Week Three Flashcards
What is a void contract?
A contract which is void is a complete nullity. It is treated as if it never existed at all.
What is a voidable contract?
A contract which is voidable is good and effective until it is annulled. If neither party to the contract takes steps to annul it then it will continue in existence.
What case provides a precedent for insanity affecting the validity of contracts and what that is?
John Loudon & Co v Elder’s Curator Bonis 1923, If the insane person understands the business in question then it is binding if not, then it is void.
What case is concerned with capacity / intoxication?
Taylor v Provan (1864), If someone is so drunk they are deprived of reason then the contract is void but if its of a lesser degree then it’s not
What cases are concerned with force and fear and the precedents they set?
Hislop v Dickson Motors (Forres) Ltd - a contract is nullified if the pressure of ‘something’ would overpower the mind of an ordinary person
Earl of Orkney v Vinfra, void through force and fear - threat of immediate violence
Hunter v Bradford Property Trust - Threat of lawful action does not constitute as force and fear
What cases set a precedent for Facility and circumvention when assessing the validity in contracts?
Smyth v Rafferty [2014] - if someone is facile in mind and subject to circumvention then its unlikely they will resist anothers pressure, in this case it was deemed that she was in a good enough state when writing the will
McGilvary v Gilmartin 1986 - Taking advantage of party in a state of mental weakness can make a contract voidable
What two cases set a precedent in regards to undue influence and what is it?
Gray v Binny (1879) 7 R. 332, If the relation of the parties are subject to mutual trust then it requires fair dealing and honesty.
Smyth v Rafferty [2014] CSOH 150, Influence can stem from relationships of trust, age, infirmity etc can link to facility and circumvention
What are the four main properties of a void contract?
Void ab initio
No rights created or transferred
No contractual basis for legal action
No protection for third parties
What two cases are relevant to Third Party Rights and the precedents they set?
Morrison v Robertson - Since there was no valid contract between parties, due to morrison being fundamentally mistaken about Telford identity, the third party had no right to receive the cow
Macleod v Kerr - The contract was voidable because it was induced by fraud but since it wasn’t rescinded before the sale to an innocent third party it was deemed to be a valid transaction
Who handles the affairs of incapable adults?
Power of Attorney
Guardianship under the Adults with Incapacity (Scotland) Act 2000, Part 6.
What cases show that any benefits passed under a void agreement may be recoverable through unjustified enrichment and the precedents they set?
Morgan Guaranty Trust Co of New York v Lothian RC 1995 SC 151 - Morgan sought repayment - arguing that there was a void agreement - shows mistakes of law are recoverable
Cantiere san Rocco SA v Clyde Shipbuilding & Engineering Co Ltd [1924] AC 226 - Contract for ship building - first installment made - war breaks out - performance of contract became illegal - repayment due to unjustified enrichment
What are the three principle elements of Facility and Circumvention?
Facility
Circumvention
Lesion
