Download Misrepresentation and Fraud and more Lecture notes Contract Law in PDF only on Docsity!
Contracts
Capacity: Consensus ad idem- meeting of minds Consensus- agreement + Consentir- agreement in sentiment = Consent Contractual Consent: Balance between objective test and principle of freedom of contract.
- Capacity- Intoxication/Age/Mental Diseases
- Improper Bargaining Behavior - power relations- e.g. boss employee / fraud/ misrepresentation/ undue influence/ coercion
- Compliance with law, public policy (unlawful consideration, restraint of trade, marriage, wagers)
Misrepresentation:
- Can be fraudulent, negligent or innocent
Fraudulent: made with deliberate dishonest intent
- Willen v Hewson (affirmative false statement)- Lied that the house is quiet even though the niece tells the truth, the buyer afterwards finds that it is a lie
- Jablonski v Rapaljie (deliberate concealment) - Bat infestation in house; seller was silent.
- Stambovsky v Ackley (1991) ( non-disclosure where there was a duty to disclose) – failed to disclose that the house was reputed to be haunted. Buyer didn’t allege that he actually met the ghosts. It was the reputation of the house that really mattered.
Negligent or innocent misrepresentation: without the deliberate intent to mislead is classified as either negligent or innocent.
Duress: ( coercion in Indian Law) Older contract law: Duress: assent induced by unlawful threat Undue Influence: assent induced by abuse of trust
Three elements of Undue Influence:
- A relationship of dependency and trust
- Relationship gave one party dominance over the other
- Dominant position abused by unfairly persuading the subservient party into entering a contract adverse to their interests. Unconscionability: caters to salutations which do not fall clearly in one of the established doctrines.
Drafting a contract
Elements of contract:
- Description of the instrument
- Caption
- Transition (language of agreement)
- Recitals
- Definitions
ll CONSENT
Contractual consent- balance between objective test and principle of freedom of contract
- Capacity- minors, mental illness, unsoundness of mind
- Improper bargaining behavior- fraud, under influence, coercion
- Compliance with Public policy - no unlawful behavior while entering into contract [the object of the contract should not be illegal restriction of trade, marriage , wagers]
- Misrepresentation of facts: fraudulent, negligent or innocent. It should be essential to the contract
- Fraudulent: made with deliberate dishonest intention
- Willen v. Hewson (affirmative false statement) Seller of a large house advertised it as "serene" and "peaceful" it was neither and the seller knew that the house was constantly trespassed.
- Jablonski v. Rapaljie(deliberate concealment) Bat infestation in a house, sellers went through considerable trouble to clear it right before showing the house.
- Stambovsky v. Ackley (nondisclosure where there was a duty to disclose) Seller failed to disclose that the house was reputed to be haunted Buyer did not allege that he actually met the ghosts. It was the reputation of the house that bothered him.
- Negligent/innocent misrepresentation - no deliberate intention to mislead
- Duress- (assent induced by unlawful threat) older contract law: actual force or unlawful threat of death or bodily harm [threat to propriety and economic interests]
- Undue influence-(assent induced by abuse of trust) where duress is not present but one of the parties had a particularly strong influence over another and abused the position of dominance over the other part section 16(3)- (3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Elements of undue influence-
- A relationship dependency and trust
- Giving dominance of one party over another
- Dominant position is abused unfairly persuading the subservient party into entering a contract adverse to their interest
- Unconscionability cater to situation which don’t fall clearly in one if the established doctrines
Section 13 - consent Section 14 - free consent (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21, and 22.
If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person
Mash v Inman: undergrad at Cambridge enters into an agreement with a tailor for 13 waistcoats. One is necessary and thirteen. Position changes with specific relief acts, section 41. Held that it could be enforced by or on the behalf of the minor Law render minors incompetent for their own protection Absurd consequence if they cannot recover when they have parted from the property for the consideration
Jyotirindra bhattacharya(a) v sona bala bora and ors(b) In favor of a In favor of b In favor of a To prove unsoundness of mind, the burden of proof lies on the plaintiff.
Coercion: section 15 one cannot be forced to enter into a contract by threat "Coercion" is the committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. It is immaterial whether ipc is or is not force in the place of coercion
Does threat to commit suicide constitute coercion under section 15?
Suicide is not punishable, attempt is. The husband threatens to commit suicide and not attempt to. Threat to commit suicide is coercion enough. Compelling someone to do something in place of harm.
In undue influence, misrepresentation of facts is not necessary- lloyd case. In undue influence and misrepresentation, the burden of proof lies on the party which is deceived. When there is a hierarchy of power, the burden of proof is on the person higher in power to prove that he did not influence
Mistake- the material fact which the parties agree on to is wrong. There is no meeting of minds. No consensus ad idem Misrepresentation- there is a meeting of minds inadequacy is the evidence of the fact that the party had no intention
The point of restrain in a contract should be reasonable.
