Vitiating factors Flashcards
What is a vitiating factor
something which makes a contract void or voidable
What are the types of vitiating factors
- misrepresentation
- economic duress
What is a misrepresentation
a false statement of material fact made by a party to the contract that induce the other party to enter the contract
False statement
The extent of the persons knowledge of the false statement defines the type of misrepresentation it might be.
Silence can NEVER amount to a misrepresentation as seen in Fletcher v Krell
Fletcher v Krell
woman applied for a job she was not asked her marital state. In the time if she said she was divorced she wouldnt be given the job. Court stated there was no misrepresentation as she wasnt asked about it
O’flanagan
A statement that may have been true when made can become a misrepresentation if it becomes false before the contract is made
Doctor originally stated the correct profits of bis practice, however before the contract was made he fell ill, lost many patients, making the original statement inaccurate.
Dimmock v Hallet
Seller of land told buyer there were tenants on the land, what he wanted, but failed to mention that they were leaving. Amounting to a misrepresentation
Part-truth can make a misrepresentation
Tate v Williamson
Where the relationship between the parties is based upon trust then silence can amount to a misrepresentation
Lambert v Co-op insurance
D renewed jewellery insurance but failed to mention husband was previously convicted of jewellery theft. This was important and would’ve affected the jewellery companies decision therefore misrepresentation
Spice Girls v Aprilia
The statement doesnt need to be oral or written just anything that would influence the others decisions.
Spice girls didn’t mention that one member was leaving= misrepresentation
Material fact
misrepresentation must be based on a material fact . Meaning that the statement would have made the reasonable person make the contract and did in fact influence the other party’s decision.
Must be a statement of fact NOT opinion
Statement of future intention is nOT a fact
Bisset v Wilkinson
D genuinely believed you could fit 2000 sheep on a stretch of land. This was false however he genuinely believed it to be true therefore = no misrepresentation
Edginton v Fitzmaurice
C invested in a business who said they would use the investment to complete alterations to the building and other developments. It was instead used for paying off debts. This was a misrepresentation as they had no intention to invest the money into the buildings and developments
Induces the other party to enter the contract
statement MUST be critical to the influence of the others decision and they must have relied on the statement rather than their own judgement
Attwood v Small
seller of mine made false statement to purchaser. The buyer instructed surveyor to confirm this statement, which he did incorrectly. purchaser brought the mine later finding the statement to be untrue. NO misrepresentation due to the survey report which C relied upon.
Redgrave v Hurd
seller verbally misled purchaser about earrings. Buyer relied on the statement and didn’t look into anything else and so this was a misrepresentation
NO NEED FOR SOMEONE TO TAKE REASONABLE STEPS TO DISCOVER THE TRUTH.
Museprime v Adhill
It doesnt matter what the reasonable buyer would do the fact that the buyer relied on the statement is ENOUGH
different kinds of misrepresentation
- innocent
- negligent
- fraudulent
Innocent misrepreentaion
The misrepresentation act states that an innocent misrepresentation is one which is genuinely held on reasonable grounds.
Remedy= recession OR damages
Negligent misrepresentation
Est. by the case of Hedley v Heller
Negligent misrepresentation is a false statement made by a person who had no reasonable grounds to believe it was true.
Two types
- under the common law tort of negligence
- under the misrepresentation act
negligent misrepresentation under common law
Hedley v Heller- claim for negligent misrepresentation is to be allowed
Negligent misrepresentation under misrepresentation act 1967
S2(1) statutory liability for NM which does not require any special relationship between parties. All that must be proven is that there is a misrepresentation which results in a contract where the victim suffers a loss.
Howard Marine v Ogden sons
Fraudulent misrepresentation
Est. Derry v Peek
when there is a statement which the person making the representation knows it to be untrue or is reckless as to whether or not it is true.
Remedies for innocent misrepresentation
- Rescission = equitable remedy. discretionary. parties are returned to the position they were in before the contract was made
NOT AVALIABLE:
-Restitution to the original position is impossible (Clarke v Dickson) - the contract is affirmed (Long v Loyd)
- delay
- third party had gained rights over property (Lewis v Averay)
Damages remedy for innocent misrepresentation
Discretionary
Remedies for negligent misrep
Rescission and/or damages
Remedies for fraudulent misrep
Rescission and damages.
Damages aim to put the claimant into the position they were in before the contract misrepresentation occurred.
Possible to recover damages for the loss of profit (East v Maurer)
What is economic duress
Where a person unwillingly enters a contract due to force of another party. can be either
- undue influence
- duress
- economic duress
Undue influence
where one party entered the contract as a result of pressure. Presumed where there is trust in the relationship and one party will benefit more than another.
Allcard v Skinner: new nun gave superior mother all her money.
Contract signed under duress
such as blackmail or violence to pursued the other.
Barton v Armstrong
Economic duress
Where someone enters into a contract due to financial threats being made.
Atlas v Kafco- forced into charging new export rates. If Atlas stopped exporting for Kafco they would go out of business = economic duress
Key requirements for economic duress
- effect of compulsion or lack of choice for the victim
- the pressure must be illegitimate
- pressure is significant cause of making the contract
Universe ships v ITWF
ITWF blocked in Universe ship and demanded payment and conditions as well as demanded the owners pay large amount of money. Ship owners agreed so they could leave. Court later decided that the money had be given through economic duress and must be repaid
Factors of illegitimate pressure
pao ơn v Lau Yiu =
- did the person claiming to be coerced protest about the pressure
- did that person have any other available course of action that was reasonable
- was he independently advised before taking the action
- after entering into the contract, did he take steps to make the contract void
CTN cash v Carry and Gallagher
Duress is NOT available when the action threaten is lawful action
However Progress bulk allowed for lawful action to be enough to constitute illegitimate pressure = a past unlawful act and threat of further one was present
Remedies for economic duress
- restitution of money or property (discretionary and puts the C in position they were before the contract created through economic duress was made
- Can order for the avoidance of the contract itself
