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Contract > vitiating elements > Flashcards

vitiating elements Flashcards

1
Q

Misrepresentation?

A

untrue statement of fact by one party which has induced the other party to enter into the contract.

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2
Q

What is needed for misrepresentation to be actionable?

A

Statement of fact – must have been a statement of fact.
Statement of future intention OR reasonably held opinion OR belief doesn’t qualify
UNLESS party is in possession of facts which makes it clear that they misrepresented their intention OR opinion/belief.

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3
Q

Untrue statement?

A

statement must be untrue.

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4
Q

untrue statement can be?

A

Oral, written or by conduct.

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5
Q

general rule about silence regarding misrepresentation?

A

silence doesn’t amount to misrepresentation EVEN THOUGH it might conceal a significant fact

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6
Q

exceptions to the rule of silence of misrepresentation?

A
  • Contracts requiring good faith.
  • Fiduciary relationship
  • Half-truth
  • Change of circumstances
    BEFORE contract is completed that makes the statement before untrue.
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7
Q

Inducement?

A

must have induced one party to enter the contract.

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8
Q

Misrepresentation is not actionable regarding inducement in three situations.

A

Party not aware that the statement was made
OR that it was untrue
OR that it didn’t affect the decision to enter into the contract.

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9
Q

Three types of misrepresentation?

A

fraudulent
negligent
innocent

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10
Q

definition of fraudulent misrepresentation

A

statement made in the knowledge that it is
False
OR
Without the belief in its truth
OR
Recklessly,
not caring whether it’s true or false AKA tort of deceit.

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11
Q

Remedies available for fraudulent misrepresentation?

A

damages
recission available.

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12
Q

definition of negligent misrepresentation

A

one party enters into a contract resulting from misrepresentation by other party

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13
Q

remedies of negligent misrepresentation?

A

Innocent party can claim damages
UNLESS the other party can prove that at the time of making the contract, they believed the statement to be true
AND has reasonable grounds for belief.
The burden of proof will then be reversed.
Recission available.

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14
Q

What must the claimant establish in negligent misrepresentation?

A

misrepresentation AND loss.

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15
Q

What must the defendant show in negligent misrepresentation?

A

they were not negligent by showing that the statement was honest and reasonable.

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16
Q

Definition of innocent misrepresentation

A

honest belief that the statement is true based on reasonable grounds
BUT it turns out to be untrue.

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17
Q

remedies for innocent misrepresentation?

A

Recission available
BUT damages available at the court’s discretion.

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18
Q

effect of misrepresentation?

A

make the contract voidable AND allows the party to rescind the contract.
Involves setting aside the contract.

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19
Q

Recission is available for misrepresentation UNLESS it has been barred by 2 factors.

A

Affirmation – party knows about the misrepresentation BUT continues with the contract OR acts in a way with the intention to continue with the contract.
Lapse of time – party has taken too long to discover the misrepresentation.
For non-fraudulent misrepresentations, from the date of the contract.
For fraudulent misrepresentations, from the date the fraud could reasonably have been discovered.

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20
Q

Damages available for fraudulent misrepresentation AND for negligent misrepresentation?

A

yes

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21
Q

Are consequential losses recoverable for misrepresentation?

A

yes

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22
Q

Aim of damages in misrepresentation?

A

put the wronged party in the financial position it would have been in if the misrepresentation hadn’t been made.

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23
Q

Will mistake render the contract void?

A

yes

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24
Q

Definition of common mistake

A

both parties have made the same mistake (e.g., both mistaken by subject matter).

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25
Q

Three factors where common mistake is only allowed?

A

Mistake is fundamental.
No party is at fault.
AND
Contract fails to make an express provision on the matter.

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26
Q

Definition of cross-purposes mistake?

A

each party has a different view of the situation

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27
Q

Ambiguity is impossible to resolve AND contract is then void/voidable?

A

void

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28
Q

Unilateral mistakes (type of cross-purpose mistake) happen when?

A

where one party is mistaken.

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29
Q

Party makes a unilateral mistake as to the identity of the other contracting party, contract is void/voidable?

A

void

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30
Q

Mistakes regarding the party’s other attributes NOT render the contract…

A

void

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31
Q

Objective principle applying to mistake?

A

court will look at the facts objectively AND ask,
‘what an onlooker would have thought each was agreeing to.’

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32
Q

Mistake must precede the contract meaning?

A

mistake must be made before contract is completed.

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33
Q

Mistake must induce the contract?

A

party is indifferent to the mistake
OR aware of it
AND takes the risk
nonetheless, contract will be valid.

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34
Q

Remedy available regarding mistake of fact or law?

A

remedy of restitution is available.

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35
Q

CRA 2015 (schedule 2) regulates?

A

unfair terms in contracts between a trader and a consumer.

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36
Q

An unfair term of a consumer contract binding on a consumer?

A

NO

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37
Q

Term is unfair if…

A

contrary to good faith, causes significant imbalance in the parties rights and obligations under the contract.

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38
Q

unfair term detrimental to the consumer (two factors):

A

Good faith = fair and open dealing.
court will ask, ‘would the consumer have agreed to the term
IF they had been subject to individual contract negotiations?
AND
Significant imbalance = term is weighted in favour of the trader.
Tilts the obligations under the contract significantly in the trader’s favour.

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39
Q

Schedule 2 of the CRA contains a list of terms.
Which terms?

A

unfair terms.

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40
Q

What happens if the term is found to be unfair?

A

not binding on the consumer BUT the contract remains valid in every other respect.

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41
Q

contract can be voidable on the grounds of duress?

A

yes

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42
Q

can innocent party on the grounds of duress rescind the contract?

A

yes, if the party wants to.

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43
Q

Definition of duress

A

violence, threats or pressure have been used to coerce a party to enter into a contract.
Threats can be extended to a person’s economic OR business interests.

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44
Q

5 situations duress can be applicable?

A

Threat or pressure must have been made/exerted by the contracting party.
Threat or pressure must be illegitimate or improper AND must be distinguished from commercial pressure to secure a contract.
Threat or pressure must have induced entering into the contract.
Claimant must have had no choice BUT to enter into the contract.
AND
Claimant must have registered their protest at the time OR shortly after the contract was made.

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45
Q

Contract can be voidable on the grounds on undue influence?

A

yes

46
Q

innocent party allowed to rescind the contract on the grounds of undue influence.

A

yes, if the party wants.

47
Q

Definition of undue influence

A

one party abuses their position of trust AND influence over the other to take unfair advantage of them
AND persuade them to make a contract.

48
Q

Definition of actual undue influence

A

claimant can prove on the facts that they entered into the contract as a result of undue influence from the other party

49
Q

Definition of presumed undue influence

A

pre-existing relationship of trust/confidence between the parties to the contract
AND the transaction requires an explanation.

50
Q

Why can a contract be illegal at the time it was made?

A

contract might involve the performance of a legal wrong.

51
Q

Why can a contract be illegal becuase of the way it was performed?

A

might fail to follow the statutory rules in the performance of the contract.

52
Q

An illegal contract is void and…

A

unenforceable.

53
Q

Three examples of contracts that will be illegal

A
  • Contracting promoting sexual immorality.
  • Contracts prejudicial to the status of the marriage.
  • Contracts prejudicial to public safety.
  • Contracts prejudicial to the administration of justice.
  • Contracts to oust the jurisdiction of the courts.
  • Contracts to encourage corruption in public life.
  • Contracts restricting, preventing, or distorting trade within the UK.
54
Q

Meaning of severance because of a illegal contract.

A

may be possible to divide the illegal provisions of the contract from the rest of the contract,
AND enforce the provisions which aren’t illegal.

55
Q

Definition of performance

A

contract goes ahead as planned.

56
Q

Definition of breach

A

one party fails to fulfil their side of the deal.

57
Q

Definition of frustration

A

where something happens to prevent future performance.

58
Q

Entire performance rule?

A

Contract requires entire performance AND party fails to perform the contract in its entirety.

59
Q

What is the party entitled to under the entire performance rule from the other party?

A

nothing.

60
Q

Entire performance is required UNLESS there is…

A

Substantial performance – party completed the work agreed BUT minor defects.

61
Q

What is the party entitled to if there has been substantial performance under the entire performance rule?

A

entitled to the sum owed less than the cost of putting the defects right.

62
Q

severable contract meaning under the entire performance rule.

A

contractual payments due at various stages of performance, contractor entitled to be paid for the stages which have been performed.

63
Q

Voluntary acceptance of partial performance?

A

contractor supplies goods or services,
AND other party voluntarily accepts partial performance.

64
Q

What is the contractor entitled to under voluntary acceptance of partial performance?

A

reasonable sum for what he has done.

65
Q

Prevention of performance by other party?

A

party wrongfully prevented from completing their contractual obligations.

66
Q

What will the contractor be entitled to for the prevention of performance by other party?

A

entitled to damages OR a reasonable sum for the work already done.

67
Q

Breach of contract?

A

party fails, refuses, or defectively performs what is required of him under the contract.

68
Q

Remedies for breach of contract.

A

gives the innocent party a right to damages AND it may give him a further right to terminate the performance of the contract,
Depending on whether there has been a breach of condition, warranty, or innominate term.

69
Q

Repudiatory breach allows the non-defaulting party to…

A
  • Treat the breach as bringing the contract to an end.
    OR
  • Affirm the contract.
70
Q

Meaning of anticipatory breach?

A

one party informs the other party, before the time of fixed performance,
they will not perform their obligations under the contract.

71
Q

Remedies for innocent party for an anticipatory breach?

A

Entitles the innocent party to terminate the contract immediately.
Or can affirm the contract and demand performance at the time stipulated in the contract.

72
Q

contract frustrated when…

A

after the contract is concluded, event occur which make the performance of the contract impossible, illegal, or radically different from that which was in contemplation of the parties at the time they entered into the contract.

73
Q

Is this correct?
An event beyond the parties control and therefore, both parties are excused from future performance.

A

yes

74
Q

An event will not amount to frustration if (4 situations):

A
  • Contract makes a provision for such an event.
  • Event merely renders the contract more onerous.
  • Foreseen or foreseeable.
  • Due to the fault of one of the parties.
75
Q

Contract that’s frustrated automatically brought to an end by…

A

law at the point at which the frustrating event occurred.

76
Q

Examples of frustrating events (two):

A

Destruction or unavailability of subject matter for contract performance.
Method of performance impossible.
Death or unavailability of either party.
Government intervention.
Non-occurrence of a fundamental event (i.e., a condition precedent).
Illegality.

77
Q

Definition of damages?

A

award of money that aims to compensate the innocent party for the financial losses they have suffered for breach of contract.

78
Q

Meaning of expectation loss?

A

purpose of awarding damages is to compensate for loss of expectation.

79
Q

Aim of expectation loss?

A

The damages should put them in the position if the contract had been properly performed.
In essence, a claim for the benefits they expected to obtain.

80
Q

Expectation loss - forward-looking or backward looking test?

A

forward-looking.

81
Q

Definition of reliance loss

A

claim for expenses occurred because of reliance on the contract being performed.
In essence, claim for wasted expenditure AND aim to restore to his pre-contractual position.

82
Q

Reliance loss - forward-looking or backward looking test?

A

backward looking test.

83
Q

Pecuniary losses?

A

financial loss.

84
Q

How will damages be calculated for pecuniary losses?

A

compensate the innocent party for any financial losses they have suffered for breach of contract.

85
Q

Non-pecuniary losses? and generally…

A

loss such as pain, suffering, and mental distress.
Generally, damages can’t be recovered for distress/disappointment/injury to feelings etc., as a result of breach of contract.
UNLESS object of the term is broken to provide pleasure or freedom from distress and the term is an important one in the context of the contract as a whole.

86
Q

Contract for recreation been broken, damages for non-pecuniary loss can be awarded?

A

yes

87
Q

Damages can’t be recovered where…

A

the loss which the claimant has suffered is too remote a consequence of the defendant’s breach of contract.

88
Q

General rule regarding where damages will be awarded in remoteness of damage?

A
  • Loss is a natural consequence of the breach of contract.
    OR
  • Loss may reasonably be supposed to have been in the contemplation of the parties when they made the contract, making the loss a likely consequence of the breach.
89
Q

Measure of loss is the difference in… and….

A

value
cost of cure

90
Q

Cost of cure damages will not be awarded where…

A

they would be out of all proportion to the consequences of the breach.

91
Q

Liquidated damages clause? and are such clauses valid?

A

Clause that attempts to pre-estimate the loss that is likely to be caused by breach of contract.
Such clauses are valid.

92
Q

Liquidated damages clause. the amount paid is that….regardless of the actual loss suffered.

A

stipulated in the contract.

93
Q

Which three principles don’t apply in a liquidated damages clause?

A

Principles of mitigation
remoteness
and measure of damages

94
Q

Penalty clause?

A

punish the other party for breach of contract with a sum that is ‘extravagant, exorbitant OR unconscionable’.

95
Q

Are penalty clauses enforceable?

A

no

96
Q

court will apply three principles to assess damages in a penalty clause?

A

mitigation, remoteness, and measure of damages

97
Q

Specific performance?

A

an order to require actual performance.

98
Q

Equitable remedy available at the court’s discretion for specific performance?

A

yes

99
Q

Equitable remedy in specific performance only available if…

A

damages not adequate remedy such as, purchases of land.

100
Q

Specific performance not available for personal services such as…

A

an employment contract.

101
Q

Injunction used when?

A

prevent a threatened breach of contract.

102
Q

Generally, equitable damages available for injunctions if…

A

damages aren’t an adequate remedy.

103
Q

Court won’t grant an injunction where…

A

it would directly or indirectly compel the defendant to do an act which he could not have been ordered to do by a decree of specific performance.

104
Q

Duty to mitigate?

A

duty to take reasonable steps by the innocent party to minimise the loss suffered by the breach.

105
Q

In duty to mitigate, reasonable steps are a question for who?

A

the court

106
Q

Reasonable steps taken have failed to reduce the loss OR even increased it, won’t prejudice the claimant.
correct?

A

yes

107
Q

meaning of indemnity?

A

primary obligation to reimburse the other party regarding a loss or liability arising under the contract.

108
Q

Indemnities have to be evidenced in writing?

A

incorrect

109
Q

Guarantee?

A

secondary obligation to pay on default of the debtor under the contract.

110
Q

Guarantees must be evidenced in writing?

A

yes

111
Q

A variation of the contract releases the guarantee since…obligation has changed.

A

primary
new guarantee is needed.

112
Q
A

Contract (5 decks)

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