Questions and Answers
What is the Latin term for 'meeting of the minds'?
Which of the following are types of vitiating factors?
A contract can be void due to a mutual mistake.
True
In contracting, parties experiencing a mistake are said to have no ______.
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What is a unilateral mistake?
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Which case dealt with the concept of unilateral mistake?
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What does 'Non est factum' mean?
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What is required for a misrepresentation to be classified as fraudulent?
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Silence can constitute a misrepresentation.
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Which type of misrepresentation carries the least liability?
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Duress or coercion leads to _____ consent.
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Study Notes
Vitiating Factors
- A contract is an agreement between parties that creates legal rights and obligations.
- Consensus ad idem, or "meeting of the minds," is essential for contract formation.
- Vitiating factors can undermine contractual agreements.
Types of Vitiating Factors
- Mistake
- Misrepresentation
- Duress or coercion
- Undue influence
Mistakes in Contracts
- Mistakes can prevent a contract from being valid.
- Types of mistakes include:
- Common (shared) mistake: Same fundamental mistake regarding existence.
- Mutual mistake: Different stipulations by conflicting parties.
- Unilateral mistake: One party is mistaken while the other party knows.
Legal Principles Surrounding Mistakes
- Courts presume everyone knows the law; errors in legal understanding do not usually invalidate a contract.
- Common mistake cases: Scott v Coulsen and McRae v Commonwealth Disposal demonstrate issues of subject matter existence.
- Quality or value mistakes do not render contracts void. Notable cases: Oscar Chess Ltd v Williams and Bell v Lever Bros Ltd.
Mistake Categories
- Common Mistake: All parties share the same misconception.
- Mutual Mistake: Parties have differing misunderstandings.
- Unilateral Mistake: One party is wrong, while the other has awareness of the mistake.
Unilateral Mistake Examples
- In Webster v Cecil, one party accepted a mistaken offer. The contract was voidable due to the unilateral mistake.
- Taylor v Johnson highlights a situation where the non-mistaken party cannot void the contract but can keep it valid until rescinded.
Identity Mistakes
- Mistakes regarding the identity of contracting parties can make contracts void if there is significant misrepresentation.
- Case examples:
- Cundy v Lindsay: Contract void due to mistaken identity.
- Phillips v Brooks Ltd: Contract voidable for fraudulent misrepresentation.
- Lewis v Avery: Similar to Phillips, the contract was voidable due to misrepresentation.
Non Est Factum Defense
- Non Est Factum ("this is not my document") can be raised as a defense but requires:
- Document fundamentally different from understanding.
- Lack of care or negligence in understanding the document has to be proven.
- Key cases: Foster v Mackinnon and Saunders v Anglia Building Society demonstrate limitations of this defense.
Effect of Mistake on Contracts
- Contracts affected by common or mutual mistake are void.
- Unilateral mistakes allow for voidable contracts, but certain conditions must be met for rescission or rectification.
Misrepresentation in Contracts
- Misrepresentation involves untrue statements that induce contracting parties.
- Types include:
- Fraudulent Misrepresentation (FM): Intentional deception.
- Negligent Misrepresentation (NM): Lack of care resulting in misstatements.
- Innocent Misrepresentation (IM): False statements made without intent to deceive; rescission is available but not damages.
Duress and Coercion
- Contracts formed under duress or coercion (actual or threatened violence) are voidable.
- Relevant cases: Kaufman v Gerson and Barton v Armstrong highlight the impact of violence or threats on contractual consent.
Undue Influence
- Undue influence occurs when one party exerts improper pressure, compromising the other party's judgment.
- Usually found in relationships marked by a lack of equality in bargaining power or trust (e.g., parent-child, lawyer-client).
- The burden of proof lies with the influenced party, which can be discharged by showing independent advice or fair terms.
Key Takeaways
- Legal principles surrounding mistakes, misrepresentations, duress, and undue influence establish criteria for recognizing voidable contracts.
- Understanding the implications of each vitiating factor is crucial for both validating and contesting contractual agreements.
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Description
This quiz covers the concept of vitiating factors that can affect the validity of contracts, including mistakes and misrepresentation. It delves into the different types of mistakes and their implications under contract law. Test your understanding of these legal principles and their real-world applications.
