35 Questions
What must be the reasonableness of fear for coercion to be effective in inducing a contract?
Threat must be sufficiently grave to affect the mind of a reasonably steadfast person.
In the case of Paragon Business Forms (Pty) Ltd v Du Preez, what was the court's opinion regarding the alleged fear of the former employee?
The court found that the alleged fear of the respondent was illogical and unreasonable as there was no threat of dismissal expressed.
What objects must a threat be directed at for it to amount to duress?
The threat must be directed at the life, bodily integrity, property, or immediate family.
Is silence generally indicative of free consent in cases of duress?
No, generally silence is not indicative of free consent.
Why does the threat need to be imminent or inevitable for it to be considered as duress?
The threat must be imminent or inevitable to induce the other party to enter the contract.
What remedy attempts to restore both parties to the position they were in prior to entering into the contract?
Restitutio in integrum
When can the innocent party choose to rescind a contract?
If undue influence is proven and he or she elects to rescind the contract.
What duty arises on both parties if a contract is rescinded?
A duty to restore and/or return any performance that has been made in terms of the contract.
Who has the onus to prove that undue influence occurred in a transaction?
The party alleging undue influence.
What happens if the innocent party chooses to uphold the contract?
He or she is bound by its terms.
What happens to the contract if the innocent party elects to rescind it?
The contract terminates upon receipt of the rescission notice.
What is the aim of the restitutio in integrum remedy?
To set aside the legal consequences of the contract and restore the parties to their pre-contract position.
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, where a party intentionally withholds information to deceive the other party.
What is designed concealment (non-disclosure) in the context of misrepresentation?
Designed concealment, or non-disclosure, is the intentional concealment of information that a person is under a duty to disclose.
What was the outcome of the case Dibley v Furter 1951 (4) SA 73 (C)?
F was held liable to D for non-disclosure of the existence of the graveyard located close to the house.
Explain the impact of intentional concealment in the case of Dibley v Furter 1951 (4) SA 73 (C).
F, the seller, failed to disclose the existence of a graveyard close to the house, which resulted in legal liability for non-disclosure.
How can misrepresentation occur through active concealment?
Misrepresentation through active concealment involves failing to correct a false impression, leading to deception of the other party.
What distinguishes designed concealment (non-disclosure) from other forms of misrepresentation?
Designed concealment, or non-disclosure, involves intentionally withholding information that should be disclosed, creating a false impression.
What are the circumstances under which disclosure is obligatory?
Disclosure is obligatory when an omission of facts has created a misleading impression, when a statement made is no longer correct due to changed circumstances, when relying on a person's skill to contract, and when law requires full disclosure (e.g. in insurance contracts regarding risk).
What is the distinction between misrepresentation and other pre-contractual misstatements?
Misrepresentation involves false statements of fact, while other pre-contractual misstatements include warranties or contractual terms, opinions, statements as to the future, statements of law, puffs, and dicta et promissa.
What are the remedies available in cases of misrepresentation?
The remedies for misrepresentation include canceling the contract through an action redhibitoria or suing for a reduction of the purchase price through an action quanti minoris.
When is non-disclosure of a fact considered actionable?
Non-disclosure of a fact is actionable when the party remaining silent is under a "duty" to reveal the fact.
What is the significance of duty in the context of non-disclosure?
The concept of duty in non-disclosure emphasizes the legal obligation of a party to reveal certain facts to ensure transparency and fairness in contractual agreements.
How does misrepresentation by silence differ from other forms of misrepresentation?
Misrepresentation by silence occurs when a party fails to disclose a fact that they are duty-bound to reveal, whereas other forms of misrepresentation involve actively making false statements.
Why is full disclosure particularly important in insurance contracts regarding risk?
Full disclosure is crucial in insurance contracts regarding risk to ensure that all relevant information is provided to accurately assess and mitigate potential risks.
Define causal misrepresentation.
Causal misrepresentation is a misrepresentation that results in a contract being formed.
What is the difference between causal misrepresentation and incidental misrepresentation?
Causal misrepresentation persuades a party to enter into a contract, while incidental misrepresentation results in less advantageous terms for a party.
Explain the types of misrepresentation mentioned in the text.
The types of misrepresentation discussed are intentional (fraudulent) misrepresentation, negligent misrepresentation, and innocent misrepresentation.
What is the key requirement for misrepresentation to induce a contract?
Misrepresentation must be made with the intention of inducing the other party to contract.
In the context of misrepresentation, when can a party obtain rescission and restitution?
A party may obtain rescission and restitution for a causal misrepresentation, but not for an incidental one.
What is the significance of intention in misrepresentation cases?
Intention is crucial in misrepresentation cases as the misrepresentation must be made with the intention of inducing the contract.
Under what condition would there be no rescission even in the presence of misrepresentation?
If a party would have contracted irrespective of the misrepresentation, there would be no rescission.
Provide an example of incidental misrepresentation.
An incidental misrepresentation could lead to less advantageous terms for a party but does not induce the contract.
Reference a case that highlights the importance of misrepresentation inducing the contract.
In Bird v Murphy 1963 (2) PH A42 (D), the misrepresentation must have persuaded the party to enter into the contract.
Study Notes
Disclosure and Misrepresentation
- Disclosure is obligatory in certain circumstances, such as when an omission of facts creates a misleading impression, or when a person makes a statement that is no longer correct due to a change in circumstances.
- Full disclosure is required in contracts, such as insurance contracts, to inform the other party of risks involved.
Misrepresentation
- Misrepresentation is a false statement of fact(s) made by one party to another before or at the time of the contract concerning some matter or circumstance relating to it.
- Requirements for misrepresentation:
- Must be a false statement of fact(s).
- Must be material.
- Made by a contracting party or someone for whom they assume responsibility.
- Made with the intention of persuading the other party to conclude the contract.
- Must be 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.
Types of Misrepresentation
- 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.
Cases
- Dibley v Furter 1951 (4) SA 73 (C): failure to disclose the existence of a graveyard on a farm.
- Paragon Business Forms (Pty) Ltd v Du Preez 1994 (1) SA 434 (SE): no threat of dismissal was found to be unreasonable.
Duress
- Coercion operates on the mind of the victim by forcing them to choose between entering the contract or suffering harm.
- Requirements for duress:
- 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
- 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 for undue influence: restitutio in integrum (action and defense).
- Restitutio in integrum attempts to restore both parties to the position they were in prior to entering into the contract.
- The innocent party has the option to uphold or rescind the contract, and if they choose to rescind, the contract terminates upon receipt of notice.
- A duty then arises on both parties to restore and/or return any performance made in terms of the contract.
Types of Misrepresentation
- Intentional (fraudulent) misrepresentation.
- Negligent misrepresentation.
- Innocent misrepresentation.
Learn about coercion in contract law, where a victim is forced to choose between entering a contract or suffering harm. Understand the reasonableness of fear and how it affects the validity of the contract based on court assessments. Explore a legal case like Paragon Business Forms (Pty) Ltd v Du Preez 1994 to gain insights into coercion in contract scenarios.
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