Question One: Types of Mistakes and the Types of Misrepresentation
A mistake in contract law forms the basis of invalidating and rescinding a contract. It can be defined as a faulty action, belief or term in agreement when the contracting parties are drafting or engaging in the contract. There are two different types of mistake that have been identified in common law, which form the basis of argument requiring interpretation of the contract from the court. These mistakes include the unilateral mistake and the mutual mistake, which is also referred to as common mistake. Establishing that there was a mistake in the contract makes the court render the contact as void ab initio, which means that the contract was void from the beginning. This would mean that the contract never existed.
When there is a unilateral mistake in a contract, only one party to the contract is mistaken, in regard to the terms and conditions or the subject matter of the contract. Unilateral mistake has two categories, which relate to terms of the contract and mistakes in regard to the identity of the parties. The remedy of the unilateral mistake is based on equity, where the affected party may rescind the contract or refute specific performance of the contract. When there is a mutual mistake in a contract, both parties are at cross purposes. This means that both parties to the contract are mistaken about similar material fact, which is within the contract. The remedy in a mutual mistake is based on court finding and applying an objective test, which would save the contract. However, under appropriate circumstances the parties to the contact can refuse specific performance and rescind the contract.
In contract law, misrepresentation is where one party makes a false statement of the facts in a contract to the other party, with the aim of inducing the other party into the contract. Misrepresentation can be classified into four and each classification with its own remedy.
- Fraudulent misrepresentation: In this case, one party to the contract makes a deceptive representation in knowledge that the statement is false. The remedy for fraudulent misrepresentation is rescission of the contract or the parties can find a remedy for the damages caused.
- Negligent misrepresentation: In this case, one party negligently makes a statement without reasonable basis of its truthfulness. The remedy in a negligent misrepresentation is rescission of the contract and damages in accordance with a tort of negligence.
- Negligent misrepresentation under misrepresentation: The remedies available for this misrepresentation are similar to those in fraud unless when the accused party releases the burden of proof. In this case, the damages are based on the tort of deceit, but not tort of negligence.
- Wholly innocent misrepresentation: In this case, one party to the contract makes a false statement but innocently so. The remedies available in this case are either rescission of contract with damages or indemnity instead of rescission of the contract under the discretion of the court according to the Misrepresentation Act of 1967.
Question Two
Distinguishing Duress, Undue Influence and Unconscionability
Duress
In contract law, a valid agreement or contract is based on parties acting on their own free will. Duress happens when one party to the contract is forcefully forced to enter into a contract through the use of violence or threat of violence. In this case, the contract is rendered voidable.
In duress, the effect and the aim is making the contract voidable, unless the injured party impliedly or expressly affirms the contract. Duress is equated to the tort of intimidation and the remedies would lie in damages of tort. However, it has not been determined whether, when an injured party affirms the contract is also entitled to damages. Good examples of duress are when a party to a contract may engage in blackmail, criminal prosecutions, and threats in bad faith and extortion to force the other party into the contract.
Undue Influence
Undue influence is based on equitable doctrine, when one party to the contract takes advantage of the position or power they have over the other party. Therefore, one party does not have the free will to bargain on the terms and conditions of the contract. When undue influence is established and proved the contract is voidable to the injured and innocent party. Undue influence is also classified into presumed and actual undue influence.
The remedy available in undue influence is rescission of the contract and damages do not apply in this case. For example, James goes to a car bazaar to buy a car due to its excellent condition and features. However, the car had a problem that affected its performance tremendously and salesperson gave James the wrong information to induce him to buy the car.
Unconscionability
In contract law, unconscionability is used in describing a defense against contract enforcement on the basis of presence of unfair terms to one party. For example, when a party to the contract is offered an unfair contract they will seek to rescind the contract on the basis of inadequate consideration.
Unconscionability remedies include refusing to enforce the contract, removal or refuse to enforce the offending clause. The court has great flexibility when dealing with uconscionability as it may also take other measures deemed necessary in ensuring fair outcome. For example, when a customer has to pay cash to an organization’s agent to receive services offered by the organization.
Question Three: Description of the Types of Assignment
An assignment in contract law can be defined as the transfer of one party’s contractual rights another party, not within the contract. The party which transfers its contractual rights is referred to as assignor and the third party to which the rights are transferred to is referred to as assignee. Assignments in contract law are classified into two, which include equitable assignments and statutory assignments. In addition, each of the assignment classifications has two classifications of a thing or chose in action
When an assignment does not fulfill the statutory criteria of legal assignment it is referred to as an equitable assignment. Equitable assignment is made into a way, which include;
- When the assignor informs the assignee the rights or a right to contract has been transferred to them.
- In addition, the assignor can communicate and inform the other party to the contract to discharge their obligation to assignee.
In an equitable assignment, only the benefit of the agreement is assigned to the assignee and does not require written agreement or notice. The only major difference between a legal assignment and an equitable assignment is that, in legal assignment, the other party can bring an action against the third party.
Statutory assignment was established in response to streamlining procedures applicable to various assignments. They were established to ensure that the assignor is little involved in the contract, and the other party can bring an action to the third party. There are various requirements for establishing a legal/statutory assignment. These include;
- Complete assignment, such that the assignor assigns full rights to assignee and no balance is payable to assignor.
- The assignment must be unconditional, such that the assignment is fixed and cannot be varied with time.
- A statutory assignment must be done in writing to avoid the need of seeking assignor’s testimony in confirming the facts of the assignment.
- A notice of the assignment is given to a promisor in writing to ensure knowledge of the promisor about the assignment.
A statutory assignment can only be made only after meeting the above outlined criteria.
