Vitiating Factors

Question 1

Which vitiating factors will lead to a void contract?

Answer 1

Illegality and Mistake

Question 2

Which vitiating factors will lead to a voidable contract?

Answer 2

Duress (common law), Undue Influence (equity) and Misrepresentation

Question 3

What are the different types of mistake?

Answer 3

1. Common mistake - both parties are mistaken about the existence of subject matter
2. Mutual mistake - parties are at cross purpose
3. Unilateral mistake - only one party is mistaken
4. Mistake to identity e.g. with respect to legal title of goods (can also claim under misrepresentation)

Question 4

Will mistake to quality ever be sufficient?

Answer 4

No

Question 5

What are the different types of duress?

Answer 5

1. Duress to the person (needs only to be ‘a reason’ for entering the contract)
2. Economic duress (needs to be a ‘significant reason’ for entering the contract, mere commercial pressure is insufficient)
3. Duress to the goods

Question 6

What are the different types of undue influence?

Answer 6

1. Actual undue influence - the conduct only needs to be ‘a reason’ for C to enter the contract.
2. Presumed undue influence, where there is a relationship of trust and confidence. BoP on D to show that there was no undue influence, and C obtaining independent advice is treated as indicative but not conclusive evidence of there being no undue influence

Question 7

What should a third party do if they suspect undue influence?

Answer 7

They need to take reasonable steps to ascertain if there is free will. If not, the contract may be set aside.

Question 8

What does illegality include?

Answer 8

Illegality also includes contracts that are against public policy, morality, damaging to the government, interfering with justice and detrimental to society.

Question 9

Are restraint of trade clauses ever legal?

Answer 9

They are only legal if they are reasonable and necessary to protect a business’s legitimate interests.

Question 10

Can misrepresentation arise from a statement communicated indirectly from a third party?

Answer 10

Yes

Question 11

What is the threshold for misrepresentation?

Answer 11

There must be reliance by C on the representation - the representation must have been a substantial reason for them to enter into the contract.

Question 12

What are not representations?

Answer 12

1. Opinions
2. Statements concerning future events
3. Statements concerning D’s intention, except if D had no intention to act accordingly
4. Silence
5. Mere puffs

Question 13

When is silence misrepresentation?

Answer 13

1. Contracts of utmost good faith
2. Duty of trust and confidence
3. To correct a previously correct representation/statement

Question 14

What are the different types of misrepresentation?

Answer 14

1. Fraudulent Misrepresentation (tort of deceit)
2. Negligent Misrepresentation
3. Innocent Misrepresentation

Question 15

In which kinds of misrepresentation, are damages available?

Answer 15

Fraudulent and negligent misrepresentation - they can claim for all damages, even damages that are not reasonably foreseeable

Question 16

Is rescission available for all types of misrepresentation?

Answer 16

Yes

Question 17

When can damages be made in lieu of rescission?

Answer 17

In negligent and innocent misrepresentation.

Question 18

What is the aim of damages in misrepresentation?

Answer 18

To put C in a position had the misrepresentation that been made