VITIATING FACTORS

• What is a vitiating factor?

  A vitiating factor makes a contract void or voidable - it effectively invalidates a contract.

  A contract is void if it has no legal standing.
• What are the two vitiating factors?

  Misrepresentation and Economic duress
• What is a misrepresentation?

  A false statement of material fact, made by a party to the contract that induces the other party to enter the contract.
• When can a misrepresentation take place?

  It can only happen during the formation of a contract (before).
• What are representations? (Before they are made to be a misrep)


  Representations are statements that influence a decision on whether or not to make a contract.
• How does a representation become an misrepresentation?

  If the statement given is false, it is classed as a misrepresentation.
• What does a misrepresentation do to the contract?

  It makes the contract voidable.
• Is a misrepresentation valid?

  It is valid unless a party to the contract (who has suffered the misrep) takes an action to court.
• What can the court decide?

  As a result, the court can rescind the contract.
• What is rescission?


  It treats the contract as if it had never existed - It puts the parties back to their pre-contractual positions.
• What are the 4 elements that must be established in order to prove a misrepresentation?

  1. A False statement
  2. Of Material fact
  3. Made by a party to the contract
  4. Induces the other party to enter the contract
• In what form does the statement need to be?

  It is usually written or verbal, although it does not have to be.
• What was a statement outlined as in the case of Spice Girls Ltd v Aprilia World Service BV (2000)?

  It could be anything that would influence the other's decision such as conduct.
• What did the case of Hamilton v Allied Domecq (2007) affirm?

  A misrepresentation can take place through silence.
• What must the statement be?

  It must be false (not true or accurate).
• What defines the type of misrepresentation it might be?

  The extent of the person's knowledge of the accuracy of the statement when it is made.
• What did the case of Fletcher v Krell (1837) state?

  There is no obligation on a person wishing to enter a contract to make any statement regarding what is being offered - however, anything said in that respect must be true.
• How can a true statement become a misrepresentation?

  Even if the statement is true when made, it can become a misrepresentation if it becomes false before the contract is made.
• What does the case of With v O'Flanagan (1936) tell us?

  A person must correct information where the situation has changed between making the representation and the acceptance - this prevents the statement from becoming a misrep.
• What does the case of Dimmock v Hallett (1866) state?

  Silence can be seen as misrepresentation where a statement made is a half-truth and there is a duty to reveal the whole truth of the situation.
• What was held in the case of Tate v Williamson (1866)?

  Where the relationship between the parties is based on trust, then silence may be a misrepresentation.
• What was held in the case of Lambert v Co-operative Insurance Society (1975)?

  Where a contract is of 'utmost good faith', then all material facts must be disclosed whether asked about or not.
• What does "The misrepresentation must be of a material fact" mean?

  A misrepresentation is of a "material fact" if it would have led a person to make the contract and did in fact influence the mind of the person making the contract.
• What can the material fact not be?

  It cannot be a mere opinion, an expression of future intent or mere trade puff.
• How can a statement of future intention be seen as a 'fact'?


  If at the time of making the statement, it is what the person intends to do.
• How can it be shown that there is a misrepresentation?

  If it can be shown that the person making the statement could not have held such an opinion or had no such intention.
• What does the case of Bisset v Wilkinson (1927) tell us?

  A mere misstatement of opinion given fairly, cannot amount to a misrepresentation.
• What does the case of Edgington v Fitzmaurice (1885) state?

  A statement of present intentions can count as an actionable misrepresentation.

  A misrepresentation need not be the sole cause of entering a contract, as long as it is an influence.
• What does "Made by a party to the contract mean"?

  This means that a person is not liable for statements made by others unless they are his or her agent.
• Where does this limitation not apply and what case demonstrates this?

  This limitation does not apply in the law of tort and negligent misstatements such as in the case of Hedley Byrne & Co. Ltd v Heller & Partners Ltd (1964).
• What must the statement be and what must it do?

  The statement must lead the other into making the contract, and must be a critical part of making the decision.
• What was stated in the case of Attwood v Small (1838)?

  The statement must be important to the person making the contract, and he or she must have relied on the statement made rather then their own judgement or outside information for there to be a misrepresentation.
• What doesn't matter in regards to element 4?

  It doesn't matter if the victim could have discovered that truth by taking reasonable steps or if it was unreasonable to rely on the untrue statement.
• What does the case of Redgrave v Hurd (1881) state?

  The fact that the untrue statement was relied upon is enough to make it amount to a misrepresentation.
• What does the case of Museprime Properties Ltd v Adhill Properties Ltd (1990) tell us?

  What the reasonable person would or wouldn't do is irrelevant.
• What are the 3 different types of misrepresentation?

  1. Innocent
  2. Negligent
  3. Fraudulent
• Under which act is the definition of an innocent misrepresentation?

  The Misrepresentation Act 1967
• What is the definition of innocent misrepresentation?

  • A false statement made honestly
  • The person making the statement, genuinely believed it to be true on reasonable grounds
• What remedies are available for innocent misrepresentation?

  • There isn't an automatic or absolute right to damages
  • The right to damages is discretionary
  • Rescission can be possible
  • The contract can be affirmed
• Under which case was the law on Negligent misrepresentation established?

  Hedley Byrne v Heller (1964)