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A contract entered into under duress is deemed void from the outset.
False
Duress involves physical force or violence only.
False
A threatened party may not set aside the contract and claim restitution and damages.
False
In cases of duress, the threat must be unlawful and the effective cause of the contract.
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In a contract entered into under undue influence, the parties are unaware of with whom and on what terms they are contracting.
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A contract entered into under misrepresentation is deemed void from the outset.
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Coercion operates on the mind of the victim by forcing him/her to choose between entering the contract or gaining a benefit.
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The more reasonable the fear, the greater will be the reluctance of the court to accept that it actually induced the contract.
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A threat must be directed at the life, bodily integrity, or property of a distant relative.
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Silence is always indicative of free consent.
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The threat of dismissal must be expressed in order to be considered duress.
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The aggrieved person was influenced to agree to a transaction that was beneficial to them.
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A threat must be possible but not necessarily imminent in order to be considered duress.
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The onus is on the other party to prove that undue influence occurred.
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The remedy of restitutio in integrum is only available to the guilty party.
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The innocent party is entitled to set aside the legal consequences of the contract and restore the original position.
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If the innocent party chooses to rescind the contract, they are not bound by its terms.
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Only the guilty party is required to restore any performance made in terms of the contract.
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There is a general duty on a party negotiating a contract to reveal information known to him that may influence the mind of the other party in deciding whether to contract or not.
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If a party's conduct is wholly or partly responsible for the other party's ignorance, the omission is actionable.
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A party has a duty to inform by operation of rule of law in all contracts.
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A misrepresentation made by an independent 3rd party is actionable against the party to the contract.
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A party has a duty to reveal information known to him that may influence the mind of the other party in deciding whether to contract or not, if the contract requires parties to work together in a relationship of trust and confidence.
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A misrepresentation must be made by a party to the contract or its agent to be actionable.
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An intentional misrepresentation is a representation of a true fact made with honest belief in its truth.
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A negligent misrepresentation renders a contract void.
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An innocent misrepresentation is a representation of a false fact made with the intention of persuading the other party to conclude the contract.
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A contract induced by intentional misrepresentation is voidable.
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A negligent misrepresentation is a representation of a false fact made fraudulently.
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A contract induced by innocent misrepresentation can be enforced.
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Study Notes
Duty to Disclose Information
- Generally, there is no obligation for a party negotiating a contract to disclose information that may influence the other party's decision.
- Exceptions where omission is actionable include:
- If conduct causes another party's ignorance.
- If parties must work together in a relationship of trust and confidence.
- If one party is dependent on the other for necessary information due to unique knowledge.
- Fair dealing where honest recognition of the right to information exists.
Misrepresentation
- Misrepresentation can arise from false statements made during contract negotiation.
-
Material Misrepresentation:
- Evaluates if a reasonable person would enter or refrain from a contract based on the statement.
-
Authority of Agents:
- Misrepresentation must be made by a party or their agent, who has relevant authority.
- Claims against independent third parties are based on delict.
Duress
- A contract entered under duress is voidable due to improper pressure and illegitimate threats.
- Elements of duress include:
- Actual violence or reasonable fear.
- Threat of considerable evil to the party or family.
- Imminence of the threat which must be unlawful.
- Moral pressure causing damage.
Coercion
- Coercion, involving psychological pressure, forces a victim to choose between entering a contract or facing harm.
- Assess reasonableness of fear; courts are less likely to accept claims of unreasonable fears.
- The object of threats must concern life, bodily integrity, property, or immediate family.
Undue Influence
- Undue influence occurs when one party exploits a position of power over another.
- The burden of proof lies on the party alleging undue influence.
- Relief can lead to a remedy called "restitutio in integrum," restoring parties to their original positions.
Types of Misrepresentation
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Intentional (Fraudulent) Misrepresentation:
- False representations made knowingly or recklessly, inducing the contract.
- Renders the contract void.
-
Negligent Misrepresentation:
- False facts presented without reasonable care.
- Renders the contract voidable, allowing remedies like contract enforcement or damages for loss.
-
Innocent Misrepresentation:
- False statements believed to be true by the representor.
- Renders the contract voidable, allowing for potential contract enforcement, but no damage claims are permitted.
Contract Validity
- Contracts reached through duress or misrepresentation are generally deemed valid until proven otherwise.
- Innocent parties have the right to rescind contracts under certain conditions and must communicate their decision to the other party, triggering a duty of restoration of benefits.
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Description
Test your understanding of contracts that are deemed voidable due to duress, undue influence, or misrepresentation. Learn about the circumstances that render a contract invalid and the rights of the innocent party.
