Vitiating Factors

Question 1

Void or Voidable: Mistake

Answer 1

Void

Question 2

Void or Voidable: Duress

Answer 2

Voidable

Question 3

Void or Voidable: Undue Influence

Answer 3

Voidable

Question 4

Void or Voidable: Illegality

Answer 4

Void

Question 5

Void or Voidable: Misrepresentation

Answer 5

Voidable

Question 5

What are the innocent party’s options if a contract is voidable?

Answer 5

Avoid (rescind) it

Affirm it

Question 6

What are common (identical) mistakes?

Answer 6

Both parties have made the same mistake at the time the enter into the contract. Usually about the existence of the subject matter.

NOTE: If the subject matter is destroyed AFTER contract formation, look at frustration analysis.

Question 7

What is a mutual mistake?

Answer 7

Where the parties are mistaken about different things when the contract is entered into.

Court will look at whether a reasonable person would have interpret the agreement as each party did. If so, and the contract is just ambiguous, then contract is void.

Question 8

What is a unilateral mistake?

Answer 8

Where one party is mistaken about the terms of a contract and the other party is aware of the mistake.

Renders the contract void.

Can be assumed if the price of something is obviously wrong.

Question 9

What is a mistake as to identity?

Answer 9

One party thinks they are contracting with a different person than they actually are.

Question 10

How do courts examine a contract where there has been a mistake as to identity?

Answer 10

Courts look at whether the innocent party would have still entered the contract irrespective of the other party’s identity.
- If so, not void for mistake (but may be voidable for misrepresentation)
- If not, void for mistake

Question 11

What are the different kinds of mistake?

Answer 11

Common mistake
Mutual mistake
Unilateral Mistake
Mistake as to Identity
Non Est Factum
Rectification

Question 12

What is the doctrine of Non Est Factum

Answer 12

Protects people from being bound by contracts when they are mistaken about the contents of the contract.

Question 13

When can you use the doctrine of Non Est Factum

Answer 13

1) FUNDAMENTAL and RADICAL difference between what the party thought they were signing and what was actually signed.

2) The party must not have been careless in signing the document.

NOTE: Heavy burden on the party claiming this defense, must have special difficulties in understanding the document.

Question 14

What is Rectification

Answer 14

When the parties agree on the terms of a contract, but the terms are recorded incorrectly when the agreement is reduced to writing.

Question 15

When will courts rectify a mistake?

Answer 15

Only if:
- The document fails to express the common intention of the parties accurately
- Written document is arbitrary or irrational

Rectification will NOT be possible if it is inequitable (e.g., third parties have acquired rights under the contract).

Question 16

3 Types of Duress

Answer 16

Duress of the Person (physical duress)

Duress of Goods (holding someone’s property)

Economic Duress (stronger economic position, but more than just commercial pressure)

Question 17

What factors do the courts consider when assessing duress?

Answer 17

• Does the threat deprive the innocent party of a practicable choice?
• Is the threat unlawful?
• Did the innocent party protest?
• Did the innocent party rely on the contract?

Question 18

How is Undue Influence different from Duress?

Answer 18

Duress= Illegitimate pressure on a party

UI= True consent given, but relationship/external source exploited. Does not need to be the ONLY reason the contract is entered into.

Question 19

Two ways of proving UI

Answer 19

1) Actual UI
2) Presumed UI

Question 20

What is actual UI?

Answer 20

Overt acts which influence a party to enter a contract.
- Can be direct, like blackmail
- Can be indirect, like abusing trust or exerting pressure

Question 21

What is presumed UI?

Answer 21

Relationship of trust between the parties (usually fiduciary) creates a rebuttable presumption that certain transactions/agreements were created through UI.

Question 22

What is Third Party UI?

Answer 22

When the influencer is not a party to the agreement, then the contract may be set aside if the other party to the contract was aware of the UI and did not take reasonable steps to ensure there was free will (e.g., independent legal advice).

Question 23

When is a contract void for illegality?

Answer 23

Contracts that are illegal when formed (e.g., to perform criminal behavior) are void

Contracts that are performed in an illegal manner may result in the wrongdoer not being able to enforce their rights, but the innocent party can recover (if they didn’t know about the illegality)