Vitiating Factors

Question 1

When is can a contract be void or voidable?

Answer 1

1. Mistake (Void)
2. Duress (Voidable)
3. Undue Influence (Voidable)
4. Illegality or contravention of public policy (void)
5. Misrepresentation (Voidable)

Question 2

What is a void contract?

Answer 2

Contract with no legal effect from beginning

Question 3

What is a voidable contract?

Answer 3

Contract that is valid until voided (rescinded) by a party

Question 4

What is the key difference between a void and voidable contract?

Answer 4

Void = cannot be enforced
Voidable = election to confirm or rescind the contract

Question 5

What is the effect of mistake on a contract?

Answer 5

Void

Question 6

What is common or identical mistake?

Answer 6

Parties agree but they both made same type of mistake (typically about existence of subject matter, rather than quality)

Question 7

What is mutual mistake?

Answer 7

Mutual mistake about different things
At cross purposes

Question 8

What is unilateral mistake?

Answer 8

One party makes a mistake as to the terms
Other party is aware of mistake

Question 9

What is mistake as to identity?

Answer 9

When one person contracts with someone being impersonated

Question 10

What is the test for mistake?

Answer 10

Would you have contracted had you known their actual identity?

Question 11

What is the doctrine of non est factum?

Answer 11

Protects you if you signa document in mistaken belief that it represents something else

Question 12

What factors must be present for non est factum to apply?

Answer 12

1. Fundamental and radical difference between hat was signed and what they thought they were signing
2. Mistaken signatory must not have been careless in signing

Burden is on party seeking to rely on defence to prove it (special difficulties etc)

Question 13

When is rectification of a contract possible?

Answer 13

Both parties agree on terms but it was recorded incorrectly in writing.

Question 14

When is recitification not possible?

Answer 14

When inequitable, such as if third parties have acquired rights under the contract as written

Question 15

What is duress and what effect does it have on a contract?

Answer 15

Some pressure is exerted over one of the parties, therefore no “free contracting”
Makes contract voidable

Question 16

What is the difference between duress and undue influence?

Answer 16

Duress = common law
Undue influence = equitable

Question 17

What type of pressure is required for duress to apply?

Answer 17

Illegitimate pressure

Question 18

What is duress of the person?

Answer 18

Physical duress (threat to kill for example)

Question 19

What is economic duress?

Answer 19

One party is in stronger economic position than the other and use this to force the other to contract

Question 20

What is the difference between economic duress and duress of the person in terms of what needs to be proven?

Answer 20

For duress of person, you just need to prove that there was some duress
For economic duress, you need to show that duress was a significant factor (commercial pressure is not enought)

Question 21

If a threat is lawful, will the courts still find duress?

Answer 21

Only in exceptional circumstances

Question 22

A contract is formed and the other party applies duress to increase the purchase price, he also provides additional practical beenfit fulfilling the consideration element, is this contract voidable for duress?

Answer 22

Yes, i

Question 23

What is undue influence?

Answer 23

Discretionary doctrine to ensure one person’s influence over another is not open to abuse

Question 24

If there is undue influence, is a contract void or voidable?

Answer 24

Voidable

Question 25

Duress deals with what type of pressure?

Answer 25

Illegitimate pressure

Question 26

What is undue influence concerned with?

Answer 26

If a party arrived at their own decision and have true consent

Question 27

What is undue influence?

Answer 27

Coercion from an external source which the influencer exploits for some degree of personal gain

Question 28

How do you prove undue influence

Answer 28

1. Actual undue influence from overt acts 2. Presumed undue influence froma relationship between two parties

Question 29

When proving actual undue influence, how does it differ from duress?

Answer 29

You don't need to prove that the influence is in bad faith or unlawful

Question 30

Does the transaction need to be a bad deal for an innocent party to rely on undue influence?

Answer 30

No

Question 31

What does presumed undue influence require?

Answer 31

1. Relationship of trust and confidence between the parties - Fiduciary (directors, partners) - Family (married, children) - Professional (client and solicitor) 2. The transaction calls for an explanation (objectively)

Question 32

Is the presumption of undue influence rebuttable?

Answer 32

Yes Prove that other party contracted out of free will and with informed consent Proving they took advice is very helpful

Question 33

What is third-party undue influence?

Answer 33

One party aware that a third party exerted undue influence on the other party to contract and did not take reasonable steps to ensure free contracting

Question 34

What is the effect of a contract that is illegal or contrary to public policy and when does it arise?

Answer 34

1. Void 2. Illegal contracts and contracts that are detrimental to society

Question 35

What happens when a contract is performed illegally ?

Answer 35

The guilty party cannot claim rights under the contract and the innocent party cannot claim any further performance

Question 36

What are the types of illegal contracts?

Answer 36

1. Illegal by statute 2. Illegal at common law (like a crime or tort) 3. Contrary to morality or institution of marriage 4. Damaging to the government (trading with enemy during war) 5. Interfere with justice (conceal a crime)

Question 37

Are restraints of trade enforceable?

Answer 37

if (a) reasonable and (b) legitimate interest

Question 38

Explain the legitimate interest portion of the test for enforceability of a restraint of trade?

Answer 38

Geographical Scope Duration = PROPORTIONATE