vitiating factors

Question 1

what is a vitiating factor?

Answer 1

something that makes a contract null/void

Question 2

what are the 2 vitiating factors studied?

Answer 2

-misinterpretation
-economic duress

Question 3

what is misinterpretation?

Answer 3

an untrue statement/fact, said/done by a party when the contract is being negotiated/drawn up, that influences the other party to enter the contract

Question 4

what are the three instances of what misinterpretation cannot be?

Answer 4

-a mere opinion (Bissett v Wilkinson)
-an expression of future intent (Edgington v Fitzmaurice)
-a mere trade puff (Carlill v Carbolic Smoke Ball Co.)

Question 5

how can misinterpretation arise?

Answer 5

-from conduct and from verbal/written statements
-not from silence (lord rodger ‘a failure to speak might be regarded as morally questionable, but that is different from saying there is a legal duty to speak’)

Question 6

is a statements made after formation actionable?

Answer 6

no
-Roscorla v Thomas

Question 7

what are the three types of misinterpretation?

Answer 7

-fraudulent
-negligent
-innocent

Question 8

what is fraudulent misinterpretation?

Answer 8

a statement made knowingly/deliberately or recklessly as to whether it was true or not

Question 9

what is Lord Herschell’s test for fraudulent misinterpretation? what case was it derived from?

Answer 9

-Derry v Peek
-a statement is a fraudulent misinterpretation if it was made
-knowing it to be false
-without belief in it’s truth
-reckless, or careless as to whether it be true or false

Question 10

what is negligent misinterpretation?

Answer 10

-actioned in common law when loss is financial
-liability only arises when there is a ‘special relationship’ and the party making the statement owed a duty of care to the other party

Question 11

what section of the misinterpretation Act 1967 covers negligent misinterpretation?

Answer 11

-s2(1)
-allows an action where a misinterpretation is made and a loss occurs as a result of relying on it. the person is liable unless they can prove they had reasonable grounds to believe the statement

Question 12

what is innocent misrepresentation?

Answer 12

an untrue statement is made, but the party making it had reasonable grounds to believe it was true

Question 13

what are the remedies for fraudulent misrepresentation?

Answer 13

-damages based on the tort of deceit, so doesn’t require the injuries to be foreseeable
-injured party is entitled to reparations for ‘all the damage flowing from the fraudulent inducement’
-defendant is responsible for all damages and consequential loss where there’s a causal link between the statement and the damage
-loss of profit can be claimed
-injured party can still affirm the contract (continue it) or disaffirm it (and refuse any future performance)

Question 14

what are the remedies for negligent misrepresentation?

Answer 14

-s2(1) misrepresentation act 1967 - same remedies available as fraudulent
-damages are available under the 1967 act and common law
-common law damages are based on foreseeable loss under tort law
-contributory negligence can reduce the amount of damages

Question 15

what are the remedies for innocent misrepresentation?

Answer 15

-s2(2)
-remedies are rescission or damages in lieu of rescission, cannot claim both
-no automatic or absolute right to damages
-there is a discretionary right to damages
-rescission is possible

Question 16

key cases on misrepresentation

Answer 16

-Derry v Peek - Lord Herschell’s test for fraudulent misrepresentation
-Bissett v Wilkinson - must be a statement of material fact, mere opinion
-Edgington v Fitzmaurice - must be a statement of material fact, expression of future intent
-The Siboen and The Sibotre - definition
-The Universal Sentinel - where was the pressure from?
-Inntrepreneur Estates Ltd v Holland - untrue statement
-Idemitsu Kosan v Sumitomo Corp - terms vs representations under s2(1)

Question 17

what is economic duress?

Answer 17

one party makes threats to a person’s financial situation in order to form or change an agreement

Question 18

what are the 2 things a victim must prove for economic duress?

Answer 18

-coercion of the will
-illegitimate pressure

Question 19

what was the first case to support economic duress? how?

Answer 19

-The Siboen and The Sibotre
-Kerr J - ‘such a degree of coercion that the other party was deprived of his free consent and agreement’

Question 20

What is meant by coercion of will?

Answer 20

courts consider whether the injured party protested, whether there was an alternative route, were they independently advised?, did they take steps to avoid it?

Question 21

what is meant by illegitimate pressure?

Answer 21

coercion caused by pressure alone isn’t enough

Question 22

what are the two cases that were decided to be economic duress?

Answer 22

-The Universal Sentinel - threats to a union to blacklist a ship
-Atlas Express v KafCo. - threat to a small firm from a large firm to breach a contract

Question 23

what are the remedies for economic duress?

Answer 23

-makes the contract voidable
-injured party has the right to put the contract aside, unless they have expressly/impliedly asserted it
-injured party must seek rescission as soon as possible after the original economic duress has stopped
-similar to the tort of intimidation, so remedy for damages would lie in tort

Question 24

key cases on economic duress

Answer 24

-The Atlantic Baron - court held there had probably been economic duress, but waiting 8 months had affirmed the contract
-Atlas Express v KafCo
-DC Builders v Rees - no true accord between parties