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Cover Cheshire, Fifoot, and Furmston's Law of Contract

8. Mistake  

M P Furmston

This chapter considers the circumstances in which a mistake by one or both parties may affect the validity of the contract, and discusses the two categories of case: (i) where agreement has been reached, but upon the basis of a common mistake; and (ii) where an apparent agreement is alleged to be vitiated by mutual or unilateral mistake. It also considers cases of documents mistakenly signed, that is, where a person is induced by the false statement of another to sign a written document containing a contract which is fundamentally different in character from that which he contemplated.

Chapter

Cover Cheshire, Fifoot, and Furmston's Law of Contract

9. Misrepresentation, Duress, and Undue Influence  

M P Furmston

This chapter discusses three reasons why a contract may be invalid. These are that it was procured by misrepresentation (basically one party misleading the other), by duress (threats by one party to the other), or by undue influence (one party improperly taking advantage of the other).

Chapter

Cover Business Law

7. Factors Affecting The Validity of a Contract  

This chapter discusses how the manner in which a contract is concluded can potentially affect its validity. Before discussing the terms and details of a contract, it is important to note that a contract may fail due to one or both parties not possessing the capacity to establish a contract. Some of the common reasons includes a mistake by one or both parties, a provision that has been misrepresented in the negotiations, or the use of undue influence or placing the other party under duress in the process of concluding the contract. Some of the reasons listed in this chapter may be common, but the emphasis here is to identify where problems may occur that could prevent the successful operation of the contract despite fulfilling the essential features discussed in the previous chapters.

Chapter

Cover Contract Law

6. Mistake  

A party who enters a contract because of a mistaken assumption as to background fact can realistically complain that she should not have to take the normal responsibility for her apparent consent. On the other hand, the objective test of intentions renders mistakes irrelevant to the validity of contracts. The chapter explores how contract law balances these competing norms. It discusses: (1) when a claimant can escape a contract due to her unilateral mistake as to: the contractual terms, the nature of the document, or the other party’s identity; (2) when a contract be rectified to correct a mistake in recording it; (3) when a claimant can escape a contract on the ground of her mistaken assumption about the relevant (non-term) facts; (4) the justification for relieving mistake; (5) whether the current law is satisfactory, and if not, how might it be developed.

Chapter

Cover Business Law Concentrate

3. Contract II: mistake, misrepresentation, duress, and undue influence  

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for and how to achieve extra marks. This chapter considers contract law and the factors that may affect the contract or its validity: mistake, misrepresentation, duress, and undue influence. A contract may be held void due to a fundamental mistake, as the parties did not have a true agreement. An action under misrepresentation is available if an untrue representation is considered ‘actionable’. If a contract is established on the basis of violence (or a threat), or unlawful economic pressure, this may be considered to be a case of duress. Where undue influence has been used to form the contract, it will be voidable.

Chapter

Cover JC Smith's The Law of Contract

23. Common mistake: contracts void for failure of a basic contractual assumption  

This chapter examines contracts which were avoided because of the failure of a basic contractual assumption before the contract has been concluded. If a contract has been concluded based on a particular contractual assumption, then the failure of that assumption before the contract has been concluded means that the contract is void. This is because both parties have made a fundamental mistake about a basic assumption. A contract cannot be void due to a common mistake where the risk of an assumption failing has been allocated to one of the parties under the contract, or where the failure is attributable to the fault of one of the parties. Very few assumptions are held to be ‘basic’; the threshold is set at a very high level. The failure of the assumption must, at the very least, render performance of the contract fundamentally different from what was reasonably envisaged.

Chapter

Cover Business Law

6. Establishing the Contract: Consideration, Intention to Create Legal Relations, and Certainty Of Terms  

This chapter is a continuation of the previous one, and further discusses the essential features of a legally binding, or valid, contract. It puts particular importance on the meaning of ‘consideration’, which is what makes a promise or agreement a ‘bargain’ and, therefore, enforceable. The courts are not bound to, and will not, consider a ‘bare promise’. Parties to a contract must intend it to be legally binding, and not just be social or domestic agreement, and such contracts must contain certain terms that identify the rights and obligations of both parties. Without an understanding of these crucial elements, agreements may be concluded but they will not create an enforceable contract. Also, although a contract is enforceable by those parties to it, this right can be extended to third parties if the contract has been made for the benefit of these parties.

Chapter

Cover JC Smith's The Law of Contract

24. Frustration: contracts discharged for failure of a basic contractual assumption  

This chapter examines contracts which were avoided because of the failure of a basic contractual assumption after the contract has been concluded. If the failure of a basic contractual assumption occurs after the contract has been concluded, the contract may be frustrated. A frustrating event kills off the contract automatically. However, everything that was done from the making of the contract up to its frustration was, and remains, validly done in pursuance of that contract. A contract cannot be frustrated where the risk of an assumption failing has been allocated to one of the parties under the contract (for example by a force majeure clause), or where the failure is attributable to the fault of one of the parties. The Law Reform (Frustrated Contracts) Act 1943 will determine the consequences of frustration. This legislation provides a statutory mechanism for adjusting the rights of parties after a contract has been frustrated.

Chapter

Cover Contract Law

16. Mistake  

This chapter examines the effects of a mistake on the validity of a contract. A mistake may prevent parties from reaching agreement. First, a court may decide that no contract has been concluded where one party knows that the other is labouring under a mistake in relation to the terms of the agreement and fails to inform that other party of the mistake. Secondly, it may conclude that the terms of the offer and acceptance suffer from a latent ambiguity such that the parties cannot be said to have reached agreement. The third case in which a mistake may prevent the formation of a contract is where there has been a mistake as to the identity of the party who is said to be a party to the contract. The discussion then turns to the leading cases on common mistake, mistake in equity, and rectification. The chapter concludes by considering the non est factum defence, which can be invoked by someone who, through no fault of his own, has no understanding of the document that he has signed.