WK 4 - Defective Agreements: Error & Misrepresentation

Question 1

Define an error

Answer 1

An error as to one of the essential aspects of the contract

Question 2

Errors are either…

Answer 2

unilateral or bilateral

Question 3

Name the two kinds of bilateral error

Answer 3

Mutual error and common error

Question 4

Define a mutual error

Answer 4

Both parties at cross purposes on an essential of the contract.

May render a contract void.

Question 5

Define common error

Answer 5

Both parties make the same mistake on an essential.

May render contract void.

Question 6

Error in the substantials

Answer 6

Error as to…
(1) Subject
(2) Quality
(3) Quantity
(4) Extent
(5) Identity
(6) Price
(7) Nature

Question 7

Unilateral errors can be…

Answer 7

induced or uninduced

Question 8

Define an induced unilateral error

Answer 8

One party is mistaken, only possible to avoid where the error has been induced by misrepresentation. Relying on what other person has said when entering contract.

“It appears clear that Scots law recognises, as indicated by Bell, that when misrepresentation by a party is alleged inducing error in the other in regard to some matter, that matter need not be an essential of the contract, but it must be material and of such a nature that not only the contracting party, but any reasonable man might be moved to enter into the contract, or put the other way, if the misrepresentation had not been made, would have refrained from entering into the contract .” per Lord Carmont, Ritchie v Glass 1936 SLT 591, 593-594

Question 9

When does misrepresentation occur?

Answer 9

When one party says or does something to persuade the other to enter into a contract under a mistaken belief.

Question 10

Misrepresentation must be an inaccurate statement of…

Answer 10

fact, not opinion.

Question 11

Are contracts void/voidable under misrepresentation?

Answer 11

Where essential error is induced, void.

Otherwise, voidable.

Question 12

Three forms of misrepresentation

Answer 12

(1) Innocent
(2) Negligent
(3) Fraudulent

[See cases for definition]

Question 13

Does misrepresentation give the right to avoid contract?

Answer 13

Yes, in all cases.

Question 14

Which types of misrepresentation give rise to the right to sue for damages?

Answer 14

Fraudulent and negligent

Question 15

What effect do uninduced unilateral errors normally give?

Answer 15

No effect.

Question 16

What is error plus?

Answer 16

Where a party to a contract is mistaken about a fundamental aspect of the contract, and the other party is aware of this mistake but does not correct it.

[Fraudulent misrepresentation]

Question 17

Define a gratuitous transaction

Answer 17

Where there is nothing in it for the avoidant.

Question 18

Nemo dat quod non habet

Answer 18

A has no title. On transfer, B’s title is void.

Question 19

How serious is the error? (2) [Error in…]

Answer 19

(1) Substantials (e.g. identity)
(2) Concomitans - not essential - voidable