mistake to identity, duress and undue influence Flashcards
mistake to identity
one party =mistaken as to identity of other party and this other party knows of it (unilateral) -courts reluctatnt as seen as escape route - a genuine MTI of other party to the contract renders contract void - shogun finance v hudson (sale of car to a fraudster)
mistake to attributes
contract = intact
norton metal co ltd v edrigide - claimants received written order from harlem and co claimants hadnt heard of company but letter stated large firm (trick) company didnt acc exist and claimants sent goods on credit - fraud sold good to innocent 3rd party - claimants found goods w/ defendants and claimed MTI (void) in telation to attributes, claimants intended to contract w/ H + C and mistaken
face to face principle
when you contract / negotiate with somone FTF presumption theres only MOA not MTI - when not FTF rely on mistake
lewis v averay - L advertised car for sale and fraudster claimed famous actor and shows ID - got ca and sold to 3rd party - courts = MTA as contracted FTF
if contract valid then title passesto buyer if void then never left seller and repossess it
fraudulent misrep and unilateral mistake involving mistaken identity
same scenario ab car selling, claim contract = result of fraud. misrep. - voidable and claim recession to terminate BUT once car = sold to 3rd party - seller cannot rescind - arg. void for unilateral mistake and get car back
duress and undue influence
contract under duress of undue influence = voidable
contract = valid until rescinded
damages arent available for duress or undue influence
conswquential matters between oarties = regulated by law of restitution
duress = 5 cons. to be satisfied:
1. pressure was exerted on contracting party - used to include violence, threats etc - barton v armstrong - threatened murder managing director if didnt agree to buy charimans terms - voidable for duress NOW also inc. economic duress - the atlantic baron - contract for builidng ship, after formation sellers raised price by 10% - buyers unwilling to risk delay of completion of ship gave money - sued and got money back as compulsion of will
2.this pressure was illegitimate - threat to do unlawful act (breach contract, commit crime or tort) - a THREAT doesnt norm constitute duress EXCEPTIONS = BLACKMAIL - CTN cash and carry v gallaghor - cigarrette supplier - monopoly for best brand - sent to wrong warehouse and stolen - claimants agreed to pay even though not their fult - threatened if didnt they wouldnt get credit facilities - no brach as only threatened to alter terms of contract and only amounted to normal commercial pressure
- the pressure indiced the claimants to enter contract - duress must be one reason for entering/modifying contract - doesnt have to be only one - “but for” test - asks if theres a sufficient causal link bet. illegal pressure and signing contract - barton v armstrong
- claimant = no real choice to enter contract - lord diplock, the universe sentinel - ‘the absence of choice can be proved in various ways e.g. by protest, by absence of independent advice or by a devalration of intention to go to law to recover the money paid or property transferred…’
- claimant protested @ time or shortly after contract made - atlantic baron - claimants waited 8 months after ship delivered - claim for duress = unsuccessful
william v roffrey brothers and economic duress
contract A - R with owners of flats (penalty clause - lose money if didnt finish flats on time)
contract B - R with W for carpentry work - original agree = £20,000
months later W tells R wont make it on time and 20,000 not enough - R agreed and told W if finish on time will give him £10,300 extra - and W finish one flat at a time to allow other contractors to work too
W finished but R didnt want to pay as no consideration - if a promise to pay extra for performing an existing contractual duty - results in practical benefit for promisor - can be consideration but no economic duress allowed which compelled promisor to agree on add. payment
genuine intent to renegotiate - W’s warning as to difficultie he had performing were not regarded as threats for breach of contract
undue influence
equitable doctrine which applies where one party uses their influence over the other to persudae them to make a contract
2 forms - actual UI and presumed UI
actual UI - dominant party had ability to influence their party and the ability was exercised the influence was undue (unconscionable - one party has UI over other - claimant doesnt exercise full free judg. ) and induced other party to enter contract, causation doesnt have to be estab ASA influence = exercised the element of causation is satisfied
presumed UI - pre existing relationship of confidence betweem 2 parties to a contract as result of which one places trust in the other - relationship = fudiciary and may arise in 2 ways
automatic presumption - parent and child, solicitor and client, doctor and patient
fiduciary triationship arising on the facts - lloyds bank v bundy - claimant and son used same bank - son went into business difficulties and put farm as guarantor security - claimed bank = trust in their advice as member for long time - PUI - no evidence it wasnt in his interest to put farm as security
where a party seeks to rely on the existence of a presumed undue influence = the transaction must be suspicious and call for an explanation
allcard v skinner - claimant joined protestant convention and signed up for rules of poverty, obedience and seclusion - gave up all property - years later left and calimed UI - courts take into account submissive nature of vows, couldnt get outside advice - prevented from understanding trasnsaction - transaction so large = supsicious
- examples inc. exceptionally large gifts - unusually generous loans and risks a party’s future independence (loss of house or large prop. of wealth)
UI (3 party cases) - barclays bank v o’brien - Mr wanted to put up farm for security for business debts - half owned by MRs - guaranteed overdraft of £60,000 but acc double that - Mrs asked to go to diff bank and sign - not explained transaction - business collapsed and tried to reposses =UI courts = banks had constructivr knowledge - obligation in transaction to make sure not due to UI - must ‘put in inquiry’
constructive knowledge
royal bank of scot v etridge - HOLs acknowledges the o’brien princips. cannot guarantee that wives ahve not or will in the future be subject to undue infleunce by husbands
etridge - bank put on inquiry in every case where relationhip bet. guarantor and debtor is non commercial
avoiding constructive knowledge - what should banks do when put on inquiry
insist guarantor attends priv. meeting with representative from bank - tells them extent of their liability, risks
communicate directyl with guarantor that lenders protection requires seperate elgal advice and require confirmation from socilitor providing advice
if bank chooses not to advise guarantor on transaction, rely on solcitors certificate that theyve appropriately advised guarantor
avoiding condtructive knowledge - solicitors role
explain nature of docs and practical cons for wife
point out seriousness of risk
discuss wife’s and husband’s financial means
discuss whether wife or husband had any other assets out of which repayment could be made if the husbands business should fail and state clearly that the wife had a choice whether or not to proceed with transaction
