Contract Law Principles Overview
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Questions and Answers

What must be present for an untrue statement of fact to be considered misrepresentation?

  • The contracting party must have no knowledge of the statement.
  • The statement must have been documented in writing.
  • The statement must have been made by the contracting party or their agent. (correct)
  • The statement must be made publicly.
  • In which situation can silence be considered misrepresentation?

  • When the contract is signed before witnesses.
  • When utmost good faith is required in the contract. (correct)
  • When both parties agree to the contract terms.
  • When a contract is made verbally.
  • What is a consequence of failing to disclose a material fact in a contract requiring utmost good faith?

  • The contract remains in effect regardless.
  • The innocent party can rescind the contract. (correct)
  • The innocent party can claim damages.
  • The contract becomes void from the start.
  • Which type of misrepresentation occurs when a true statement becomes false due to changed circumstances?

    <p>Subsequent falsity.</p> Signup and view all the answers

    In which scenario does a party have a duty to disclose the whole situation, even when the statement made is true?

    <p>Partial revelation.</p> Signup and view all the answers

    Which situation obligates a party to disclose material facts about a contract due to their relationship?

    <p>Fiduciary relationship.</p> Signup and view all the answers

    What outcome occurs when a party has voluntarily assumed responsibility for a matter that later proves to be misleading?

    <p>They are held liable for damages.</p> Signup and view all the answers

    Which of the following is true regarding silence in contractual agreements?

    <p>Silence may lead to misrepresentation under specific circumstances.</p> Signup and view all the answers

    What is the primary effect of a misrepresentation in contract law?

    <p>It makes the contract voidable.</p> Signup and view all the answers

    Which of the following statements is true regarding inducement in the context of misrepresentation?

    <p>Inducement can be a contributing factor for a claim of misrepresentation.</p> Signup and view all the answers

    What is the difference between a common mistake and a cross-purpose mistake?

    <p>Common mistakes are based on objective facts, while cross-purpose mistakes stem from misunderstanding.</p> Signup and view all the answers

    Which case established that delivering an opinion does not create an actionable misrepresentation?

    <p>Bisset v Wilkinson (1927)</p> Signup and view all the answers

    Recission in contract law refers to which of the following?

    <p>Restoring parties to their pre-contractual position.</p> Signup and view all the answers

    In cases of misrepresentation, a party has the right to claim for what type of loss?

    <p>Any loss suffered due to reliance on the misrepresentation.</p> Signup and view all the answers

    What legal principle do courts follow when determining the validity of a mistake in contract law?

    <p>Objective principle, assessing the facts objectively.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a statement of fact in misrepresentation?

    <p>It can merely be an opinion or sales talk.</p> Signup and view all the answers

    What is the effect of a contract declared void?

    <p>The contract is considered as if it never existed.</p> Signup and view all the answers

    Which of the following is NOT a recognized vitiating factor?

    <p>Unfair competition</p> Signup and view all the answers

    What does it mean when a contract is voidable?

    <p>The innocent party has the option to enforce or terminate the contract.</p> Signup and view all the answers

    For a misrepresentation to be actionable, which of the following is required?

    <p>An untrue statement must have induced the other party.</p> Signup and view all the answers

    Which element is NOT necessary for a misrepresentation to be actionable?

    <p>It must be a statement of opinion.</p> Signup and view all the answers

    What type of mistake occurs when both parties share the same incorrect assumption about a vital fact?

    <p>Mutual mistake</p> Signup and view all the answers

    Under which condition can a representation be considered a misrepresentation?

    <p>It must be a statement of a fact that is untrue.</p> Signup and view all the answers

    Which of the following scenarios would likely result in a claim of duress?

    <p>One party threatens to harm the other if they do not agree.</p> Signup and view all the answers

    Study Notes

    Misrepresentation

    • A misrepresentation is an untrue statement of fact that induces another party to enter a contract.
    • For misrepresentation to be actionable, it must meet three criteria: be untrue, be a statement of fact (not opinion), and induce the other party's decision.

    Types of Mistakes

    • Two main types of mistake: common mistake and cross-purpose mistake.
    • Courts employ an objective principle to determine if a mistake is substantial enough to void a contract, referencing Smith v Hughes (1871).

    Untrue Statements

    • An untrue statement must be made by either the contracting party or their agent, or the other party must be aware of the falsehood.
    • Silence typically does not constitute misrepresentation unless special circumstances apply.

    Circumstances Leading to Misrepresentation

    • Contracts Requiring Utmost Good Faith: In contracts like insurance, failure to disclose relevant information allows for rescission without damages.
    • Subsequent Falsity: A statement true at the time it was made may become untrue due to changed circumstances, and silence about the change can be misrepresentation (With v O’Flanagan (1936)).
    • Partial Revelation: True statements that misrepresent a situation due to omitted information can lead to misrepresentation (Dimmock v Haller (1866)).
    • Fiduciary Relationships: Relationships may create a duty to disclose important contract facts.

    Inducement

    • For a statement to be actionable under contract law, it must be a reason for entering the contract, as established in Redgrave v Hurd (1881).

    Remedies for Misrepresentation

    • A misrepresentation typically makes a contract voidable, allowing it to continue until the innocent party chooses to rescind it.
    • Recission: An equitable remedy that nullifies the contract and restores parties to their pre-contract position.
    • Damages: If misrepresentation induces a contract, the aggrieved party may claim damages for losses incurred.

    Vitiating Factors

    • Contracts can be invalidated by vitiating factors despite meeting requirements for offer, acceptance, consideration, and legal intent.
    • Recognized vitiating factors include misrepresentation, mistake, illegality, duress, and undue influence.

    Effects of Vitiating Factors

    • A contract declared void means no enforceable agreement ever existed, while a voidable contract allows the innocent party to decide on its validity.

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    Description

    This quiz covers essential principles of contract law, focusing on misrepresentation and liability. Key cases like Bisset v Wilkinson are discussed to illustrate the difference between fact and opinion in contractual agreements.

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