Defective Agreements

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Questions and Answers

What type of error occurs when both parties make the same mistake regarding an essential aspect of the contract?

Bilateral error

Induced unilateral error

Mutual error

Common error (correct)

What must a misrepresentation be in order to be considered valid?

A prediction of future events

A statement of opinion

An inaccurate statement of fact (correct)

A vague assertion

In the case Raffles v Wichelhaus, what type of error was identified?

Bilateral error

Mutual error (correct)

Common error

Induced unilateral error

What is necessary for a contract to be void due to mutual error?

Parties must be at cross purposes on an essential aspect Signup and view all the answers

What term defines an error that is induced by misrepresentation and is material but not necessarily essential?

Induced unilateral error Signup and view all the answers

What could void a contract based on common error according to case law?

A misunderstanding of a price Signup and view all the answers

According to Scots law, under what condition might a misrepresentation not need to relate to an essential matter?

If it is material and could persuade a reasonable person Signup and view all the answers

What is the implication of an induced unilateral error according to the case Ritchie v Glass?

The misrepresentation must influence the decision to enter the contract Signup and view all the answers

What effect does a fraudulent misrepresentation have on a contract?

It allows the innocent party to sue for damages. Signup and view all the answers

Which of the following cases illustrates negligent misrepresentation?

Cramasco LLP v Ogilvie-Grant, Earl of Seafield Signup and view all the answers

In which situation can a unilateral error challenge a contract?

When there is 'error plus' criteria met. Signup and view all the answers

What distinction does negligent misrepresentation have compared to innocent misrepresentation?

Negligent misrepresentation allows for a claim of damages. Signup and view all the answers

What happens to B's title when A has no title during a transfer?

B’s title is void. Signup and view all the answers

Under what circumstances does a misrepresentation become merely voidable?

When it is an innocent misrepresentation. Signup and view all the answers

Which case directly relates to a fraudulent misrepresentation?

Smith v Sim Signup and view all the answers

Which statement accurately describes the concept of 'snatching at a bargain'?

It can lead to the challenge of a contract based on unilateral errors. Signup and view all the answers

Study Notes

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Defective Agreements - Part II

Title: Defective Agreements - Part II
Sub-title: How do I get out of this transaction?

Error

An error as to an essential aspect of the contract
Bilateral or unilateral

Bilateral Error: 2 Types

Mutual error: Parties misunderstanding essential elements of the contract (e.g., Raffles v Wichelhaus, Stuart & Co v Kennedy)
Common error: Both parties make the same mistake regarding an essential part of the contract (e.g., Hamilton v Western Bank of Scotland, McLaughlin v The New Housing Association Ltd)

Case Law - Bilateral Error

Raffles: Mutual error about the ship; different ships, different delivery periods
Stuart: No consensus, but performance did happen... question of remedy
Hamilton: Common error regarding price, missed statutory provisions for calculation
McLaughlin: Common error regarding price, missed statutory provisions for calculation

Induced Unilateral Error

Scots law recognizes misrepresentation inducing unilateral error
The misrepresentation must be material, affecting a reasonable person's decision to enter the contract

Misrepresentation

Misrepresentation occurs when one party persuades another to enter a contract under a false belief
It must be a statement of fact, not opinion (e.g., Flynn v Scott)
Essential error due to misrepresentation renders the contract void; otherwise, it's voidable
Misrepresentation must be made to the innocent party by the other party to the contract

Three Forms of Misrepresentation

Innocent: No intention to mislead
Fraudulent: Intention to mislead
Negligent: Carelessly made false statement

Misrepresentation (Specific Cases)

Innocent: Boyd & Forrest v Glasgow & South Western Railway Co
Fraudulent: Fraud proved where false representation made knowingly or without belief in truth, or recklessly
Negligent: Cramasco LLP v Ogilvie-Grant, Earl of Seafield (case involving Law Reform); Various acts, including Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 s.10

Uninduced Unilateral Errors

Generally ineffective
Example cases include Stewart v Kennedy, Menzies v Menzies
Contract challenge possible if "error plus" (e.g., snatching a bargain) present
Illustrative case mention of Angus v Bryden, Wills v Strategic Procurement (UK) Ltd, Chwee Kin Keong v Digilandmall.com

Transfer of Ownership

A has good title: B acquires good title upon transfer
A has no title: B's title is void (nemo dat quod non habet)
A has title, but transfer contract is void: B acquires no valid title

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Description

This quiz covers key concepts from Defective Agreements - Part II, detailing the process of exiting a transaction due to errors in contracts. Explore the distinctions between bilateral and unilateral errors and understand the implications through landmark cases. Get ready to test your knowledge on contract law essentials.