Contract Vitiating Factors Explained

The statement in Bisset v Wilkinson was not considered a misrepresentation because it was an opinion rather than a statement of fact. The seller expressed an opinion about the land's capacity for sheep farming, and both parties understood it as such. Misrepresentation requires a false statement of fact, not an opinion.
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- A vitiating factor makes a contract void or voidable because it affects the agreement's validity.
- In *Bisset v Wilkinson*, the seller's statement wasn't misrepresentation because it was an opinion, not a factual claim.
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There could be an argument for misrepresentation by omission. Under Kenyan law, misrepresentation involves a false statement of fact. In certain circumstances, not disclosing a known defect can amount to misrepresentation:
- Under the *Consumer Protection Act, **, a seller must disclose known defects that could affect the buyer's decision.
- In *Smith v Hughes (*)*, silence was not misrepresentation, but if the seller knew of the defect, it could be argued otherwise.
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Sure! Here’s a brief explanation:
- Misrepresentation by Omission: If the seller knows about the fault and fails to disclose it, this non-disclosure can be considered misrepresentation under certain laws.
- Consumer Protection Act, *: This act requires sellers to disclose any known defects.
- Relevant Case Law: In *Smith v Hughes (*)*, silence was not considered misrepresentation unless the seller knew of the defect and the buyer relied on their expertise.
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The case of *Pankhania v Hackney London Borough Council [*]* made an important change to the law by establishing that a statement of law can be a misrepresentation. In this case, it was held that misrepresentation can include false statements about the law, not just facts.
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Here’s a detailed explanation:
- Vitiating Factors: These are elements that can make a contract void or voidable by affecting the consent of the parties involved.
- Misrepresentation: A false statement of fact that induces someone into a contract. *Derry v Peek (*)* showed that fraudulent misrepresentation makes a contract voidable.
- Duress: When one party is forced into the contract under threat. *Universe Tankships Inc. of Monrovia v International Transport Workers Federation (*)* illustrated this.
- Undue Influence: Unfair persuasion by one party over another. *Allcard v Skinner (*)* is an example.
- Mistake: A misunderstanding by both parties about a fundamental aspect of the contract. *Bell v Lever Brothers Ltd (*)* demonstrated this.
- Illegality: Contracts for illegal purposes are void, as in *Pearce v Brooks (*)*.
- Bisset v Wilkinson: The seller’s statement was deemed an opinion, not a misrepresentation, because both parties understood it as an estimate rather than a factual claim.
- Misrepresentation by Omission:- Misrepresentation by Omission:
- If a seller knows of a defect and does not disclose it, this can be misrepresentation, particularly under the *Consumer Protection Act, **, which mandates disclosure of known defects.
- In *Smith v Hughes (*)*, silence wasn’t misrepresentation unless the seller knowingly concealed a defect.
- Statement of Law as Misrepresentation:
- *Pankhania v Hackney London Borough Council [*]*: This case established that false statements about the law can be considered misrepresentation, expanding the scope beyond just factual misstatements.
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In *Derry v Peek (*)*, the statement was not considered a fraudulent misstatement because the makers of the statement genuinely believed it to be true. For a statement to be fraudulent, it must be made knowingly, without belief in its truth, or recklessly without caring whether it is true or false.
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In *Esso Petroleum v Mardon (*)*, the court held that Mr. Mardon was entitled to rely on Esso's statement because:
- Esso had expert knowledge and experience in the petrol station business.
- The statement was made by Esso's representative with the intent to induce Mr. Mardon to enter the contract.
- The projection was considered a statement of fact rather than opinion.
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In *Howard Marine v Ogden (*)*, the statement about the barges' capacity was held to be a misrepresentation under the Misrepresentation Act * because:
- The statement was made without reasonable grounds for believing it to be true.
- The correct capacity was easily verifiable from the barge documents.
- The misrepresentation induced Ogden into the contract.
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In *Leaf v International Galleries (*)*, the buyer was not allowed to rescind the contract because of the lapse of time. The court held that the right to rescind for misrepresentation is lost if not exercised within a reasonable time. Here, the buyer discovered the painting was not by Constable five years after the purchase.
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Vijay likely cannot rescind the contract based on misrepresentation in this scenario because he knew the statement about the engine being new was false at the time of purchase. Misrepresentation requires reliance on a false statement, which is not the case here.
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- Misrepresentation and Reliance: For misrepresentation to be actionable, the misled party must have relied on the false statement. In *Attwood v Small (*)*, the buyer's claim failed because they did not rely on the seller's statement but conducted their own investigation.
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Issue: Can Vijay rescind the contract for the car purchase based on Sarah's misrepresentation, given that he knew the statement about the engine was false at the time of purchase?
Rule:
- Misrepresentation is a false statement of fact made by one party that induces another to enter into a contract.
- The misled party must rely on the false statement for it to be actionable.
- *Attwood v Small (*)*: If the party does not rely on the false statement but on their own investigation, misrepresentation cannot be claimed.
Application:
- Vijay knew Sarah's statement about the engine was false at the time of purchase.
- Since Vijay did not rely on Sarah’s false statement when deciding to buy the car, but rather chose to buy it despite knowing the truth, misrepresentation is not actionable here.
Conclusion: Vijay cannot rescind the contract based on Sarah's misrepresentation because he knew the statement was false and did not rely on it when purchasing the car.
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It seems like you have a good grasp of misrepresentation and its implications. Since you are referencing Derry v Peek (*), which established that for misrepresentation to be fraudulent, there must be an absence of an honest belief in the truth of the statement, it’s important to understand the nuances.
- Derry v Peek (*): Established that fraudulent misrepresentation requires a false statement made knowingly, without belief in its truth, or recklessly.
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It appears you are interested in understanding how duress affects contracts. Duress occurs when one party is forced into a contract through threats or pressure, making the contract voidable at the option of the coerced party. Here are relevant points:
- Duress: In *Universe Tankships Inc. of Monrovia v International Transport Workers Federation (*)*, a contract was deemed voidable due to duress.
- Legal Principle: Duress must involve wrongful threats or pressure that deprives the victim of their free will.
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Undue influence involves one party exerting excessive pressure on another, leading to an unfair agreement. Here are the key points:
- Undue Influence: Occurs when one party uses their power over another to gain an unfair advantage.
- Allcard v Skinner (*): Established that a contract made under undue influence is voidable.
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In *Bell v Lever Brothers Ltd (*)*, the House of Lords held that a fundamental mistake must go to the root of the contract to make it voidable. In this case, both parties were mistaken about the redundancy terms, but the mistake did not affect the contract's very essence, so it was not voidable.
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Illegality in contracts means that the contract involves activities that are illegal or against public policy. In *Pearce v Brooks (*)*, the court held that a contract for an illegal purpose is void. Here are some key points:
- Illegality: Contracts involving illegal actions are unenforceable.
- Pearce v Brooks (*): Established that contracts with illegal purposes are void.
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