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Business Law Lecture 6&7: Defects in the contract (Misrepresentation…
Business Law Lecture 6&7: Defects in the contract
Misrepresentation
Definition: A misrepresentation is a false statement of fact.
A result of misrepresentation is
voidable
(可撤销)
Elements of misrepresentation
The representor has made a false statement of fact
The statement made must be material
The representee must rely on the statement in deciding to enter into the contract
Silence cannot amount to a misrepresentation except:
Change in circumstances making a original statement untrue
Half- Truths
Types of misrepresentations
Innocent misrepresentation
Statement made honestly with reasonable grounds for believing in its truth.
Remedies
: Rescission only. Court may award damages
instead of
rescission where it would be fairer to do so (s2 Misrepresentation Act)
Negligent Misrepresentation
Statement made honestly but without reasonable grounds for believing in its truth.
Remedies
: Rescission and/or damages (compensation)
Fraudulent Misrepresentation
Statement made dishonestly, knowing it to be untrue or being reckless (as to whether it was true to not)
Remedies
: Rescission and/or damages for tort of deceit 诈骗
Limits to the right of rescission (innocent party can no longer rescind 撤销)
(a) There is a lapse of time
(b) The part misled affirms the contract
(c) Restitution is impossible
(d) Rights of 3rd parties affected
Contracts made by minors - unenforceable contracts
(a) Contracts for necessaries
(b) Education and employment contracts for the minor's benefit
Duress
3 Main types of duress
Duress to the person
Duress to Goods
Economic Duress
Undue Influence
Definition
: Undue influence occurs when one party has been affected by some improper conduct of the other party such as pressure, coercion or influence and as a result did not enter into the contract out o f his own free will.
Actual Undue Influence
(Innocent Party responsible of proving that he had acted under the influence of the other party and had entered the contract without exercising his free will)
Presumed Undue Influence
(Wrongdoer responsible to rebut 反驳 by showing that the innocent party had exercised his free will)
Undue Influence and Third Parties
Whenever the relationship between the parties are non-commercial, the
bank
would be put on
inquiry
.
Ensure that the party is advised by a lawyer
Ensure that the party is reminded of the risks involved
If the bank has failed to do so, the bank may find itself unable to enforce the mortgage later on as it may be set aside on the grounds by the innocent party for undue influence.
Mistake
Mistake does not make the contract void.
3 Types of fundamental mistake that makes a contract to be void.
Common Mistake
(a) The existence of the subject matter of the contract
(b) The Possibility of Performing the Contract
Mutual Mistake
Unilateral Mistake
(a) Important term of the contract
(b) The identity of the other person
Where persons contract face to face (Vaild)
Phillips v Brooks (1919)
Where persons do not contract face to face (Void)
Cunday v Lindsay (1878)
(c) Mistake as to signed document
Illegal Contracts
ANZ Holdings Pte Ltd v Bina Puri Holdings Bhd (2013)
Contract made Illegal
At Common Law
(a) Contracts where the objective is to commit a crime a tort(civil wrong) or a fraud
(b) Contracts to defraud the tax authorities
(c) Contracts that interfere with the administration of justice
By Statute
Civil Law Act
say that all gaming or wagering 投注 contracts shall be null 无效的 and void.
Moneylenders Act 2008
states that a loan granted by an
unlicensed moneylender
is unenforceable 不可执行的.
Employment Contracts
Contracts in restraint of trade 贸易限制合同
He has some legitimate interest that needs protection
(a) Trade secrets or highly confidential information
(b) Customer Connection
(c) Maintaining a stable and trained workforce
The restraint of trade is reasonale
(a) The area of restraint
(b) The duration of rstraint
(c) The position of the employee
(d) The scope of the restraint
Forster & Sons Ltd v Suggett (1918)
Lek Gwee Noi v Humming Flowers & Gifts Pte Ltd (2014)
Effects of Illegality
Void and cannot be enforced.