Consent:

Consent may be voided if there is: Mistake: Non est factum Misrepresentation Undue Influence Duress Unconscionability

Mistake:
Not reading a term or condition does not void the contract, it is still enforceable: Lestrange v Graucob, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, note: Res sua (the thing was already his) is also a mutual mistake

Mistake of facts:
Common Mistake- (the thing in question doesnt exist) In the case of a common mistake the parties have made a contract on the basis of a common assumption as to the existence or identity of the subject matter which both intend to be a condition precedent to the existence of a binding contract. The mistake must concern the fundamental existence of the subject matter (e.g. the thing is res extinct or never existed), not about its qualities; Bell v Lever Brothers Ltd. This is seen in McRae v Commonwealth Disposals Commission where a wrecked tanker was offered for sale, and the location given to the purchaser. There was no tanker at that location, nor any wrecked tanker. This definition of mutual mistake is supported in Scott v Coulson; Leaf v International Galleries. Did both parties make a mistake as to the existence of the subject matter? Was it a condition precedent? Effects of Common mistake: Nemo dat quod non habet, contracts of mutual mistake may be void ab initio at common law, and voidable at equity. Specific performance may also be awarded, as is supported in Tamplin v James; also Raffles v Wichelhaus. Lord Justice James said specific performance should be excused where ...a hardship amounting to injustice would have been inflicted upon [the purchaser] by holding him to his bargain, and it was unreasonable to hold him to it. Would there be hardship amounting to injustice if specific performance was awarded? Mutual mistake - In the case of mutual mistake, the parties are talking about different things or are at cross-purposes. There has been no genuine correspondence of offer and acceptance; and therefore no genuine agreement or Consensus ad idem, and the contract is containing mutual mistake is void ab initio. The court will, however, strive to find a reasonable interpretation in order to preserve the intended agreement whenever possible (such as in Hillas & Co Ltd v Arcos Ltd) but if no reasonable interpretation can be found the contract will be null and void: Raffles v Wichelhaus. Were the parties talking about different things or at cross-purpose? Is there a reasonable interpretation? *see remedies in common mistake to see if they fit. Unilateral mistake - In the case of unilateral mistake, one party is mistaken as to the terms of the contract or the identity of the other party and their mistake is known to that other party, so no genuine agreement or Consensus ad idem and the contract is void ab initio. This is shown in Smith v Hughes where the defendant sold the plaintiff some oats which were old, knowing that the plaintiff believed them not to be. Hartog v Colin & Shields suggests that if there is an obvious mistake in the terms of an agreement, one cannot simply quickly accept it and hold it enforceable. Taylor v Johnson supports this. Was there a mistake by one party? Was the other party aware of this mistake prior to signing? Mistaken identity mistaken identity is a unilateral mistake- one party is mistaken as to the identity of the other party and their mistake is known to that other party. Where the question goes to the identity of the person and the parties deal through the post, the contract is void ab initio. In Cundy v Lindsay, it was established that mistaken identity voids a contract. Shogun Finance Ltd v Hudson & Boulton v Jones support the rule that the contract is void. Phillips v Brooks Ltd however, suggests that if parties are face to face, then the contract is merely voidable for fraud, and if the item in question has passed already to a third person, then it is unrecoverable. Lewis v Averay supports this. Was there a mistake of identity by one party? Was the other party aware of this mistake prior to signing? Are parties face to face?

Mistake of Law
The Court usually considers that a payment which has been caused by a mistake of law is sufficient to give rise to a prima facie obligation on the part of the payee to make restitution, although there have been cases which argue against restitution due to Ignorantia legis non excusat e.g. Bilbie v Lumley, however unjust enrichment made due to a mistake of law is not allowed. Justice Dawson acknowledges: A person seeking restitution for money paid under a mistake of law is not attempting to avoid the law but to avail himself or herself of the law. Relatively recently, the case of David Securities Pty Ltd v Commonwealth Bank of Australia supports the notion that restitution of monies paid due to a mistake of law is legal.

Non est factum not my deed

A plea of Non est factum may be used as a defence when the defendant alleges that they did not intend to sign a contract and was it a mistake as they had no intention to be bound by those terms, but signing was not done so negligently. A successful plea allows the defendant to escape performance of the contract by rendering it void ab initio. In Lloyds Bank v Waterhouse where there was an illiterate father acting as a guarantor for his son under the belief that he was guarantor for a farm only and not all the rest of his sons debts, the plea of Non est factum was successful because of the defendants disability in being illiterate. If the defendant merely fails to read the contract then the plea will not be successful. Petelin v Cullen established the following rules: A) The document was fundamentally, radically, or totally different in character from that which the signer thought it to be, B) The claimant has to belong to a class of persons who have to rely on others for advice as to what they are signing because of inability to read resulting from either blindness or illiteracy, or because through no fault of their own, they are unable to have any understanding of a particular document (such as in Saunders v Anglia Building Society where the defendant was elderly and had no real understanding of what he or she is signing and, therefore, cannot sign with the requisite intent, or Petelin v Cullen who was illiterate); and C) At least as against innocent parties, the failure to read and understand the document must not have been due to carelessness on the claimants part. (however a rogue who fraudulently procures someones signature will not be allowed to benefit from that wrongful act simply because the claimant was careless in signing the signature will be disregarded and the contract, at least to extent that it benefits the rogue, will not be enforced)

* Misrepresentation <first prove innocent misrep, then ask if it was also fraudulent or negligent>
condition: a term of major importance allowing the innocent party to rescind and/or sue for damages; warranty: a term of lesser importance and entitling the innocent party to suing for damages only It is not necessary to have taken steps to verify the statement, a representee may rely on the representor at his or her word: Redgrave v Hurd As to the question of whether a statement induced the contract, the statement need not be the sole or decisive inducement: Edington v Fitzmaurice <see inducement below>

Three types of misrepresentation

Innocent misrepresentation Innocent Misrepresentation occurs when a misleading or untrue statement was made, but the seller was neither acting fraudulently or negligently (they didnt know the truth, they werent obliged to know the truth and did not intend to mislead). A party alleging innocent misrepresentation must normally satisfy four criteria: (a) That a false statement was made, (b) That a statement was one of material fact, (c) That it was addressed to the party who was misled (before or at time the contract was made) (d) it did actually induce the contract, in reliance on the statement; Holmes v Jones; Peek v Gurney. Innocent misrepresentation is made without intention to deceive or realisation of untruth. Are these criteria satisfied? If the innocent misrepresentation was of a fundamental condition to the contract and induced the other party to enter the contract, then the contract may be rescinded. Goods Act 1958 (vic) S100 provides rescission/reversal for innocent misrepresentation. Was the representation a condition, a warranty or neither? Neither= no remedy in reasonable misrepresentation, the right to rescind has prima facie been lost by the rule in Sheddon v North Easter Salt Co Ltd. There is an Australian authority, however, wthat that the rule does not apply to a sale of goods: Leason Pty Ltd v Princes Farm Ltd. In victoria, it would seem that the rule now give the buyer of goods a reasonable time after the sale to discover the misrepresentation. Fraudulent misrepresentation Involves a deliberate untruth. It can be considered as fraudulent when it was made knowingly, or without belief in its truth

or recklessly (dont care whether it is true) Edgington v Fitzmaurice A party alleging fraudulent misrepresentation must normally satisfy five criteria: (a) That a false statement was made, (b) That a statement was one of fact, (c) That it was addressed to the party who was misled (before or at time the contract was made), (d) which the representor knows to be untrue, or has no belief in its truth, or doesnt care if it is true & (e) That it was intended to induce (as in Peek v Gurney) and did actually induce the contract (agreement must be in reliance on the statement; Holmes v Jones). Are these criteria satisfied? If the fraudulent misrepresentation was of a fundamental condition to the contract and induced the other party to enter the contract, then the contract may be rescinded and/or the party may sue for damages under the tort of deceit. If the misrepresentation is a warranty, the party may sue for damages only. Was the misrepresentation fundamental?- rescind or damages. Was the misrep a warranty? Damages only. Negligent misrepresentation Is when an unknowing false or misleading statement has been made, but the party making the representation had a duty of care not to. A party alleging Negligent misrepresentation must normally prove four things: (a) the subject matter of the representation must be of a serious matter; and (b) the person providing the advice or information must be aware that the recipient intends to act upon it; and (c) in the circumstances it was reasonable for the recipient to rely upon it, i.e. there is reliance; and (d) and the recipient suffers damage as a result. Are these criteria satisfied? If the fraudulent misrepresentation was of a fundamental condition to the contract and induced the other party to enter the contract, then the contract may be rescinded. If the misrepresentation is a warranty, the party may sue for damages only under the tort of deceit. Was the statement a fundamental condition? rescind. Otherwise, sue for damages in negligence. A duty of care exists in providing information pre-contractual negotiation; Esso Petroleum Co Ltd v Mardon Rules for inducement: as per Wilson J in Gould v Vaggelas Representee must rely on representation or they have no case If a representation was made for the purpose of inducing a contract and a contract did occur, that statement may be said to have succeeded in inducing the contract. The inference may be rebutted if the representee knew the true facts or if they made it clear in plain language that they did not rely on the statement.

When silence is a misrepresentation:

Distortion Of a Positive Representation (half truth)

The failure to make full disclosure may operate as a distortion of some positive representation. In this case, the positive representation then becomes only a half-truth. Krakowski v Eurolynx Properties Ltd

Subsequent Discovery That The Statement Was False

If the representor

The Statement Becomes Untrue

A statement can become untrue because of a change in circumstances; representor is under positive duty to inform representee about it. With v OFlanagan

Parties In a Fiduciary Relationship

Where a statement is made by a party in a fiduciary relationship representor is under a positive duty to disclose all material facts of which he or she is aware. Hill v Rose

Contract uberrimae fidei

Those contracts are requiring utmost good faith. That requires parties to disclose all materials they are aware of. Such contracts are usually arise when one party is in particularly strong position of knowledge (usually contracts of insurance) Gordon v Gordon

discovers that the statement he made was actually false, he is under positive duty to correct that erroneous statement. Lockhart v Osman

Puffery
Puff is best described as a statement in glowing terms made by trader in praise of his or her own wares- it is not reasonable to rely on puff as it is unrealistic, therefore a reliance on puff does not give rise to legal rights. Leonard v Pepsico

Non contractual representations

Do not give rise to legal rights unless they were made negligently.

* Undue influence
Undue influence occurs when one party is in a position of trust and confidence over the other, and abuses that position to exert a level of influence over the other party to the degree that they are unable to exercise their judgement freely, and enter a manifestly disadvantageous contract; Where there is a special relationship that exists (e.g. a doctor and a patient), undue influence is presumed and the onus is on the party in the position of influence to prove no advantage was taken; Allcard v Skinner Where there is no special relationship, the contracting parties, the onus is on the party who is alleging the undue influence to prove they were unduly influenced to the extent that they were unable to use their free judgement; Llyods Bank Ltd v Bundy; Johnson v Buttress, Contracts that were created under undue influence are voidable by the party that was under that influence. Claims should be made within a reasonable amount of time; in Allcard v Skinner, the party under influence left The relationship between husband and wife does not normally give rise to a presumption of undue influence unless a special relationship of control and dominance can be showns

* Duress
Duress is actual or threatened harm against a person (direct) or their immediate family (indirect), their goods or economic interests to force them to enter into a contract against their will. Was there an actual or implied threat towards the party? Duress does not have to be the sole reason for the coerced party entering into the contract as long as it a reason; Barton v Armstrong. Therefore it does not matter that part of the reason that the defendant entered the contract because he thought it was a good business deal, A contract entered into under duress is voidable at the option of the coerced party allowing them to resist an action for specific performance and/or seek rescission. Economic duress Economic duress occurs when one party is coerced by the other party into a contract by threats amounting to extreme economic pressure. To succeed it needs to be established whether any applied pressure induced the party to enter into the contract, and whether the pressure went beyond what was normally acceptable commercial practice. An example is North Ocean Shipping Co Ltd v Hyundai Construction Co where a ship building company threatened to break a contract to build a ship, unless they were paid more.

Unconscionable conduct
The court will rescind a contract where unconscionable conduct has been successfully pleaded. For unconscionable conduct to be pleaded, one party has superior bargaining power over the other, resulting from some kind of special disability. The requirements as set out in Commercial Bank of Australia Ltd v Amadio provide that: The weaker party must have been under a special disability in relation to the stronger party so that there was no real equality between them, The stronger party had been aware of that special disability or should have been aware, and the stronger party took advantage of that special disability in a way which was unfair unconscientious in the circumstances in which the agreement formed. ; Louth v Diprose; Begbie v State Bank of New South Wales Ltd Special disadvantage definition: What amounts to special disadvantage includes poverty, sickness, age, sex, drunkenness, illiteracy, lack of education, lack of explanation or assistance when necessary