validity of a contract Flashcards
What are the 5 main grounds for challenging a contract’s validity?
Capacity (void)
Force and Fear (voidable)
Facility and Circumvention (voidable)
Undue Influence (voidable)
Error and Misrepresentation
How can a voidable contract be annulled?
Intimation to the other party (court declarator if disputed).
Judicial decree (action for “reduction” of the contract).
What is the requirement for annulment of a contract?
Restitutio in integrum (restoration to original position) must be possible.
The contract must not have been affirmed.
There must be no unnecessary delay in taking action to annul.
What does the case Western Bank of Scotland v Addie (1867) highlight about annulment?
Annulment is impossible if restitutio in integrum is not possible, such as in cases where the contract has led to significant changes that cannot be undone (e.g., a completed railway).
What is the difference between a void and voidable contract?
Void: Treated as if never existed; no rights acquired.
Voidable: Valid until annulled; third parties in good faith are protected.
What is a classic example of a contract voided by force and fear?
Earl of Orkney v Vinfra (1606): The agreement was null as it was signed under just fear and compulsion.
What is the difference between lawful threats and duress in contract law?
A threat to take legal action to enforce a debt is lawful (Priestnell v Hutcheson), but if the threat compels someone to agree to an obligation they wouldn’t otherwise have agreed to, it becomes duress (Hislop v Dickson Motors).
What constitutes duress and renders a contract voidable?
Duress occurs when the pressure is so overwhelming that it overpowers the mind of a person of ordinary firmness, preventing true consent (Hislop v Dickson Motors).
What does Priestnell v Hutcheson (1857) say about force and fear in contract law?
Fear, not just force, is the key element in extortion and reduction of a contract. It can be induced by fear of torture, infamy, or danger to life.
What are the three elements required to establish facility and circumvention?
(1) Facility (mental weakness, distress, age, etc.); (2) Circumvention (deceit or manipulation); (3) Loss or lesion (disadvantage).
What case outlines the three elements of facility and circumvention?
Mackay v Campbell 1967 S.C. (H.L.) 53.
Can circumvention be inferred without proof of specific deceit?
Yes — MacGilvary v Gilmartin 1986 S.L.T. 89 held that lesion and facility alone may allow inference of circumvention.
What did Stair say about error in contract law?
“Those who err in the substantials of what is done, contract not.” – implying that fundamental error prevents contract formation.
What are the elements of undue influence in contract law?
(1) Relationship of trust/confidence; (2) Substantial benefit to the dominant party; (3) Lack of independent advice.
How is error in contract law typically categorized in Scots law?
A) Error preventing formation – void (dissensus)B) Uninduced mutual/shared error – voidC) Uninduced unilateral error – sometimes voidableD) Induced error (misrepresentation) – voidable
What case emphasizes the abuse of trust in undue influence?
Gray v Binny (1879) 7 R. 332 — trust creates a duty not to abuse power.
What is the general state of the law of error in Scots contract law?
It is highly unsettled, uncertain, and historically difficult to define clearly (McBryde; Wills v Strategic Procurement [2013] CSOH 26).
Which case illustrates dissensus due to misunderstanding of a fundamental term?
Stuart & Co v Kennedy (1885) 13 R 221.
What happened in Morrison v Robertson (1908 SC 332)?
There was no contract due to mistaken identity; Morrison reclaimed the cows from a third party, as no title had passed.
How does Morrison v Robertson contrast with MacLeod v Kerr (1965 SC 253)?
In MacLeod, the contract was voidable (not void), so good title could pass to an innocent third party.
What statutory example supports mutual error voiding a contract?
Sale of Goods Act 1979, s6 — contract is void if goods perished unknown to both parties at the time of contract.
How do courts handle mutual error involving a non-existent subject matter?
Courts may imply a suspensive condition (e.g., subject exists), making the contract void if the condition can’t be fulfilled.
What is uninduced unilateral error and its typical effect?
One party is in error (not induced by the other). Generally, it does not invalidate a contract — the non-erring party can assume the other means what they say.
Which case shows a contract was voidable due to known error being taken advantage of?
Steuart’s Trustees v Hart (1875) 3 R 192 – voidable due to essential error known and exploited.
