Week 3 & 4: Matters Affecting Validity

Question 1

Which case highlights that third party rights are not protected under void agreements.

Answer 1

Morrison v Robertson.
- M thought he was contracting with Wilson not T
- The contract with T was void
- There was an error in the substantials
- M had been induced into agreement by misrepresentation
- M entitled to get cows back from R

Question 2

What case highlights that third party rights are protected under voidable agreements?

Answer 2

Macleod v Kerr.
- There was no error as to identity
- The contract between K and G was voidable not void
- Misrepresentation did not induce error therefore not an error in the substantial
- Car had been resold therefore restitutio in itegrum not possible.

Question 3

‘All people have capacity to enter into contracts.’

What are the four exceptions?

Answer 3

1. Children*
2. Incapable adults
3. The intoxicated
4. Illegal aliens

Question 4

Under what circumstances can children enter contracts.

Answer 4

1. Bargains commonly entered into
2. Not unreasonable

Question 5

Which Act regulates the ability for children to enter contracts?

Answer 5

Age of Legal Capacity (Scotland) Act 1991

Question 6

What Act provides for adults with incapacity in Scotland

Answer 6

Adults with Incapacity (Scotland) Act 2000.

Question 7

What case highlights force and fear in the negotiation process ?

Answer 7

Earl of Orkney v Vinfra

Question 8

What case highlights that the threat of lawful action does not constitute force and fear ?

Answer 8

Hunter v Bradford Property Trust Ltd

Question 9

What case highlights that a right cannot be passed down if a party is facile or there is circumvention.

Answer 9

Macgilvary v Gilmartin.
- Daughter stayed with Mother following the passing of Father
- Daughter convinced Mother to sell property
- Mother declared unfit to understand and comprehend the implications of agreement
- Contract declared voidable.

Question 10

What are the three key elements of undue influence?

Answer 10

1. Lack of independent council for weaker party
2. Gratitious benifit for stronger party
3. Ascendent and subordinate relationship between the parties

Question 11

What are the seven circumstances under which a contract may be declared void?

Answer 11

1. Force and fear
2. Age
3. Incapable adults
4. Intoxication
5. Enemy aliens
6. Induced unilateral error
7. Bilateral error

Question 12

What are the circumstances under which a contract may be declared voidable?

Answer 12

1. Facility and circumvention
2. Undue influence

Question 13

What are the two forms of bilateral error

Answer 13

Mutual: Parties are at cross purposes on an essential terms of the contract

Common: Parties both make the same mistake on an essential.

Question 14

Which case highlights mutual error?

Answer 14

Raffles v Winchelhaus.
- Mutual error as to ship (one leaving in October and one leaving in December)
- Both ships had the same name

Question 15

Which case highlights common error?

Answer 15

Hamilton v Western Bank of Scotland
- A bank sold a property that it was not aware that it in fact did not own

Question 16

Which case highlights that a matter of opinion cannot be considered induced unilateral error?

Answer 16

Flynn v Scott.
- Party suggested van was in good working order.

Question 17

What was the judgement in Ritchie v Glass?

Answer 17

Induced unilateral error can be described as when a reasonable man only enters a contract because of the misrepresentation made by the other party.

Question 18

What are the three forms of misrepresentation?

Answer 18

1. Innocent
2. Fraudulent
3. Negligent

Question 19

X v BBC

Answer 19

Contract void due to incapacity (intoxication).

Question 20

Hislop v Dickson Motors

Answer 20

You can blackmail someone into repaying money by using a lawful threat only insofar as it restores the money lost. Legitimate pressure is not force and fear

Question 21

Stuart v Kennedy

Answer 21

Mutual error as to units of measurement.

Question 22

McLaughlin

Answer 22

Common error: Both missed a statutory provision preventing the conclusion of the bargain.

Question 23

Boyd & Forrest v Glasgow & South Western Railway

Answer 23

Facts:
o Firm tendered to build a railway line based on data by the railway company
o Railway proported that the area of land concerned was comprised of soft rock, when in fact it was bedrock
o The actual cost turned out £1000 more than otherwise would have been necessary
o Information provided was correct
o Innocent mistake
o Employee had altered information, innocently, and not with malice
o Impossible to

Judgement:
o Restiutio in integrum not possible – because it was innocent
o Court declared that when bedrock was discovered they should have stopped

In summary: Innocent Misrepresentation

Question 24

Smith V Sim

Answer 24

Facts:
o Seller had provided the buyer with incorrect turnover figures of a pub in Montrose
o Smith paid a lot more than he should for the pub than was reasonable

Judgement:
o Eligible to claim damages

In Summary: Fraudulent Misrepresentation

Question 25

Cramasco LLP v Ogilvie-Grant, Earl of Seafield

Answer 25

Negligent misrepresentation.

Question 26

Stewart v Kennedy and Menzies v Menzies

Answer 26

Uninduced unilateral error.