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MISREPRESENTATION, MISTAKE AND ILLEGALITY - Coggle Diagram
MISREPRESENTATION
Exceptions to misrepresentation rules
- Following can amount to statements of fact on which misrepresentation claim can be based
Statements of opinion
Allowed if:
Representor has greater knowledge / experience SO their opinion may be held as statement of fact if there are reasonable grounds for it
IF NO reasonable grounds = false statement > misrepresentation
Statement of future intention
Allowed if:
Representor states that they intend to do something + at that point they know they cannot do what they state / do not intend to do it = they misrepresent their existing intention
IF NO such intention = false statement > misrepresentation
SilenceAllowed if:
- Half-truths = statements is technically true but misleading > misrepresentation
- Continuing representations = if statement is made at beginning of negotiations BUT prior to contract becomes false, representor must correct it. IF THEY DO NOT + other party enters into contract believing it > misrepresentation
- Contracts uberrimae fidei (utmost good faith) = material facts must be disclosed in types of contracts where 1 party is in strong position to know the facts which form the basis of the contract (e.g. insurance contract where facts must be made to the insurer) IF NOT > misrepresentation
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REMEDIES
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If contract contains exemption clause protecting party from liability for misrepresentation OR exclude / restrict remedy available to the other party = no effect UNLESS satisfies the requirement of reasonableness
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MISTAKE AND ILLEGALITY
MISTAKE
If contract is affected by operative mistake = contract is void so has no legal effect from outset
Law of mistake is exception to rule that parties are bound by terms of agreement + must rely on contract for protection
1. Common mistake Both parties to agreement are suffering from the same misapprehensionIF mistake is sufficiently fundamental to affect validity of contract = voidMistakes not sufficiently fundamental:
- On quality of goods even if quality affects utility / value of goods UNLESS subject matter is essentially different from that intended OR performance is impossible
- One party is at fault
- Contract makes provision for issue
2. Mutual mistake
Both parties are mistaken BUT about different things > cannot be said they were in agreement so contract will be void
Objective test = what reasonable 3P would believe agreement to be based on words / conduct of parties
IF from reasonable person would infer existence of contract = binding upon parties regardless of mistake
IF NOT infer existence of contract = NOT binding upon parties
3. Unilateral mistakeOnly 1 party is mistaken + other party knows of mistake
- IF occurs = acceptance does not correspond with offer > no agreement reached
There are 3 types:
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2. Mistake as to nature of document signed
Due to blindness / illiteracy / senility of person signing OR trick / fraudulent misrepresentation as to nature of document provided person took reasonable precautions before signing = contract is void
3. Mistake as to the identity of the person contracted with1 party believes they are contracting with person the other party pretends to be = if void depends on circumstances
a. IF identity is mistake + buyer identity is fundamental = contract is void for mistake from outset
- If property is sold to innocent 3P before avoided > title NOT pass + property can be recovered
b. IF attribute is mistake = contract is voidable for misrepresentation so in force until something happens
- If property is sold to innocent 3P before avoided > title passes + property can't be recovered
Face to fact contracts
- Void is identity is of vital importance
ILLEGALITY
IF there is contract to perform illegal act = court applies a discretionary appraochPrior 2016
Contract to perform illegal act is void + unenfoeceableAfter 2016
Illegality based on whether allowing recovery for illegal act would cause inconsistency in law based on:
- underlying purpose of law that has been breached + if enhanced by denial of claim
- other relevant public policy affected by denial of claim
- if denial of claim would be a proportionate response to the illegality