LAWS1100 Study Guide - Final Guide: Undue Influence, Unconscionability, Australian Consumer Law
VITIATING FACTORS
1. Common Law Contract Principles
− Policy underpinnings to Contract Law
1. Caveat Emptor – Let the Buyer beware but
2. Freedom of Contract – Free and Voluntary consent
2. Fatos that affet geuie otatual oset ae alled itiatig fatos.
These fatos itiate a otat ad allo the ioet pat to set it aside.
3. The innocent party may set aside the contract and/or sue for damages or the
Courts may declare the contract void due to lack of genuine consent.
4. Lack of free and voluntary consent may arise from:
− Misrepresentation
− Mistake
− Duress
− Undue influence
− Unconscionability
Exam Notes: Youe ot liited to just oe, a ea uestio aoud issues of feedo of
contract and vitiating factors, there is a potential that any number of the above can be used.
In particular, with undue influence and unconscionability. In terms of a final exam question
if you do one really well and fail to pick up the other one, it will affect marks
Void and Voidable Contracts
• A transaction is said to be void when it is of no contractual effect.
• A transaction is described as voidable when it is capable of being either set aside or
confirmed at the option of one party (the innocent party).
• Until set aside or avoided, the transaction is a valid contract and is legally binding on
the parties
Exam Notes: Note the difference between void or voidable
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Misrepresentation
• A false statement of fact made by one party to another.
• If the other party was induced to enter into the contract by a misrepresentation, the
contract is then voidable.
• Elements for a Misrepresentation:
1. A false statement/representation of fact is made by the representor to
the representee;
2. With regard to an existing fact or past event – not statements of future
intention;
3. Before or at the time the contract is concluded;
4. Intended to induce and in fact does induce the other party to enter into
the contract.
• There are 3 types of misrepresentation:
1. Fraudulent
2. Innocent
3. Negligent.
Exam Notes: You have to go through all types of misrepresentation, even if you know they
are not applicable, you must disprove them.
Exam Notes: You cannot misrepresent future events, but you can mislead and deceive in
regards to them (see notes on Misleading and Deceptive Conduct)
What does not constitute a Misrepresentation?
• The legal definition of a misrepresentation does not include:
• Honest statements of opinion;
• Puffs or exaggerated statements;
• Promises/statements of future intention;
• Mere silence, unless one or more of the following applies:
− A statement, previously true, then becomes untrue;
− The representor does not correct a previous statement after discovering it is
untrue;
− A failure to disclose distorts a statement previously made so that it becomes a
half-truth;
− There is a legal obligation of full disclosure by parties during negotiations.
Fraudulent Misrepresentation
• Fraudulent misrepresentation: The representor knows or believes that the statement is
untrue and presents it to be true or accurate with the aim of making the other party
enter into the contract.
• The elements of fraudulent misrepresentation are as follows:
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find more resources at oneclass.com
• A false statement of fact is made by one party to the other;
• The statement is made knowingly, with a lack of belief in its truth or recklessly;
• The statement induces the other party to enter into the contract;
• The statement results in damage to the innocent party.
Case Law: Derry v Peek (1889)
• Parties may rescind the contract and sue for damages.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
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