Commercial Law - Vitiating Factors

Vitiating factors
In an agreement, there could be many factors that would affect the validity of the contract
These factors are referred to as Vitiating Factors

Vitiating Factors
Illegality
Minority
Misrepresentation
Mistake
Duress
Undue Influence
Unconscionable Bargain

Illegality
Gaming Contracts
Contracts contrary to public policy
Contracts illegal in performance
Contracts for the Restraint of Trade

Minority
Minors are person below 21
Contracts for necessity are valid
Contracts for non necessities are voidable
Nash v Inman (1908)

Misrepresentation
Requires prove of 3 elements
False Representation
Factual Representation (Bisset v Wilkinson)
Inducement to enter contract (Smith v Chadwick)

Categories of Misrepresentation
Fraudulent (Derry v Peek)
Negligent
Innocent
Rescission / Damages

Mistake
Common Mistake – mistake made by both parties
Mutual Mistake – cross purpose
Unilateral Mistake –
Non Est factum

Duress
Physical Duress
Economic Duress (Llloyd Bank v Bundy)
Atlas Express v Kafco (1989)

Undue Influence
Capacity to influence
Influence was exercised
Exercise was undue
Exercise brought about the transaction

Unconscionable Bargain
Inequality of Bargaining power
Unconscionable conduct

Effect of Vitiating Factors
The presence of a vitiating factor allows the “innocent” party to avoid the contractual obligation

The effect is to render some contract void and some contract voidable

Conclusion- Vitiating Factors
The presence of vitiating factors may mean that the contract is not enforceable

Important that you know when and how these factors become operative

Commercial Law - Terms (slides)

Terms
In this part of the lecture we determine the promises exchanged in a contract
What did parties agree upon?

Pre Contractual Statements
Statements made before the contract is made fall under 3 categories
Puffs – inconsequential statements
Representations – action for misrepresentations
Terms

Terms of Contract
Tells us what parties agreed on
Determines the obligations of parties to the contract
Sets the perimeters for the deal

How are terms agreed upon?
Expressly by parties
Implied by law
Implied by legislation

Express Terms
Are terms considered expressly by parties
Present in the minds at the time of the contract

Express Terms
Orally – many contract are made orally
In writing – letters, faxes, sms, proper contracts
Conduct – a nod, a shrug etc.
Combination of all of the above

Written Agreements
The Parol Evidence Rule
Section 93 Evidence Act
Tells us that where parties agree to put their agreement in writing, oral evidence cannot be admitted to vary it.

Implied Terms – Common Law
Terms can be implied by common law
The common law uses a test known as the “business efficacy” test;
The Moorcock (1889)
Shirlaw v Southern Founderies (1926)
“SOMETHING SO OBVIOUS IT GOES WITHOUT SAYING”

Implied Terms (cont)
Examples:-
Air Conditioner works;
Rental car is insured
Lawyer is licensed
Doctor is qualified
Drugs approved by authority is safe?

Implied Terms - Legislation
Used by lawmakers to regulate certain aspect of commercial transactions
The Sale of Good Act
Hire Purchase Act

Sale of Goods Act
Contracts for sale as oppose to Contracts for Services or Barter trade (S2(1))
Imposes duties on seller of goods to:-
Deliver goods
Pass good title (s12)
Deliver goods of right quantity


Sale of Goods Act (cont)
Deliver goods that matches description (S13)
Deliver goods that is satisfactory in quality (s14)
Deliver goods that is fit for intended purpose (s14)
Deliver goods that corresponds with sample (s15)
Property, Risk & Possession

Quality on Terms
Conditions – very important terms, breach of which entitles non breaching party to rescind the contract
Warranties – less important terms, breach of which entitles the non breaching party only to damages
In-nominate terms – are terms which could be both conditions and warranties depending on the breach (Hong Kong Fir case)

Quality on Terms (examples)
Car is sold without a tyre replacement equipment
Car keeps breaking down
Air Conditioning is not cold enough
Food is too salty
Pizza delivered late

Exemption Clauses
Are terms that are intended to exclude or limit the liability of the breaching party
They are valid provided the following conditions are satisfied:-
The terms must be agreed upon either in a contractual document; (Chapelton v Barry UDC (1940))
Reasonable notice must be given;(Olley v Marlborough Court (1949))

Exemption Clauses (cont)
UCTA (1977) – limits the scope of exclusion clauses
Makes a distinction between consumers and non consumers (s12 UCTA)
Prohibits sellers from excluding their implied obligations under the SOGA to consumers (s6(2))
Restricts the sellers from excluding their implied obligations under the SOGA to non consumers (s6(3)) by the requirement of reasonable

Conclusion
Pre Contractual Statements – Puffs, Representations or Terms
Terms – Express or Implied
Terms fall under 3 quality – Warranty, Conditions or In nominate Terms
Exclusion Clauses

Law of Investements - lesson schedules for PT and FT

Law of Investments (Full Time)


11th Feb – Managed Investment Schemes

14th Feb - Securities

16th Feb - Investment in Equities

24th Feb – Investments in Real Estate

7th March – Consequences of Death & Relationship Breakdown

10th March – Structures of Holding Investments

14th March - Insolvency

24th March – Revision


Law of Investments (Part Time)

12th Feb - Managed Investment Schemes

19th Feb - Securities

26th Feb - Investment in Equities

5th March - Investments in Real Estate

12th March - Consequences of Death & Relationship Breakdown

19th March - Structures of Holding Investments

26th March - Insolvency

2nd April - Revision

Commercial Law - Slides - Lecture 1 & 2

Commercial Law 2011 - L1
Course Outline
Part 1 – Introduction to Legal Rules
Part 2 – Introduction to Contract
Part 3 – Tort
Part 4 – Agency
Part 5 – Business entities
Introduction to Legal Rules
Moral Rules
Rules of Nature
Religious Rules
Legal Rules
Moral Rules
Smoking?
Drugs?
Hand phones in the Cinemas?
Pre marital sex?
Abortion?
Homosexuality?
Adultery?
Rules of Nature
Gravity
Temperature
Biological
Religious Rules
Pray 5 times a day
Make offerings
Bible
Koran
Legal Rules
Drugs
Abortion
Murder
Promissory Estoppel
Creator of rules
Moral
Religious
Nature
Legal
MAN or GOD ?
Conclusion
Rules determine how we do things and explains why we do things;
It also helps us ensure things are done in a particular way
It is legal rules that we so often refer to as law
Sources of Law
In this part of the lecture we determine who makes legal rules
Sources of Law
Parliament
Common law
Parliament
Democratically elected
Makes rules according to the will of people
Unshakable
“What parliament does no body on earth can undo”
Common Law
Decision of the Courts
System called “Binding Precedent”
Judges decisions through a court hierarchy
Doctrine of Precedent
Judge in a higher court binds Judge in a lower court
Ratio Decidendi – reason for the decision
Obiter Dicta – statements made by the way
Rules of Interpretation
Literal rule
Golden rule
Mischief rule
Ejusdem Generis rule
Role of Judges
Decide on facts
Interpret rules
Make rules?
Conclusion
Legal rules are made by parliament and by the courts through a complex system of interpretation and application
Part 2 - Contract
A rule to facilitate commercial transactions;
To ensure parties deliver their promises;
Overview
Formation
Vitiating factors
Terms
Discharge
Remedies
Formation
Tells us whether there is a contract between parties;
Requires 3 basic elements –
- Agreement
- Consideration
- Intention to create legal relationship
Agreement
Determines if parties minds met
Whether there was a “consensus ad idem”
Derived by determining that an offer was accepted
What is an offer?
Willingness of the offeror to be bound;
His intention is crucial
Offer could be :-
- Unilateral (to the whole world)
Case : Carlil v Carbolic Smoke Ball Company (1892)
- Bilateral (to a specific party)
Offer differentiated from Invitation to Treat
Differentiated by intention;
Intention in a ITT is to solicit for a offer
Intention in an offer is to be bound
Examples of ITT
Advertisements
Case : Partridge v Crittenden (1968)
Shop display
Case : Fisher v Bell
Self service stores
Case : Pharmaceutical Society of GB v cash Boots Chemist (1952)
Provision of information
Case : Harvey v Facey
Lapse of offer
Can be withdrawn anytime before acceptance
Case :Byrne v Van Tienhoven (1880)
Dickinson v Dodds (1879)
Upon rejection
Upon lapse of prescribed time
Upon lapse of reasonable time
Death of offeror
Acceptance
Person accepting must be aware of offer
Case : R v Clarke
Cross offers do not constitute an agreement
Case :Tinn v Hofmann (1873)
- Acceptance must be unqualified
Communication of acceptance
Must be communicated unless:-
-Waiver
-Silence (agreed)
-Postal rule applies
Case : Adams v Lindsell (1818)
Entores v Miles Far East Corporation (1995)
Consider : Electonic Transaction Act
Consideration
Is the price of the promise
Contract operates on a quid pro quo basis
Consideration - time
Executory – promised but not performed (valid)
Executed – promised and performed (valid)
Past – promised after contract (invalid)
Case: Roscola v Thomas (1842)
Pau On v Lau Yiu Long (1980)
Consideration – must move from promisee
This rule stipulates consideration must move from the party wishing to enforce the promise
He has to be a party to the contract
Contract (Third Party Rights) Act
Case : Tweedle v Atkinson (1861)
Consideration – sufficient not adequate
Contract rules not concerned with the adequacy of the bargain;
Consideration must be sufficient
Insufficient Consideration
Moral obligation
Case : Eastwood v Kenyon (1840)
Vague promises
Case: White v Bluett (1853)
Existing public duty
Case:Glassbrook Brothers v Glamorgan CC
(1925)
Existing private duty
Case:Stilk v Myrick (1809)
Williams v Roffey Brothers (1991)
Consideration – Rule in Foakes v Beer
Payment of lesser sum in satisfaction of greater sum (invalid consideration)
Case : Foakes v Beer (1884)
Exception – Promissory estoppel
Case :High Trees v Central London
Properties (1947)
Intention to create legal relationship
Distinguishes legal contract from informal social domestic contract
The test is the intention of parties
Presumption
Social Domestic ( no ITC)
Case :Merrit v Merrit (1970)
Commercial (always ITC)
Case : Edwards v Skyways (1964)
Conclusion- Formation
In this part of the lectures we have seen how a contract is formed.
A contract improperly formed is not enforceable.

Lesson Plan - Commercial Law

Hi,

This is the lesson plans for the respective classes. Please remember to bring your textbook to class.

Good luck.


Marketing – Commercial Law
25th January 2011 – Introduction

8th February 2011 – Formation

15th February 2011 - Terms

17th February 2011 – Terms/ Vitiating Factors

22nd February 2011 – Vitiating Factors

8th March 2011 - Discharge

11th March 2011 - Remedies

15th March 2011 - Negligence

22nd March 2011 - Revision


Accountancy – Commercial Law


9th Feb 2011 - Introduction

16th Feb 2011 - Formation

23rd Feb 2011 - Terms

2nd March 2011 – Terms/Vitiating Factors

9th March 2011 – Vitiating Factors

16th March 2011 - Discharge

23rd March 2011 - Remedies

30th March 2011 - Negligence

6th April 2011 - Revision