Contract Law Fundamentals Flashcards

What is 'misrepresentation' in contract law?

Answer: A false statement of fact made by one party that induces the other to enter the contract

Misrepresentation is a false statement of existing fact (not law or opinion) made by one contracting party to the other, which induces that party to enter the contract.

What remedy is available for fraudulent misrepresentation?

Answer: Rescission of the contract and damages in the tort of deceit

Fraudulent misrepresentation (Derry v Peek [1889]) entitles the innocent party to rescind the contract and claim damages in the tort of deceit, including all losses flowing from the fraudulent statement.

What is 'common mistake' in contract law?

Answer: Both parties make the same fundamental mistake about a matter that goes to the root of the contract

Common mistake occurs where both parties share the same fundamental mistake about a matter of fact that goes to the root of the contract, such as the existence of the subject matter (Couturier v Hastie [1856]).

What is the effect of duress on a contract?

Answer: A contract entered into under duress is voidable at the option of the innocent party

Duress (including economic duress) makes a contract voidable, meaning the innocent party may elect to rescind it. The contract is valid unless and until rescinded.

What is 'undue influence'?

Answer: Equitable doctrine allowing a contract to be set aside where one party improperly influenced the other's decision

Undue influence is an equitable doctrine that allows a court to set aside a transaction where one party has used their position of influence to improperly override another party's free will (Allcard v Skinner [1887]).

What is the 'doctrine of privity of contract'?

Answer: Only parties to a contract can enforce it or be bound by it

The doctrine of privity (Dunlop v Selfridge [1915]) states that only a party to a contract can sue on it or be bound by it. The Contracts (Rights of Third Parties) Act 1999 created statutory exceptions.