake, but others know/ should know. Contract is void and cannot be enforced. But damages not usually available.
If person signs any document
Bound by those terms
Performance termination of contract
Contract must be performed exactly, if not, don’t have to pay.
Severance
Break contract down into sections to enforce each seperately
Part performance
Parties agree to end contract part way through, payment made for part completed
Substantial performance
Substantial performance > Contract virtually completed
Prevention of performance
Where one party prevents contract from being performed/ completed. Payment can be claimed for part which has been carried out
Time of performance termination
Time is not term unless expressly stated it is, implicit in nature of contract, or made by notice by one party
Termination by agreement
Contract can be ended by agreement between parties, but must be fresh consideration for agreeemtn
Frustration of contract
Both parties excused from performance. Happens when performance becomes impossible, illegal or radically different
Termination by breach of contract
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
Damages intended to
Compensate individuals for suffering and restore back to position would have been in had contract been performed correctly, not punish guilty party
Remoteness of damage
Not all losses can be claimed. Must arise in natural course of things > what is reasonably forseeable
Mitigation of loss
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
Liquidated damages
Fixed sum expressed in contract to be payable in event of breach. Must be genuine estimate to be permitted
Quantum meruit
Court decides how much party should be paid by way of damages if no specific price agreed between parties
Specific performance
Court can order someone to complete contract, not just award damages. Usually only granted if damages are not adequate remedy
