Vitiating factors case cards (2021 contract law jan exams)

Question 1

Dimmock v Hallet, 1866 (origin of principle of misrepresentation)

Answer 1

• sale of land
• land divided into farms and worked by tenant farmers who paid rent
• value of land was the stream of rental income
• buyer asked if farms are fully let and seller said yes so B bought the land
• this was true but misleading because S didn’t say the tenants had all given notice to quit
• S’s defence was he didn’t say anything technically untrue and wasn’t required to give extra info
• courts sided with B as the statement was misleading and not the whole truth

Question 2

The rule in Smith v Hughes (1871), misrepresentation

Answer 2

• a mistake as to the terms of the contract known to the other party renders the contract void
• B believed the goods were contractually obligated to be a certain way
• S knew he was making a mistake and didn’t intervene
• contract is void
• if one party knows the other is making a mistake about the terms of contract they must correct it or there won’t be a contract

Question 3

Bisset v Wilkinson (1927), statement of opinion

Answer 3

• sale of land, NZ
• B wanted to use land for farming sheep but it had never been used for that
• B asked S how many sheep it could sustain
• S gave his opinion
• S was wrong but had no liability in misrepresentation because it was an opinion
• he is allowed to have a wrong opinion whereas you are not allowed to present something that is wrong as a fact
• if B acted on reliance of S opinion it is their problem

Question 4

Carmaso v Ogilvie-Grant (exceptional misrepresentation)

Answer 4

• A made representation to B that was true at the time and was intended to be of continuing effect until contract was concluded
• B dropped out and was replaced by another party (c)
• the contract was concluded but C found the statement made by A to be untrue
• C wished to rescind contract based on that misrep.
• A said they only made misrep. to B but court held that negotiations can pass from one party to another
• C can inherit misrep. from B

Question 5

Progress Bulk Carriers v Tube city (duress)

Answer 5

• C agrees to enter into contract as their faced with take it/leave it offer
• C is in difficult economic position
• if they do not take offer they could suffer massive financial loss
• there is legitimate threat cause D has no obligation to enter contract
• financial position of C gave threat coercive power
• it was D’s former unlawful act of breaking contract that created financial pressure that forced C to take offer
• judge ruled contract had unlawful roots so they uploaded duress because of earlier unlawful conduct

Question 6

Times Travel v Pakistan international airlines (duress)

Answer 6

• travel agency made money by serving local P community/providing direct flights from UK to P
• Airline said they were going to lawfully terminate contract and if they wanted future business they needed to enter new contract
• airline had enormous coercive power as they were the only suppliers for the agency’s main product
• C claimed economic duress because they had no choice either to sign or go out of business
• CA said D recognized their rights to terminate and re-negotiate their contract and there was no basis for law to condemn them as the threat was legitimate

Question 7

Salt v Stratstone (unjust enrichment)

Answer 7

• B was sold car on representation that it was brand new
• B used it for 2 yrs then found out it wasn’t new
• S said they couldn’t rescind because the car had been through 2 yrs depreciation
• S would end up with worse car and B would get all their money back
• CA still permitted recission despite UE

Question 8

Whittington v Seale (indemnity)

Answer 8

• claimant was bale to be reimbursed for other expenditure such as payment to local authorities because they would have had to make these payments regardless of the misrepresentation
• C was entitled only to the indemnity because through recission what happened as a result of misrep. is not recoverable

Question 9

William Sindall v Cambridgeshire county council

Answer 9

• there was misrep but it wasn’t fraudulent
• section 2 (2) of misrep act used
• if recission went ahead it would impose financial penalty on the seller of 3 millon for misrep which was worth about 20,000
• courts used judicial discretion to not use recission and use damages for a more appropriate penalty

Question 10

Derry v Peek (fraudulent statement)

Answer 10

• you are fraudulent when you intend to speak an untruth and know it is untrue
• when you’re wreckless (don’t care if your info is correct but act like it is)