The Factors That Can Invalidate a Contract - Essay Example

Task Discuss the Factors that Can Invali a Contract Introduction A contract could be defined as an agreement presenting a legal responsibility upon involved parties. A contract normally occurs voluntarily between different parties with intentions of creating legal obligations between them. The elements involved include ‘offer’ and ‘acceptance’ by competent parties, leading to the creation of ‘mutuality of obligation’. These elements might involve writing as a method for proofing legality of the process, though sometimes contracts could occur orally, through mutual understanding between involved parties. The requirement for proof of contact elements becomes essential in litigating instances when a party breaches the contract. The legal process following contract breach ultimately results in remedy for damages incurred upon the wronged party. The action of contract breach ultimately results in invalidation of contractual elements. Numerous factors contribute towards the invalidation of contracts agreed upon by different parties, voluntarily (Koffman and MacDonald, 75-9). Factors contributing to invalidation of contracts There are different legal ways through which contracts could be set aside. These include a contract being declared void, and it never coming into existence. A contract could also become voidable when one party declares the contract as ineffective form their own individual determination. The contract could also become unenforceable or ineffective. Unenforceability refers to situations where neither party could get remedy form courts upon breach, and ineffectiveness refers to court decision terminating contracts between different parties. These elements could be contributed by the factors discussed below. Misrepresentation This refers to situations where some parties make false statements and presents false information which makes other parties agree into the contract terms. Misrepresentation results in remedies of rescission or damages depending on the occurrence of misrepresentation. Misrepresentation can occur through words or conduct of one party implying falsehood, though not all elements of speech and conduct constitute misrepresentation within the setting of contract law (Gordon v Selico, 5). Misrepresentation can take place under three different conditions which include: Stating a fact falsely Directing the false statement to a party of the contract The statement inducing suing party into agreeing contract terms following the statement. Misrepresentation, therefore, occurs when a party appears to falsely induce another party into a contract by providing false or partial information, resulting in another party agreeing into the contract. The wronged party, therefore, lacks sufficient information and agrees without proof of the involved facts. Opinions held by parties, however, do not constitute misrepresentation as these remain opinions and not factual information regarding contract terms. There are different types of misrepresentation based on their occurrence; Fraudulent misrepresentation: This misrepresentation could be characterised by parties making representation intended to deceive others, and knowing the representation being as false. Fraudulent misrepresentation could constitute litigation under tort law within different legal frameworks. Negligent misrepresentation at common law: This misrepresentation occurs when parties make representations without reasonable information regarding the truth of information. This misrepresentation seeks to provide a remedy for situations where collateral contract or fraud cannot be proved. This commonly occurs where individual claim to possess special skills for performing various tasks, but fail to delivery as implied. Negligent misrepresentation under statute law: This commonly refers to misrepresentation stated under various legal statutes and litigation occurs according to the statute provisions. The parties involved must prove the presence of falsehood within the statement provident by the representing individual. Innocent misrepresentation: This commonly occurs without the knowledge of the individuals presenting contractual terms. While the individual makes the statements, he/she might have lacked information regarding the validity of the statement. This misrepresentation normally allows rescission, allowing parties to take positions within the contract. The judgement of misrepresentation remains based on the nature of innocence and incurred damage by claimant. Mistake A mistake could be defined as an incorrect understanding of contract terms which can be utilised in invalidating existing contracts. A mistake could result from an erroneous belief of contacting terms as being true. The type of resulting belief contributes towards mistakes being identified as mistakes of law or fact. A mistake of law occurs when parties enter into a contract with one party lacking sufficient knowledge of prevailing within a country. A mistake of fact occurs when parties enter into a contract, with existing mistakes to certain facts constituting the agreements. Under contract law, three types of mistakes exist. They include a unilateral mistake, mutual mistake and a common mistake. A unilateral mistake could be defined as one where a party becomes mistaken to the subject terms contained within a contract. These mistakes remain the most common among the existing mistakes, resulting in invalidation of contracts. This mistake occurs only when one of the parties becomes mistaken into the subject-matter of contract. During litigation, the sued party must prove as not taking advantage of the mistaken party. Contrary to the unilateral mistake, a mutual mistake occurs when both parties become mistaken on material facts relating to the contract. These mistakes never constitute rescission because parties meet regarding material aspects of contract and consequently fail to understand the terms involved. Within the components of this mistake parties commonly misunderstand the meaning of different elements presented by other parties. The parties make assumptions of meaning, consequently resulting in contractual problems following agreement of terms. A common mistake, on the other hand, occurs when contracting parties making the same mistake regarding contract facts. This mistake makes delivery of contract agreement impossible on both parties upon realisation of actual constituents and requirements, stipulated within the contract. The mistaken subject-matter renders the contract identity different from the agreed terms during the negotiation period of contract. During litigation facts regarding the mistake must be analysed. This seeks to differentiate mistakes resulting from legal mistakes and those resulting from ignorance. Duress Duress could be defined as threat made, ultimately compelling individuals into accepting contract terms. Duress normally negates an individual’s capacity for independent action regarding different situation and could become defence to unlawful actions performed by various individuals (Westen and Mangiafico, p. 900). For duress to become viable within the legal framework, certain requirements must become proved. Threat must entail severe bodily harm The implied harm must be greater than resulting damage The threat must be displayed as inescapable and immediate The defendant must have been involved in issuing identified threats Under contract law, duress could be categorised into two broad categories. One such category is the physical duress which involves physical threats made to individuals compelling them into signing contracts without their consent. This can be executed through death threats upon failure to sign contract, becoming duress to person (Westen and Mangiafico, 887). Physical duress can also be executed on goods, where one party holds goods belonging to another, seeking to compel the individual into agreeing contract terms. The second type of duress is the economic or pecuniary duress. This occurs when the wronged party is presented with no options regarding contract terms. This occurs where the only available option remains signing the contract; hence agreeing to contract terms without personal consent. Undue influence Undue influence refers to individuals taking advantage of their position, consequently resulting in compelling others towards agreeing contractual terms using their position of power. The remedy for undue influence within contract law remains rescission as minimal physical damages could be involved. The element of undue influence could be categorised into two categories; presumed undue influence and actual undue influence. Presumed undue influence occurs where influence can be presumed based on the existing relationship between involved individuals. This can occur, for example, in a case of patient signing contract agreeing to an operation being undertaken by a doctor. Presumption of undue influence could become observable because the doctor holds superior authority over patient regarding the validity of medical processes. The patient would be compelled because the doctor remains a professional and the patient cannot question the doctor’s decision. Actual undue influence, on the other hand, occurs when an individual proves existence of power imbalance during the time of making contractual agreement. Within this setting, presumption of influence remains a non-existent factor. Illegality This refers to cases where contracts might be based on conducting illegal operations. The illegality factors become valid when weighed against existing policies and regulations governing different operations. An individual agreeing to work for less than the required minimum wage would be termed as entering into an illegal contract. While the terms of contract might be agreed between parties, regulations could render the agreement illegal; hence, invalidating the contract. Under illegality, contracts become unenforceable because they contravene the law seeking to administer justice to wronged parties. Capacity The capacity for individual to become involved within binding legal agreements could become an invalidating factor for existing contracts. Children, for example, might not be allowed to enter into contracts regarding many matters, without the consent of guardians/parents. These minors cannot be held liable for breaching contractual agreements under various jurisdictions. These individuals lack the legal capacity to become parties to valid contract agreements; hence contract with such individuals could be termed as invalid, because of the legal capacity for involved individuals. Conclusion Contracts remain, legally binding agreements between involved parties until one party breaks the contractual agreements. This breaking becomes referred to contract breach upon the involved parties. Other than breaching of contracts, contracts could become legally invalid because of various elements involved in making the contracts. Courts could invalidate contracts through declaring them void, voidable, unenforceable or ineffective (Koffman and MacDonald, 157). The invalidation results from different contributing factors, including misrepresentation, mistake, duress, undue influence among others. These factors contribute to undesired termination of contract through one party experiencing damage from the agreements. The wronged party becomes entitled to damages from the defendant and sometimes rescission can be declared by the court. The remedy delivered follows objective analysis of the factors contributing towards invalidation of the contract. Works Cited Gordon v Selico. 1986. Koffman, L and E. MacDonald. The Law of Contract. Oxford: Oxford University Press, 2007. Westen, Peter and James Mangiafico. "The Criminal Defense of Duress: A Justification, Not an Excuse - And Why It Matters." Buffalo Criminal Law Review 6.2 (2003): 833-950. Read More