vitiating factors Flashcards
what factors in vitiating factors
misrepresentation, including omission in consumer contexts
economic duress
what are vitiating factors
it is a pre-contractual issue, something that occurs prior to the point of contract formation, namely, acceptance of an offer
what can vitiating factors be
either a wrongful action, statement or duress by D during contractual negotiations that makes the contract void or voidable
what happens if a suffering party enters a contract
enters into a contract but subsequently discovers that they were subject to a vitiating factor, meaning the suffering party has the option to make the contract void of they wish
what is the note that the contract is not form the point of discovery
vitiating factor automatically void but rather becomes voidable
what is a void in the contract
a contract that is “void” cannot be enforce by either party. law treats a void contract as if it had never been formed
what is a voidable contract
a contract is valid but that can be declared invalid at the request of the parties
what does it mean if a contract is valid
it is enforceable
what does it mean if the contract is not valid
then the contract may not exists all or it may exists but become ‘voidable’- void contract are those that never existed for not reason pr another
what is misrepresentation
it is an untrue statement, material fact, made by a party to the contract this could be the offeror or the offeree, induces the other party to enter into a contract
what is undue influence
where there exists a relationship between the parties which has been expolited by one party to gain an unfair advantage…
what is enable in undue influence
this will enable the person influenced to have the contract set aside as against a party who subjected the other to such influence
what undue influence in duress
in a contractual law relates to where a person enters an agreement as a result of threats. were a party enters a contract bc of duress they may have the contract set aside
what is undue influence in economic duress
is where someone enters into an agreement as a result of financial threats
What are the different terms of misrepresentation
Fraudulent
Negligent
Innocent/statutory - misrepresentation act 1967
What case link to express of misrepresentation
Oscar v Williams - the car is a “1984 morris 10 saloon”
What case link to implied of misrepresentation
Spice girls Ltd v Aprillia world service- taking part in photo shoots advertise motorbikes- in this case was implied by conduct
What must be in an untrue statement in misrepresentation
Must be one that is not true or accurate and may be in any written form, spoken or by conduct
What are the two case that link to untrue statement
Fletcher v Krell
Spice girls v aprilla world service
What happen in Fletcher v Krell (untrue statement)
Silence cannot be a misrepresentation, governess not obliged to tell potential employers that she was divorced
What happen in spice girls Ltd v Aprillia world service (untrue statement )
Misrepresentation can be by conduct. Filing promotional material was a representation that none of the spice girls intended to leave the group
What is meant by change of circumstance half truth
There may be a misrepresentation bc the party tells a half truth or says something that later becomes untrue
Cases link to change of circumstance half truth
Dimmock v Hallett
With v O’flanagan
What happen in dimmock v hallett
Seller of land said that there were tenants on the land, but not they were all leaving. Part-truth was misrepresentation
What happen in with v o’flanagan
Doc stated profits of his medical practice but then lost patients when he became ill and did not tell the purchaser. He should have corrected the info before he offer was accepted
What subsection are in confidential relationships
Fiduciary relationships
Utmost good faith
What is fiduciary relationships in confidential relationships
Relationship of trust. Would include- doctor/patient or financial adviser/client
Case link to fiduciary relationships
Tate v Williamson
What happen in Tate v Williamson 1866
Williamson was asked to provide natural advice to a young man with lots of student debt. He had to sell his land to pay the debt he bought the land at half its value. He knew this and did not disclose it to the young man..
What is meant by utmost good faith in confidential relationships
All material facts must be disclosed
Case link to utmost good faith
Lambert v cooperative insurance
What happen in lambert v cooperate insurance
Where the insurance company could refuse to pay claim bc woman had not told them about her husband’s conviction for conspiracy to steal when she took out the policy
What act is insurance contract consumer
Consumer insurance (disclosure and representations) act 2012
What does a consumer have a duty of (insurance contracts)
To take reasonable care not to male a misrepresentation to the insurer
What is carelessly representation (insurance contract)
Insurer cannot avoid the contract, but can make a reduction
What is meant by deliberate or reckless in insurance contracts
Insurer can avoid the contract ad refuse all claims (usually without having to return the premiums that have been paid)
What is meant by statement of material fact
One which would have led a reasonable person to enter into the contact and which had
What is meant by a statement of opinion or belief
Doesn’t amount to a misrepresentation unless the maker of statement is an expert or in a betrayer position to know truth. May be a misrepresentation if the marker of the statement does not he lost hold that opinion
What three cases link to statement must be one of material fact not one of opinion
Basset v Wilkinson 1927
Edgington v Fitzmaurice 1885
Smith v land and house property corporation 1994
What happen in Bisset v Wilkinson 1927
No misrepresentation, seller of farmland gabe his honest opinion about number of sheep land could hold
What happen in Edginton v Fitzmaurice 1885
Yea, company said investment was to be used for alternations to building but really intend to use it to pay off debts, misrepresentation of fact
What happen in smith v land and house property corporation 1884
Yes, said that someone was a ‘most desirable tenant’ when they knew he was in arrears with rent
What is a statement of intention
A promise for the future
Not a statement of fact
What can a statement of intention become
A statement of fact if the person has no intention of carrying it out- becoming misrepresentation if it proves to be false
What meant by a party to the contract of his or her agent
Not liable for statements made by other person unless they are your agent so old be liable if someone else makes a misrepresentation in a review
What is meant by Induces the other party to enter into the contract
Statement must lead the other party into making the contract
Why must it be important for a party making the contract
As the party must of relied on the statement rather than their own knowledge or info
What are the three cases that link to Induces the other party to enter into the contract
Redgrave v Hurd
Atwood v Small
Muse-prime v Adhill properties
Was Redgrave v Hurd misrepresentation
Not misrepresentation
Why was Redgrave v Hurd not misrepresentation
not misrepresentation if the other party relies on their own judgment or information obtained elsewhere. Solved Doesn’t matter of the party could have discovered the truth by taking reasonable steps
Was Atwood v Small misrepresentation
Not misrepresentation
Why was the case- Atwood v Small not misrepresentation
does not matter if the party could have discovered the truth by taking reasonable steps. No misrep if other party relies on their own judgment or information obtained elsewhere
What is stated under s.12 CRA 2015(omission in consumer contracts)
Sets out certain info that must be provided by the trader in sale of goods contracts. If not provided not binding
If the info changes what happen (s.12 CRA)
It will not be effective unless expressly agreed between the trader and the consumer
What act leads to misleading omissions
Consumer protection regulations 2014(CPR)
What two bits are stated in the CPR 2014- misleading omissions
Traders have to provide key info.
Omitting any key info may be treated as a misrepresentation
What the 3 parts for omitting any key info may be treated as misrep. CPR 2014
- Info needed to make an informed decision that the average customer would need
- Hides info in ambiguity
- Fails to identify commercial intent
What are two types of misrep
Fraudulent and negligent
What can be affected by the types of misrep
The remedy available and/ or standard of proof
Case link to fraudulent misrepresentation
Derry v Peek 1889
What happen in Derry v Peek 1889
In the company prospectus the defendant stated the company had the right to use steam powered trams as opposed to hors powered tram
How did lord Herschel defined fraudulent misrep as a statement which is made wither
- knwiung it to be flase
- without belief in its truth, or
- recklessly, careless as it whether it be true or false
What can fraudulent misrep also include
Hiding defects
Overly optimistic view
What case links to hiding defects
Gordon v Selico Ltd 1986
What happen in Gordon v selico Ltd 1986
A misrep is made by a statement of supposed fact, or otherwise a statement of intent. Held by COA that the parting of dry rot to conceal it amounted to misrep- as the seller knew it was there
What case links to an overly optimistic view
Green Luton one Ltd 2016
What happen in Green Luton One Ltd 2016
High court held that a buyer of a commercial property was entitled to have its deposit returned bc of an untrue repres made recklessly or fraud by the sellers that there was no service change arrears, when in facts
Facts of Smith new court v Scrimgeour vickers 1996
C was interested in buying shares in a company for D bank. D fraudulently miss presented that there were close rival bids. Co was later the V of a massive fraud, causing its share price to drop. C sold the shares at a massive loss. Sued for damages for deceit
Held for Smith new court v Scrimgeour Vickers 1996
C was entitled for all its consequential loss form purchasing the shares, as measured by the difference between price paid and price sold
What are the remedies for fraudulent misrepresentation
Damages are to put the innocent party in position they were in before the misrep but will sometimes award damages to allow innocent party to claim loss of profits
What section and act is negligent misrepresentation under
S.2 of misrepresentation act 1967,
What is a negligent misrepresentation
It is a statement made without reasonable grounds for belief in its truth
What is the burden of proof in negligent misrep
Shifts the burden of proof being the representer to demonstrate that they had reasonable grounds for believing the statement to be true
What case link to negligent misrepresentation
Howard marine v Ogden and sons 1978
Facts of Howard marine v Ogden and sons 1978
C hired two dredging barges from D for £1,800 per week to carry out certain excavation works. In fact the entry in Lloyds register was wrong. Capacity was a lot lower. Consequently the work carried out by C took much longer and cost a great deal more to perform. C brought action for negligent misrepresentation.
Held for Howard marine v Ogden and sons 1978
D argued they had reaonsble ground to believe the stament as true.
D was not discharged the burden of proof by demonstrating they had reasonable to believe it was true.(correct capityP)
what choice does the C have if it is negligent misrep
can sue under common law or misrep act 1967
what case links to negligent misstatement
Hedley Byrne & Co Ltd v Heller & partners Ltd 1964
what happen in Hedley Byrne & Co Ltd v Heller & partners Ltd 1964
C was an advertising agency asking for a reference from a bank about a client’s finances. the bank said the client would be able to meet any financial obligations and this was not the case
what was emerged from Hedley Byrne & Co Ltd & Heller & partners Ltd 1967
important legal principles but those have now been adopted and refined further
what is the first part of the tort of negligent misstatement
party making the negligent statement must be in possession of a particular type of knowledge for which the advice is required
what is the second part of the tort of negligent misstatement
sufficient proximity must exists between the two parties so that it is reasonable to rely on the advice
what is the third part of the tort of negligent misstatement
they party to who the statement is made does rely on the statement and the party making the statement is aware of the reliance
what case links to the tort of negligent misstatement
Esso petroleum Co Ltd v Marden 1976
what was held in Esso petroleum Co Ltd v Marden 1976
COA held that Esso was liable for damages to Mr. Mardon, a petrol station tenant, due to a negligent misstatement about the potential throughput of the station, which induced him to enter the tenancy agreement
there is now an avenue for what
claims of negligent misrep in contract law under s.2(1)
what is stated in s2(1) misrep act 1967
if the person making the misrepresentation would be liable… unless he proves that he had reasonable ground to believe up to the time the contract was made the facts represented were true
what can claim for if they claim under misrep act
rescission and or damages
what happen in Royscott trust Ltd 1991
court decided that damages under s.2 calculated in the same way as damaged for fraud, which means that the rules on remoteness are not as strict
what is innocent misrep
the representer honestly believes the statement to be true D had no specialist knowledge or skill to think
what can they claim for when claiming for innocent misrep
they can only choose recession or damage, not both
case links for innocent misrep
Oscar chess Ltd v Willaims
facts of Oscar chess Ltd v Willaims
the seller (D) represented a car sold to a motor dealer(C) as a 1948 model as it was stated so in the car’s registration book. The car was actually a 1939 model, thus the price was inflated. When C found out that the car was a 1939 model, C brought a claim for breach of contract, claiming that it was a term of the sale agreement that the car was of the 1948 model.
held for Oscar chess Ltd v Willaims
C’s claim was rejected.
The statement that the car was a 1948 model was not intended to be a term.
The statement was an innocent representation for which no damages could be awarded
what are 4 possibilities if rescission isn’t available
impossibly
affirmation
reasonable time
3rd parties
what case links to impossibility
Clarke v Dickson
what happen in clarke v Dickson
partnership had become limited company & could not return this
what case links to affirmation
Long v Lloyd
what happen in Long v Lloyd
customer had shared cost of repair the first time lorry broke down so had indicated a willingness to preserve with the contract.
what case links to reasonable time
leaf v international galleries
what happen in leaf v international galleries
did not find out that painting was not by consumable until 5 years after purchase- too late to rescind.
case link to 3rd parties
lewis v Averay
what happen in lewis v Averay
car had been sold on to an innocent third party so no rescission possible
what is the remedies for innocent misrep
Rescission or discretionary damages under s2 misrepresentation act 1967.
if the right to rescind it lost the right of what
lost the right to damages is also lost in Zanzibar v British aerospace
what is economic duress
this is where someone enters into a contract as a result of threats to damages a person or business financially
what does economic duress amount to
to the application of illegitimate pressure by one party on another, which results in the innocent party being forced to enter into a contract they would otherwise not have entered into
what is the concept of economic duress
has been recognised, in theory at least, for many years. However, it remains difficult to establish in practice
what is the problem for judges and arbitrators with economic duress
is drawing a distinction between tough, but legitimate commercial negotiations on the one hand and unlawful coercion on the other
case link to economic duress
The Simone and the Sibotre (1976)
what happen in The Simone and the Sibotre (1976)
Ds chartered two vessels from C. Ds told C that they would go bankrupt if they did not lower the costs of charter. This was completely untrue. Cs was scared to loose valuable customers
held for the Simone and the Sibotre 1976
whilst recognising that it would be possible to render a contract voidable for economic duress, it was not established in this case. To amount to economic duress there had to be a coercion of the will so as to vitiate consent. Commercial pressure was not sufficient
what is meant by the nature of threat
A threat that is improper and not just acceptable business negotiations
what is first part of pressure/no choice illegitimate inducement
Pressure was exerted on the victim so that the victim had no real choice but to enter the contract
what is second part of pressure/no choice illegitimate inducement
the pressure was illegitimate
what is third part of pressure/no choice illegitimate inducement
the pressure induced the victim to enter into the contract
what is meant by pressure exerted on the victim
No choice, not just market, pressure, no reasonable and alternative
what must pressure be
have been exerted on the innocent contracting party, which amounted to compulsion or lack of practical choice
economic duress case pressure must go further than what
much further than the pressure of the market(so entering into an employment contract bc you need money is not economic duress
what did the court say about Poa On v Lau Yiu Long 1979
that the question is whether the person had any other course of action that was reasonable
what factors were identify in the case of Poa On v Lau Yiu Long 1979 to help decide economic duress
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 or she independently advised before taking the action?
After entering into the contract, did he or she take steps to make the contract void?
wat case links to pressure exerted on a victim
Universe tankships v international transport workers federation 1983.
facts of Universe tankships v international transport workers federation 1983.
The IWTF insisted upon a payment being made to its welfare fund before it would call off a strike and allow UT’s ship the universe sentinel to leave port.
UT made the payment so that the ship could leave port, then tried to recover the money on the basis that it had been paid under duress.
held for Universe tankships v international transport workers federation 1983.
COA decided that the money had been extracted as a result of duress and that ITWF should repay it. The sip owners were losing revenue whilst the ship was struck in port and so had no real choice but to pay the money so that it could leave
what is meant by pressure was illegitimate
will only be illegitimate if the threat is unreasonable
what case link to reasonable lawful pressure
CTN cash and carry v Gallagher 1994
what happen in CTN cash and carry v Gallagher 1994
a threat to withdraw the C’s credit facility when an invoice was not paid did not amount to economic duress
what case links to unreasonable lawful pressure
Progress Bulk Carriers v Tube city 2012
what happen in Progress Bulk Carriers v Tube city 2012
where the threat to refuse to supply a substitute ship unless claims for breach of contract were waived, amounted to economic duress
what is meant by The pressure induced the victim to enter into the contract
The duress must be one of the reasons for entering the contract but does not have to be the only or even the main reason.
case links to the pressure induced the victim to enter into the contract
Barton v Armstrong 1975
what happen in Barton v Armstrong 1975
There was some evidence that, despite the death threats, the C bought shares because he thought it was a good business deal
what was contract made in Barton v Armstrong 1975
voidable because the death threats had contributed to the decision to buy the shares
what is meant by protest
The victim protested at the time of or shortly after the contract was made
case link to protest
Atlantic Baron 1979
what happen in Atlantic Baron 1979(protest)
C waited for eight months and so did not succeed in his claim
what case links to when lawful pressure amounts to duress
Time travel(UK) limited v Pakistan international airlines corporation (2019)
facts of Time travel(UK) limited v Pakistan international airlines corporation (2019)
C’s main business was the sale of tickets to fly to and from pakistan. It was heavily dependent on the D airline. D’s agents claimed that D owed them various sums on commission. D terminated the agency contracts and offered each agent a contract requiring them to waive any claims to unpaid commission. They later sought to have the new agreement set aside for economic duress.D argued that they had not procured that contract by economic duress, bc their actions were legitimate and lawful.
held for Time travel(UK) limited v Pakistan international airlines corporation (2019)
The court of appeal held in the D’s favour. D exercised only legitimate pressure. This was because D believed in good faith that it was entitled to act the way it did.
what are the three remedies for economic duress
rescission
contract rendered voidable
effect of delay by claimant
what is meant by returning party in rescission
to the position they were in before the contract was made ( as if contract never existed)
when is equitable remedy only granted when in rescission
only granted when it is fair to do so
If the claimants actions indicate that they affirm the contract what happen to rescission
they may lose the right to recession
what is meant by contract rendered voidable (remedy)
Claimant has the option to continue with the contract, or repudiate the contract with immediate effect, this means that the contract from thereon is void
what is meant by the effect of delay by claimant(remedy)
If the claimant leaves a delay of time, they may be seen as to affirm the contract and any claim may not be successful
