Written Assignment - Three questions on contract law.docx -...

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Written Assignment Three questions on contract law 1) What are the differences between the doctrines of misrepresentation and common law mistake? Both misrepresentation and mistake regulate the consequences of reliance in the formation of a contract upon false information. It is the character of the false information and the manner of and intent behind its communication that gives rise to different consequences at law. Due to three of the basic requirements for the formation of a contract – offer, acceptance and certainty – where parties are genuinely at “cross purposes” in their negotiations, a contract cannot come into being. This has been said [1] to be a species of mistake. However, there is a further acknowledged category of mistake at common law which occurs where the nature of the mistake is such as to nullify consent. This has been referred to in earlier authorities as “mutual mistake” and is generally now known as “common mistake”. This occurs where both parties have reached agreement in reliance upon an understanding which is objectively shown to be false after agreement is concluded. However, the mistake by the parties must be “fundamental” to their respective decisions to enter into the contract [2] . This may involve mistake as to subject matter as in Strickland v Turner [3] in which a contract for an annuity was held to be void because, unbeknown to the parties, the person to whose life the annuity related was already dead at the formation of the contract. Similarly, mistake as to ownership of the subject matter as in Cooper v Phibbs [4] resulted in a contract being held to be voidable. In the leading case on the third category of common mistake – that of mistake as to quality (which must be sufficiently fundamental) – Bell v Lever Bros [5] Lord Atkin held that the contract should be regarded as void and not merely voidable. The mutuality required to establish mistake does not exist in actionable misrepresentation. This occurs where a party makes to the claimant an unambiguous statement of fact (as opposed to opinion or future intention) which induces the claimant to enter into the contract. The representation must be material [6] , known to the representee [7] , be intended to be acted upon [8] and actually acted upon [9] . It is important to distinguish between fraudulent misrepresentation in

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