SOCI10001 Lecture Notes - Lecture 8: Divisor, Australian Consumer Law, Specific Performance
25 Jul 2018
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Week 8 Lecture
Circumstances that may invalidate legal transactions
• You can set aside a contract only if it is made against good conscience and it
is “void abnitio”. “Restitutio in integrum” → reverse any performance that
was made, the parties are restored to their pre-contractual position.
• The validity of a legal transaction can be affected by the following
circumstances: duress; mistake; undue influence; unconscionable dealing,
and misleading conduct.
• Unconscionable dealing= taking advantage of vulnerability to the extent that
there is an imbalance of power between the parties.
Duress
• When one party uses, or threatens to use, unlawful force or harm to obtain the
other party’s agreement.
• Economic or physical harm, directed at you or people near you.
• The harm must be directed towards humans close to you that you are
emotionally invested in.
• Illegitimate pressure, the contract comes into existence and is not set aside.
Undue Influence
• Because of their relationship, one party necessarily places confidence and trust
in the other. The dominant party may influence the decisions of the other.
• Presumptive controlling influence → judges presume these relationships
give way to undue influence. E.g. parent and child, doctor and patient,
solicitor and client, religious advisor and believer.
• Judges start from a mindset of automatically believing the plaintiff was
controlled.
• The stronger party then has the onus of proving that no undue influence was
actually exercised.
• Relationships: no presumptions. Controlling influence is not inevitable but the
weaker party may be able to prove that the stronger party had a general
controlling influence.
- Spouses, accountant and client, banker and customer, dentist and patient,
employer and employee, principals and agents.
- If this is effectively proved, a presumption of undue influence arises and
the stronger party has the onus of proving that no undue influence was
actually exercised.
• While general controlling influence does not exist (someone you didn’t know
before) you can argue the stronger party used an improper controlling
influence to bring about a transaction.
• Mistakes might prevent the parties from reaching sufficient consensus to
create a valid contract:
Document Summary
Circumstances that may invalidate legal transactions: you can set aside a contract only if it is made against good conscience and it is void abnitio . Illegitimate pressure, the contract comes into existence and is not set aside. Undue influence: because of their relationship, one party necessarily places confidence and trust in the other. The dominant party may influence the decisions of the other: presumptive controlling influence judges presume these relationships give way to undue influence. Controlling influence is not inevitable but the weaker party may be able to prove that the stronger party had a general controlling influence. Spouses, accountant and client, banker and customer, dentist and patient, employer and employee, principals and agents. Mutual mistake: two parties misunderstood two different things. Bilateral mistake: both parties misunderstand the same thing. Unilateral mistake: only one party makes a mistake. Bilateral mistake: both parties make exactly the same mistake about something, e. g. regarding its existence or quality.
