Question 1

Where parties to a contract are mistaken about the existence of an essential fact,this type of mistake is classified as:

Accepted Answer

A common mistake in contract law occurs when both parties hold the same incorrect belief regarding a fundamental fact that is essential to the contract. This type of mistake can render a contract void if the mistaken belief goes to the heart of the agreement.

Question 2

A contract is void if a person can prove that the agreement they signed was fundamentally different from the one they believed they were signing.Which of the following statements are true in relation to this rule?

Accepted Answer

D

Question 3

Where the parties to a contract misunderstand each other regarding the details of a fact that is essential to the contract,this type of mistake is classified as:

Accepted Answer

A mutual mistake occurs when both parties to a contract have a shared misunderstanding about a basic fact that is essential to the contract. This type of mistake may result in the contract being voided or reformed to reflect the parties' true intent. Unilateral mistake, on the other hand, occurs when only one party to a contract is mistaken about a key fact, which usually does not provide grounds for voiding or reforming the contract. Mistakes regarding the nature of the contract document and common mistakes are not relevant to this scenario.

Question 4

Mori advertised to sell his scuba diving equipment.A person who resembled Tom Cruise and spoke with an American accent came to Mori's house and convinced Mori that he was the actor.Mori accepted a cheque for the equipment.Five days later,when the cheque proved to be a forgery,Mori contacted the police.They discovered that the fake Tom Cruise had sold the equipment to an innocent third party two days after obtaining it from Mori.Under common law,the most likely result is that:

Accepted Answer

Under common law, the contract between Mori and the impersonator is voidable because Mori was deceived into making the contract under false pretenses. However, if the impersonator sells the goods to an innocent third party before the original contract is voided, the third party can obtain good title to the goods. This is because the law aims to protect innocent third parties in transactions. Therefore, Mori's best chance for compensation would indeed be to try to sue the impersonator, assuming he can be found.

Question 5

A partially blind elderly lady is tricked into signing a contract for expensive repairs to the roof of her house.She believed she was signing an approval for the roof to be inspected.Under common law if she wants to avoid the contract she will have to rely on:

Accepted Answer

Non est factum is a defense that can be used by a party who has signed a contract under a fundamental mistake. In this case, the elderly lady was tricked into signing a contract under the mistaken belief that she was signing a document for a roof inspection, not expensive repairs. As she was partially blind, she would not have been aware of the true nature of the document she was signing. Therefore, she can use the defense of non est factum to avoid the contract. Choice A) mutual mistake and choice D) common mistake are not applicable in this scenario as the mistake was made by one party only. Choice B) non podere credere is not a recognized defense under common law.

Question 6

Under common law,the tests that a plaintiff must satisfy in a fraudulent misrepresentation action include:

Accepted Answer

Under common law, for a fraudulent misrepresentation action to succeed, the plaintiff must prove that they suffered a loss due to the representation (A), and that the representor was either knowingly untruthful or recklessly indifferent about the truthfulness of the representation (B). Issuing a disclaimer (C) is not a required element for establishing fraudulent misrepresentation.

Question 7

Under common law,if both parties to a contract are mistaken about the quality or value of the subject matter of the contract,the most likely result is that:

Accepted Answer

In cases where both parties are mistaken about the quality or value of the subject matter of the contract, the contract remains valid unless the mistake was induced by one party or there is a fundamental mistake about the subject matter. This is known as a non-fundamental mistake or a mutual mistake, which does not invalidate the contract.

Question 8

In which of these relationships is there a presumption that undue influence exists?

Accepted Answer

The relationship between a solicitor and client involves trust and confidence, and there is a presumption of undue influence because the solicitor has a position of authority and can potentially take advantage of the client's vulnerability. This presumption can be rebutted by showing that there was no actual undue influence, but the burden of proof rests with the solicitor to prove this. The other relationships listed do not necessarily involve a presumption of undue influence.

Question 9

A was persuaded to buy B's exercise equipment because of fraudulent misrepresentations by B.This contract is most likely to be

Accepted Answer

This contract is most likely to be voidable because A was persuaded through fraudulent misrepresentations by B, which means A was not fully informed and did not make a voluntary decision to agree to the contract. As a result, A has the option to cancel the contract and seek remedies for the fraud.

Question 10

The difference between innocent misrepresentation and fraudulent misrepresentation is that:

Accepted Answer

Innocent misrepresentation is when there is no intention to mislead, while fraudulent misrepresentation is when there is an intention to mislead.

Question 11

Where there is a common mistake,both parties are mistaken about a fact that is:

Accepted Answer

A common mistake that affects the essential part of the contract is when both parties are mistaken about a fact that is necessary for the contract to be valid. It means that the contract cannot be enforced because both parties were unaware of a key element required for the agreement to be legally binding. This mistake is different from mistakes based on opinions, knowledge, or information that is uncertain or variable.

Question 12

A entered into a contract with B when she was under the undue influence of B.The common law view is that A has not:

Accepted Answer

Undue influence occurs when one party takes advantage of another's vulnerability or trust in order to influence them to enter into a contract. In this situation, A's consent to the contract is not genuine, as it was influenced by B's undue influence. While A may have given consideration and intended to enter the contract, these factors do not negate the effect of undue influence on the validity of the contract. Understanding all the terms of the contract is also not necessarily relevant to the issue of undue influence.

Question 13

In Barton v Armstrong,it was proved that Armstrong had made death threats against Barton.Consequently,the High Court held that contracts Barton had entered into with Armstrong were void on the grounds of duress. The court also held that:

Accepted Answer

In Barton v Armstrong, the court held that a contract could be voided on the grounds of duress even if the duress was not the sole reason the 'innocent' party entered into the contract. This means that the presence of duress, even alongside other factors motivating the agreement, can invalidate a contract.

Question 14

In an action for undue influence,defendants may be obliged to prove they did not obtain a benefit by exploiting their special relationship with the plaintiff.In which of the following relationships does the law presume that this special relationship exists?

Accepted Answer

The law presumes a special relationship exists between a doctor and patient, where the doctor has a duty of care towards the patient and has access to confidential information. This duty and access could potentially be exploited for undue influence. The other relationships do not typically carry the same level of trust and vulnerability, and thus the presumption of a special relationship does not apply.

Question 15

If both parties to a contract misunderstand each other regarding an essential fact the contract is:

Accepted Answer

When both parties to a contract misunderstand each other regarding an essential fact, the contract is void because of mutual mistake. This means that both parties were mistaken about the same thing and therefore, there was no meeting of the minds on an essential element of the contract. As a result, the contract is considered to be void from its inception.

Question 16

In Allcard v Skinner,the court held that a former sister in the Church of England could not recover gifts she had passed to the church as a result of undue influence because:

Accepted Answer

The court held that the plaintiff could not recover the gifts because she had not taken action within a reasonable time after leaving the church and realizing the undue influence.

Question 17

Persons who have been induced (persuaded)to enter a contract by an innocent misrepresentation often prefer to sue for negligent misstatement.The advantage of an action for negligent misstatement is that:

Accepted Answer

The advantage of an action for negligent misstatement is that damages are available. While the plaintiff still needs to prove that the statement was false or misleading, and that they suffered a loss as a result of relying on the statement, an action for negligent misstatement allows them to seek damages rather than being limited to rescission.

Question 18

Non est factum is a defence used by persons who want to void a contract.In plain English,the term means:

Accepted Answer

Non est factum means "it is not my deed", implying that the individual did not fully understand or know what they were signing. Therefore, B is the correct answer. A, C, and D do not accurately represent the meaning or use of non est factum.

Question 19

Under common law,if one party enters a contract because of duress the contract is:

Accepted Answer

If a party enters a contract because of duress, the contract is not illegal, but it is voidable. This means that the party who was subject to duress can choose to either enforce the contract or avoid it (cancel it).

Question 20

Where one party is mistaken about a term of the contract and the other party is aware of the mistake but does nothing to correct it,the result is that:

Accepted Answer

In this scenario, all the statements apply: there is no genuine agreement because one party is under a misconception about a key term; it's a unilateral mistake since only one party is mistaken; and typically, the contract would be considered void because the mistake goes to the heart of the agreement and the other party knowingly took advantage of the mistake.

Quiz 13: Genuine Consent