39 Questions
What is the role of coercion in contract law?
Coercion operates on the mind of the victim by forcing him/her to choose between entering the contract or suffering harm.
In the context of coercion, what must the reasonableness of fear entail?
The threat must be sufficiently grave to affect the mind of a reasonably steadfast person.
What impact does unreasonable fear have on the acceptance of coercion in a contract?
The more unreasonable the fear, the greater will be the reluctance of the court to accept that it actually induced the contract.
In the case of Paragon Business Forms (Pty) Ltd v Du Preez, what was the court's opinion regarding the alleged fear of the respondent?
The court found that there was no threat of dismissal and that the alleged fear by the respondent was illogical and unreasonable.
What is the object of the threat in the context of duress?
The threat must be directed at the life, bodily integrity, property, or immediate family.
Why is proof of protest sometimes required in cases of duress?
To prove the involuntary nature of the transaction.
Is silence generally considered indicative of free consent in cases of duress?
No, generally silence is not indicative of free consent.
What condition must the threat meet in terms of imminence to be considered under duress?
The threat must be imminent or inevitable.
What is intentional (fraudulent) misrepresentation?
Representation of a false fact made fraudulently, believed by the representee, inducing to contract.
How does negligent misrepresentation differ from intentional misrepresentation?
Negligent misrepresentation involves a false fact made negligently, believed by the representee, rendering the contract voidable.
What is innocent misrepresentation?
Representation of a false fact made innocently, believed by the representee, inducing to contract.
In misrepresentation, what renders a contract void?
Intentional (fraudulent) misrepresentation.
What remedy attempts to restore both parties to the position they were in prior to entering into a contract?
Restitutio in integrum
What kind of misrepresentation renders a contract voidable?
Negligent misrepresentation and innocent misrepresentation.
What are the remedies available in case of negligent misrepresentation?
Setting aside the contract, enforcing the contract, and claiming damages if loss suffered.
What is the onus of the party alleging undue influence?
To prove it occurred
When can the innocent party bound by the terms of a contract?
If they choose to uphold the contract
Give an example of intentional misrepresentation.
Misrepresentation made knowingly or without honest belief in its truth, persuading the other party to conclude the contract.
What happens if the innocent party elects to rescind the contract?
The contract terminates upon receipt of notice
What distinguishes innocent misrepresentation from the other types of misrepresentation?
Innocent misrepresentation involves a false fact made innocently, without the intention to deceive.
What duty arises on both parties if a contract is rescinded?
To restore and return any performance made in terms of the contract
Can a contract be enforced in the case of innocent misrepresentation?
Yes, a contract can be enforced in the case of innocent misrepresentation.
What is the key factor in misrepresentation inducing a party to contract?
The belief of the representee in the false fact presented.
What type of remedy is available in cases of undue influence?
Restitutio in integrum
Who has the discretion to decide whether to uphold or rescind a contract under undue influence?
The innocent party
What are the requirements for a misrepresentation to be considered valid?
- A false statement of fact(s) 2. Be material 3. Made by a contracting party or someone for whose actions he assumes responsibility 4. Made with the intention of persuading the other party to conclude the contract 5. Made in such a way that the other party believes the facts to be as represented and concludes the contract on the basis of the misrepresented facts
What is active concealment in the context of misrepresentation?
Active concealment refers to the failure to correct a false impression, whether through express or implied conduct.
What is required for misrepresentation to induce a contract?
Misrepresentation must be made with the intention of inducing the other party to contract.
In what scenario would there be no rescission even with misrepresentation?
If the party would have contracted irrespective of the misrepresentation.
Explain designed concealment (non-disclosure) in the context of misrepresentation.
Designed concealment, or non-disclosure, involves intentionally concealing information that one is under a duty to disclose.
What was the case of Dibley v Furter about?
F sold a farm to D without disclosing the existence of a graveyard located close to the house.
What is the difference between causal misrepresentation and incidental misrepresentation?
Causal misrepresentation results in a contract being formed, while incidental misrepresentation does not induce the contract but results in less advantageous terms for a party.
What are the three types of misrepresentation mentioned?
- Intentional (fraudulent) misrepresentation. 2. Negligent misrepresentation. 3. Innocent misrepresentation.
What action did F take regarding the graveyard in the case of Dibley v Furter?
F had ploughed over the graveyard and removed all visible traces of the graveyard.
What must be the intention behind a misrepresentation for it to be significant in inducing a contract?
The misrepresentation must be made with the intention of inducing the other party to contract.
What was the outcome of the case Dibley v Furter regarding the non-disclosure of the graveyard?
It was held that F was liable to D for non-disclosure of the existence of the graveyard.
How does causal misrepresentation differ from incidental misrepresentation in terms of contract formation?
Causal misrepresentation results in the formation of a contract, while incidental misrepresentation may lead to less advantageous terms but not the contract itself.
Why was F held liable in the case Dibley v Furter for not disclosing the graveyard?
F did not disclose the existence of the graveyard close to the house, which was a material fact affecting the sale.
Provide an example case that highlights the importance of misrepresentation in contract formation.
Bird v Murphy 1963 (2) PH A42 (D)
Study Notes
Types of Misrepresentation
- Intentional (fraudulent) misrepresentation: made with the intention of persuading the other party to conclude the contract, renders the contract void
- Negligent misrepresentation: made negligently, renders the contract voidable, remedies include setting aside the contract, enforcing the contract, and claiming damages
- Innocent misrepresentation: made innocently, renders the contract voidable, remedies include setting aside the contract and enforcing the contract
Coercion and Duress
- Coercion operates on the mind of the victim, forcing them to choose between entering the contract or suffering harm
- Reasonableness of fear: the threat must be sufficiently grave to affect the mind of a reasonably steadfast person
- Object of the threat: the threat must be directed at the life, bodily integrity, or property, or immediate family
- Imminence of harm: the threat must be imminent or inevitable
Undue Influence
- Occurs when one person exploits their influence over another to persuade them to agree to a transaction that is detrimental to them
- Remedy: restitutio in integrum, which attempts to restore both parties to their original position before entering into the contract
Misrepresentation Requirements
- The misrepresentation must be a false statement of fact
- The misrepresentation must be material
- The misrepresentation must be made by a contracting party or someone for whom they assume responsibility
- The misrepresentation must be made with the intention of persuading the other party to conclude the contract
- The misrepresentation must be believed by the other party and induce them to enter into the contract
Types of Misrepresentation Statements
- Express statement, verbal statement, or implied from conduct
- Active concealment: failure to correct a false impression
- Designed concealment (non-disclosure): intentional concealment of information that the person is under a duty to disclose
Explore the concept of coercion in contract law, where a victim is forced to enter a contract under the threat of harm. Learn about the reasonableness of fear and how it impacts the validity of the contract. Delve into a case study like Paragon Business Forms (Pty) Ltd v Du Preez 1994 to understand the application of coercion in real-life scenarios.
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