chpt 4

• Vitiating factors


  Factors that make a contract void or voidable

  • illegality - makes a contract void
  • misrepresentation - makes a contract voidable
• Fundamental basis of a contract

  • Presence of an agreement
  • Agreement entered into voluntarily
  • Genuine meeting of minds
• Void contract


  Treated as a nullity, as though it had never existed at all between the parties
• Voidable contract


  Valid until it is terminated by the injured party
• All ROT contracts are prima facie illegal and void as they impact on economic interests of society
• Reasonableness test for ROT contracts

  Restraint must be no more than what is reasonably necessary to protect the person's legitimate or proper interest, and in the public interest
• Misrepresentation


  • the statement consists of some facts, not law, intentions, "sales talk" or opinion
  • the statement must be false
  • the statement must be made by one party to the contract to the other
  • the statement must have induced the other party to enter into the contract
• Types of misrepresentation

  • Fraudulent
  • Negligent
  • Innocent
• Fraudulent misrepresentation

  The maker of the statement knows that what they have said is false
• Negligent misrepresentation

  The maker of the false statement has no reasonable grounds for believing the statement to be true
• Innocent misrepresentation

  The maker of a false statement had reasonable grounds to believe that it was true
• Rescission remedy

  An equitable remedy that aims to restore the parties to their pre-contractual positions
• The court may refuse to award rescission if the injured party has received some benefit under the contract or has affirmed it in some way
• Determining whether a restraint of trade clause is enforceable

  1. Consider whether the person for whose benefit the restriction was imposed had any legitimate interest in imposing it

  2. Consider the nature, geographical area, and duration of the restraint

  3. Determine if the restraint as a whole is no more than what is reasonably necessary to protect that particular interest, in the context of the public interest