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FREE CONSENT - Coggle Diagram
FREE CONSENT
Definition
- Free consent is the basis of a contractual relationship.
- There must be a meeting of minds as to the nature and scope of the contract (a consensus ad idem)
- Under S10(1) CA 1950 - 'agreements are contracts if they are made by **free consent of parties competent to contract...'
- Consent - parties agree upon the same thing sense.
- Consent also must be free.
(1) Coercion
- Under S15 CA 1950 - is the commiting, or threatening to commit any act forbidden by the Penal Code or the unlawful detaining or threatening to detain, any property, to prejudice of any person whatever, with the intention of causing any person to enter the agreement.
- If :check: coercion = contract is VOIDABLE.
- S73 CA 1950 - repay money paid or return property under coercion.
(2) Undue influence
Under S16 CA 1950
Actual
One party is in a dominant position,
Used that dominant position, and
-
Presumed
Real authority over another, or (employer v employee)
Fiduciary relationship, or (parents and child, doctor and patient.....)
Mental capacity affected by age, illness or mental/bodily distress.
Additional infos :
- Presumed undue influence is a rebuttable presumption.
- If these three has no balance, so it is undue influence.
If undue influence can be PROVEN, then contract is VOIDABLE.
Representation
- Statement of FACT & NOT OPINION.
- Made BEFORE the contract is entered into
- Which INFLUENCES/INDUCES the other person to enter into the contract
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Misrepresentation
- FALSE statement of FACT & NOT OPINION.
- Made BEFORE the contract is entered into
- Which INFLUENCES/INDUCES the other person to enter into the contract.
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TWO types of misrepresentation :
1. Fraud (S17 CA1950) - purposely/deliberately lied. (purposely done)
2. (Innocent) Misrepresentation (S18 CA 1950) - whatever he is saying is the truth BUT comes out as untrue. (careless)
- Definition : Under S17 CA 1950, various acts commited by a party with intent to deceive the other contracting party.
(eg P must prove that D purposely lied)
-
FIVE categories of actions that would constitute fraud :
- :check: False suggestion
- :check: 'active concealment of a fact by one having knowledge of belief of the fact' - Illustration (c) S19 CA1950
- :check: Promise made without any intention of performing it.
- :check: Any other act fitted to deceive.
- :check: Any such act or omission specially declares to be fraudulent.
The person who claim that there is a fraud case MUST prove the existence of fraud.
- Example :
Datuk Jaginder Singh & Ors v Tara Rajaratnam
Held : The standard of proof of fraud in civil proceedings was the criminal standard of proof beyond reasonable doubt.
- Effect : VOIDABLE - according to S19 CA1950, the injured party may terminate or if he or she wishes to continue, can claim for damages. If he terminates, must restore any benefit received (S65 CA 1950).
Fraud & Misrepresentation
- Explanation to S19 CA 1950
:star: Misrepresentation whether fraudulent or innocent is irrelevant if it has NOT* induces the other party to enter into a contract.
- Exception to S19 CA 1950
:star: Even consent caused by misrepresentation, or by silence, the contract is valid if the part whose consent was so caused had the means of discovering the truth with ordinary diligence.
- Explanation S17 CA 1950
:star: Silence does not amount to misrepresentation unless there is a duty to speak.
:pencil2: eg Insurance contract - there is a legal duty on the insured to disclose material facts that is likely to influence a prudent insurer and the failure to do so may entitle the insurer to rescind the contract.
:pencil2: eg With v O'Flanagan - if a statement made is truth but later become untrue before the contract is concluded, the person who made the statement has a duty to update with latest information. If he does not,this may amount to misrepresentation.
(4) Misrepresentation
- Under S18 CA 1950 - normally refers to certain false statement made by representator and which induces the other party to enter into a contract but the representor does not intend to deceive.
- Effect - VOIDABLE. *(affirm - which later he cannot rescind & rescind)
(5) Mistake
- Under S21 CA 1950 - Both parties make mistake as to essential fact, contract is VOID.
Remedies :
- Repay money paid or return property delivered under mistake (s73 CA 1950)
- Restore any advantage received/compensate (s66 CA 1950)
If its a mistake of law in force in Malaysia, the contract is VALID but if it a mistake of law not being in force in Malaysia, contract is VOID. (s22 CA 1950)
One party make mistake, contract still VALID *(s23 CA 1950)
If due to misrepresentation of the other, s18(c) CA 1950 applies.
- Under S14 CA1950 - if the consent caused by the following, then there is NO free consent!!
(a) Coercion
(b) Undue influence
(c) Fraud
(d) Misrepresentation
(e) Mistake
- Effect - may be void or voidable