Lecture 5 - Vitating Factors 250911


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Unformatted text preview: t will be assumed that the wrongdoer exercised undue pressure (presumed undue pressure) and it will be up to him to show that he did not. He could do this by showing that the other party had independent advice from another, or the other party exercised free will or the other party knew all the facts and therefore could not have been misled. CM20278 Regulatory Framework 36 Business 2011 - 2012 for Undue influence by a third party ­ where the third party takes advantage of the mutual trust and confidence between two people. Thus, where a bank knows of the undue influence of a husband on his wife and allows the wife to sign a guarantee on behalf of the husband, the court may set aside the guarantee (Diners Club International (HK) v Ng Chi Sing (1987)). CM20278 Regulatory Framework 37 Business 2011 - 2012 for 5. Unconscionable Contracts At common law, a contract is not ordinarily set aside on the ground that the contract contains harsh terms. The relief on the ground of unconscionable conduct is usually taken to refer to the class of cases in which a party makes unconscientious use of its superior position or bargaining power to the detriment of a party who suffers from some disability or is placed in some special situation of disadvantage. CM20278 Regulatory Framework 38 Business 2011 - 2012 for The circumstances such as poverty, sickness, age, sex, infirmity of body and mind, drunkenness, illiteracy or lack of education, or lack of assistance or explanation where assistance is necessary are cases of special situation where the court may consider. However, a court will not set aside a contract against a party where the party’s conduct is not unconscionable and it acts with complete innocence of the disability of the other party. CM20278 Regulatory Framework 39 Business 2011 - 2012 for For comparison, in case of undue influence, the will of innocent party is not independent where it is not the case for unconscionable contracts. The principles set out above are only guidelines. The courts have not laid down any unifying principle or comprehensive requirements for its operation. The principles regulating unconscionable contracts are now codified by the Unconscionable Contract Ordinance. The Ordinance applies to a contract for the sale of goods or supply of services in which one of the parties’ deals as consumer. CM20278 Regulatory Framework 40 Business 2011 - 2012 for The Ordinance provides greater flexibility in matters of remedy that can be awarded. The court may: refuse to enforce the contract; enforce the remainder of the contract without the unconscionable part; or limit the application of, or revise or alter, any unconscionable part as to avoid any unconscionable results. CM20278 Regulatory Framework 41 Business 2011 - 2012 for In granting relief, the court may have regard to the conduct of the parties in relation of the performance of the contract since it was made. The Ordinance did not define the word “unconscionable”. However, it provides a non­...
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This note was uploaded on 04/01/2013 for the course ACCOUNTANC CM20249 taught by Professor Ta during the Spring '13 term at City University of Hong Kong.

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