A Legally Enforceable Contract May Be Vitiated By Many Factors-Discuss With Examples – Assignment Example
INTRODUCTION TO COMMERCIAL LAW ASSIGNMENT Guo Junhao(Johnny) S8312057F A legally enforceable contract may be vitiated by many factors. Discuss with examples.
What is a contract?
A contract is an agreement between two or more parties, which is enforceable by law. For a contract to be form, the following must be presence. Contract may be made orally or in writing.
Offer and Acceptance
What is an Offer?
An offer is a promise, or other expression of willingness.
What is an Acceptance?
An offer is accepted by the unconditional and unqualified assent to its terms by the offeree.
Is something of ‘value’. Requested by the party making the promise and provided by the party who receives it.
Intention to Create Legal Relationship
The parties to an agreement intended to create legal bindings relations between them.
At law there are a number of factors which may prevent a contract from being legally enforceable. The main factors are as follows:
Explain as unsound mind and minors that have not reach a reasonable age to be responsible for their actions. Unsound mind means under a stage of mental disorder that a person unable to make decisions or judgement and do not understand the nature of the contract, Accordance to mental capacity act is does not matter if the impairment or disturbance of the function of mind or brain is permanent or temporary that lacks capacity to judge the consequences of their actions when enter into contract. For the case Rai Bahadur Singh & Bank of India(1993), has clearly identify that both plaintiffs enter the contract with the bank at the age of 18 & 19 years old to sign a letter of set-off, Which is still treated as a minor at that time, so the letter of set-off was void & null as the common law in Singapore set the age of majority at 21 years old.
This can be categorize in which form of law infringed, statues or common law. But the main focus on this factor is the restraint of trades. Statue has been made previously to make a contract unenforceable by both parties. And the court has started moving away from an approached where contract unenforceable by a guilty party, innocent party can enforce a contract to be illegal on account of an illegal consideration or has been misled by the nature of contract. Restraint of trade prevents a person from entering into a company of a same industries or restraint a party from getting employment. Restraint of trades can be found in employment contract and for the sales of business. In order for a contract to be valid and legal, it has to fulfil certain criteria:
-Legitimate interest of the covenantee: Legal consideration for the company to restraint an employee from exploiting trade secrets & company trade information to new employment. Trade secrets can constitute a legitimate interest.
-Reasonable in scope: Involves in 3 areas like activity, time and geographical. If restraint is more than a year is illegal, and the industries that involve must not be broad.
-Not contrary to public interest: Must not be against to public interest. Considerations must be given to the public interest & such agreements with the exclusive dealing agreements.
It is a false statement of fact by one party (representor) to another (representee) to induce (Influence) the representee to enter into a contract. No true consent if contract was entered due to mis-rep. It can be made in verbal or writing. But it exclude contract of sale made. Types of misrepresentation are as follows:
-Fraudulent: Dishonesty, False statement (Tort of deceit), Unless the party who makes the contract has shown that there is dishonesty on the contract.
-Negligent: Lack of care by the representor.
-Innocent: Error without fault.
But not all statements of induced are consider misrepresentation. If certain element was not found in the evidence of the statement. Then is not a misrepresentation.
Types of remedies to use for misrepresentation:
-Rescission: An equitable remedies to wipe out the existing contract prior to restore the parties to their situation prior to enter the contract. (abs initio)
-Damages: Monetary compensation (Allow for Fraudulent-Rep)
-Indemnity: An agreement for different parties to compensate for any damage or losses, an obligation to held another party responsible for loss or damage,
Void & Voidable Contract
Void: Invalid contract, No legal effect & not enforceable.
Voidable: Valid till rightfully terminated by either party.
Which is known as non est factum, relevant only at time of contract. No meeting of minds, This has been categorize into four types as follows:
-Common Mistake: Commit same mistake and accept it even knowing the fact.
-Mutual Mistake: Both commit different mistake.
-For common and mutual mistake: Both parties are mistaken.
-Unilateral Mistake: Mistake commit by only one party. Is an objective test taken.
-Non est factum: Not my deed.
At common law mistakes vitiates a contract such that it becomes ‘ab initio’.
The three other vitiating factors:
Duress: Enter the agreement under the constraint of threat or actual injury.
Undue Influence: Where an agreement has been obtain by certain kind of improper pressure.
Unconscionable Bargain: Any agreement which is manifestly inequitable.
Contractors for construction sites ‘wore several hats’.
The argument at first was that Mr. Tan and other clerks had been negligent. Furthermore there was a claim for breach of contract, against ANA Contractors. However, the High Court agreed only to the point that there had been breach of contract and went on to dismiss that Mr. Tan had been negligent. Other claims that are being faced are based in pollution caused by the company.
When the case reached the Court of Appeal, the claimant argued that Mr. Tan took money to allow dumping, which can be construed as illegality, as such behaviour would vitiate the contract and its legality. Furthermore, the plaintiff argued that the claim should be bought against subcontractors, which might be allowed on the basis of privity of contract.
There has been a misrepresentation on part of Mr. Tan whereby he claimed not to be an employee of ANA Contractors. Such an act may be argued as fraudulent, if it was made with the intent or if the words came out negligently, then it may be negligent misrepresentation. It is evident that one way or the other if it turns out that Mr. Tan had made the statement, then he would possibly face personal liability under one of the heads of misrepresentation. Finally, there can be a possible argument by Acres that they were mistaken as to the identity of Mr. Tan and therefore a claim under mistake can also be made. However, a claim under misrepresentation would be stronger when compared with mistake.