Copyright Guy Harley 2004 Mistake. Copyright Guy Harley 2004 Mistake A party cannot get out of a...
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Transcript of Copyright Guy Harley 2004 Mistake. Copyright Guy Harley 2004 Mistake A party cannot get out of a...
Copyright Guy Harley 2004
Mistake
Copyright Guy Harley 2004
Mistake A party cannot get out of a contract because
they made a mistake Exceptions:
Mistake due to other party’s misrepresentation, unconscionable conduct etc.
Common mistake Mutual mistake Unilateral mistake
Copyright Guy Harley 2004
Mistake Common mistake
Both parties make the same mistake
Mutual Mistake An objective test
Unilateral Mistake One party is mistaken as to a fact; and Other party is aware of the mistake
Copyright Guy Harley 2004
Misrepresentation
Copyright Guy Harley 2004
Elements of Misrepresentation The statement was false The statement was one of fact Statement was addressed to the representee
before or at the time that the contract was entered into
The statement induced the representee to enter into the contract See Attwood v Small (Outline p 8-8)
Copyright Guy Harley 2004
History 1880’s – Caveat Emptor – Let the buyer beware Court of Equity
Relief for fraudulent misrepresentation Rescission was only remedy
Common Law Courts Relief for innocent misrepresentation only if it
became a term of the contract Tort of negligent misrepresentation Only remedy was damages
Copyright Guy Harley 2004
History 1970’s – Statutory Reform
S52 Trade Practices Act & s11 Fair Trading Act Removed distinction between fraudulent, negligent
and innocent misrepresentation Built upon previous law regarding
misrepresentation
Copyright Guy Harley 2004
Action for misleading or deceptive conduct (breach of TPA s 52, Fair Trading Act or
ASIC Act)
Action for damages for tort
of deceit (fraud)
Action for damages for
tort of negligence
common law misrepresentations
statutory misrepresentations
Causes of action for misrepresentation
Action for breach of contract
contract law
Copyright Guy Harley 2004
Categories of Misrepresentation Fraudulent misrepresentation
Representor knew it to be false or was reckless as to whether it was true or false
If Representor believed it to be true, no action for fraudulent misrepresentation even if negligent
Copyright Guy Harley 2004
Fraudulent misrepresentation (deceit)
Liability for fraud cannot be excluded Remedy for fraudulent misrepresentation is damages.
of fact was made (beware
Step 1 A false representation
promises, opinions or a mere puffery)
Step 2 The representation was
intended to (and did) induce the representee to
act ; (eg, by creating a contract)
Step 3
The representor knew the statement was
untrue, or was reckless as to its truth
Copyright Guy Harley 2004
Categories of Misrepresentation Negligent Misrepresentation
Representor owed a duty of care to representee Representor failed to exercise the required
standard of care Loss, which was a reasonably foreseeable
consequence of the misrepresentation, was caused by misrepresentation
Originally restricted to cases where there was a physical loss – now can claim for pure economic loss – Hedley Byrne v Heller
Copyright Guy Harley 2004
Negligent misrepresentation
Liability for negligence can be excluded by an exemption clause
Remedy for negligence is damages.
Did the representor owe a duty of care to the representee?
Step 1
Has the representor failed to exercise the required standard of
care?
Step 2
Were the representee’s losses caused by the
negligence and were the losses reasonably
foreseeable?
Step 3
Copyright Guy Harley 2004
Categories of Misrepresentation Innocent misrepresentation
Representor did not know it was false and owed no duty of care to the representee
No remedy at common law or equity
Copyright Guy Harley 2004
Categories of Misrepresentation Misleading & Deceptive Conduct
Section 52 Trade Practices Act No need for fraud or negligence
Copyright Guy Harley 2004
Misleading & Deceptive Conduct Section 52 Trade Practices Act
‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’
Section 9 Fair Trading Act ‘A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’
Copyright Guy Harley 2004
Misleading & Deceptive Conduct No requirement for:
Fraud; or Negligence
Will not be liable if: Not the source of the information; and Disclaims responsibility
Copyright Guy Harley 2004
Remedies for Misrepresentation Common Law
Recission Contract is void ab initio Not the same as termination
Damages Trade Practices Act
Recission, damages, injunctions
Copyright Guy Harley 2004
Duress, Undue Influence and
Unconscionable Conduct
Copyright Guy Harley 2004
Duress A contract entered into due to coercion or
force can be rescinded by the victim Coercion can be:
To the person; To goods; or Economic duress
Copyright Guy Harley 2004
Duress (cont.) Duress to the Person
Actual or threatened Violence or Unlawful imprisonment
to the person, his family or friends Duress to Goods
Threats that are made against a person’s property
Copyright Guy Harley 2004
Duress (cont.) Person threatening violence must show that it
was not a contributing cause to victim’s decision to enter into the contract
Violence must occur at or before the time that the victim entered into the contract
Copyright Guy Harley 2004
Economic duress An economic threat that is not “legitimate” No rule that that commercial parties have to
be fair to one another A threat to break a contract can be economic
duress A lawful threat may be illegitimate
Copyright Guy Harley 2004
Undue influence The unconscionable use by one person of
power possessed by him over another in order to induce the weaker party to enter into a contract
Presumed in special relationships and where one party is in a position of dominance or confidence
Copyright Guy Harley 2004
Undue influence (cont.) There must be more than mere reliance or
influence Innocent party must show that the contract
would not have been made without the undue influence
Court will look at: The equality of the bargain The weaker party’s ability to make free and
independent choices Whether the weaker party received independent
advice
Copyright Guy Harley 2004
Undue influence (cont.) Court will presume undue influence for
contracts between: Parent and child Trustee & beneficiary Physician & patient Solicitor and client Guardian and ward Religious advisor and devotee Any fiduciary relationship
Tasker v Algar (Outline p 8-9)
Copyright Guy Harley 2004
Unconscionable Conduct One party takes advantage of the other parties
special disability to the extent that the contract is unfair or unconscionable Commercial Bank of Australia Ltd. V. Amadio [1983]
HCA 14 Louth v. Diprose [1992] HCA 61
Elements Special disability Absence of any equality between the parties Disability evident to other party
Copyright Guy Harley 2004
Unconscionable Conduct - Remedies Originally, only rescission was available s51AA Trade Practices Act and s7 Fair Trading Act
permits damagesA corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.
S82 Trade Practices Act & s159 Fair Trading ActA person who suffers loss or damage by conduct of another person … may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
Copyright Guy Harley 2004
Provision TPA ASICA FTA
Misleading or deceptiveconduct
52 12DA 9
Predictions 51A 12BB 4
Injunctions 80 12GD 149
Damages 82 12GF 159
Other remedies 87 12GM 158
Unconscionable conduct 51AA 12CA 7
Unconscionable conduct – consumers
51AB 12CB 8
Unconscionable conduct – small business
51AC 12CC 8A & 8B