lecture four Flashcards
What are the main grounds for challenging the validity of a contract?
A party may challenge the validity of a contract based on five main grounds: capacity (which renders the contract void), force and fear, facility and circumvention, and undue influence (all of which make the contract voidable), and error and misrepresentation.
What are the main characteristics of a void contract?
A void contract is a complete nullity, treated as if it never existed. Two key features of void contracts are that no court decree is needed to declare them void, and no one can acquire rights or pass good title to property under such a contract.
How does a voidable contract function, and what happens upon its annulment?
A voidable contract remains effective until annulled by either party. If not annulled, it continues to exist. Annulment can occur through communication to the other party or by judicial decree. Once annulled, the contract is treated as if it never existed. Third parties who acquire rights in good faith and for value before annulment are protected.
What are the requirements for annulling a contract?
The requirements for annulment of a contract include the possibility of restitutio in integrum, meaning restoration to the original state. This is illustrated in cases like Western Bank of Scotland v Addie and Boyd & Forrest v Glasgow & South Western Railway Co, where the existence of the railway made restoration impossible. Additionally, the contract must not have been affirmed, and there must be no unnecessary delay in seeking annulment.
Under what circumstances can a contract be considered void or voidable due to force and fear?
When a person agrees to a contract under duress, where force causes fear, the resulting obligations are void due to a lack of valid consent, resembling a forced simulation of consent. While extreme situations of duress are rare, more common scenarios involve some degree of reluctant consent, leading to a voidable contract. Examples of force and fear include threats of physical assault or defamatory conduct, but threats related to lawful actions, like enforcing a valid debt, do not constitute duress unless they compel a reluctant agreement.
