Lecture 5 - Vitating Factors 250911

Thisiswhereonepartyexertsillegitimate

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Unformatted text preview: ract is made. Remedies ­ can claim rescission, cannot claim damages. However, under the Misrepresentation Ordinance (MO) the court can award damages instead of rescission where it would be equitable to do so. CM20278 Regulatory Framework 29 Business 2011 - 2012 for iii) Negligent Misrepresentation ­ It was held in (Hedley Byrne & Co. Ltd v Heller & Partners Ltd) that if the representee can establish that there is a duty on the representor not to make a negligent misrepresentation and if he does he is in breach of his duty. Such a duty exists in spets e.g. accountants, surveyors and agents have a duty in tort not to make negligent statements to persons who will act on them. CM20278 Regulatory Framework 30 Business 2011 - 2012 for However, since the MO S.3(l), the tort of negligent statement has become less important. Under this section all the representee has to prove was that there was a misrepresentation. The burden is then on the representor to prove that he believed the statements to be true up to the time of the contract. There is now no need to establish a duty of care between the parties. Remedies ­ can be a claim for rescission, damages and/or indemnity. Under s3(2) of the MO, the court has a discretion to declare a contract subsisting and award damages in lieu of rescission. CM20278 Regulatory Framework 31 Business 2011 - 2012 for 3. Duress Common Law Duress is actual or threatened violence, unlawful restraint or threats against another or his family e.g. a threat to put someone in a mental hospital, the contract will be voidable. Even a temporary threat of violence, if of sufficient severity, could amount to duress. CM20278 Regulatory Framework 32 Business 2011 - 2012 for There is another form of duress known as Economic Duress. This is where one party exerts illegitimate economic pressure. For example when one party agrees to build a house for a sum of money and then subsequently tells the other party that they will not complete the works unless a further sum of money is paid. The contract will be voidable. The court will declare the contract invalid if it seems just in the circumstances to do so – usually the degree of duress has to be high. Therefore, the threshold for this kind of duress is relatively higher. CM20278 Regulatory Framework 33 Business 2011 - 2012 for 4. Undue Influence This is where one party to a contract has unfairly used his influence to persuade the other to enter into a contract, which is clearly disadvantageous to him. CM20278 Regulatory Framework 34 Business 2011 - 2012 for If the court is satisfied that undue influence has been used, the contract can be set aside, provided the plaintiff has acted equitably. The plaintiff have to show that: i) The defendant exerted undue influence on him (actual undue pressure) (Williams v Bay ley (1866)) OR CM20278 Regulatory Framework 35 Business 2011 - 2012 for ii) There was a fiduciary relationship between the parties e.g. solicitor and client, parent and child, brother and sister, fiancé and fiancée, medical advisor and patient. In this case, i...
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