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21 Cards in this Set
- Front
- Back
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What does it mean when there is a defect in the consensus of one of the parties? |
Both parties are in agreement but the consent of one of the parties is defective. Defect can be due to misrepresentation; duress or undue influence |
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How does misrepresentation influence the validity of a contract? |
It renders a contract voidable. |
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What is a misrepresentation? |
-It is a false statement of fact made by one party to another, -with the intention of causing the other party to enter into the contract, -and which does actually cause him to enter into the contract
These are pre-contractual statements ; made during negotation. |
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What are the the three types of misrepresentations? |
-fraudulent misrepresentation -negligent misrepresentation -innocent misrepresentation |
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What are the different forms in which misrepresentation can occur whether it is fraudulent, negligent or innocent misrepresentation? |
1. Verbal or written misrep 2. Misrep by conduct 3. Misrep by silence (non disclosure) General rule in SA is that there is no duty to speak or disclose information but there are exceptions |
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What are the exceptions to the general rule in SA law that there is no duty to speak or disclose information? |
5 exceptions: a. Where the person has been told a half truth and creates a misleading impression b. Where he has, by his conduct, prevented the other party from discovering the true state of affairs c. Where he has by an earlier statement or conduct given the other party a certain impression and circumstances have changed. d. Where the facts are in exclusive knowledge of one party e. Common law rule that a seller must disclose latent defects (defects that are not obvious) |
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What are the basic requirements for misrepresentation to render a contract voidable? |
1. The misrepresentation was a false statement of fact. 2. The misrep did not induce the contract i.e. a causal misrep (caused other party to contract) 3. Misrep was made by the other party to the contract |
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What are the relevant factors to consider when determining whether a misrepresentation was a false statement of fact? |
- was statement made in answer to direct question? Then probably fact -did the maker of the statement know it was important to the other party - then fact? -would a reasonable person think it was fact, puff or opinion? |
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What is a casual misrepresentation? |
A person would not have contracted at all - it renders a contract voidable. |
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What is an incidental misrepresentation? |
The person would still have contracted or contracted on less favourable terms = not voidable |
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What are the consequences of misrepresentation ? |
1. Contractual remedies -applies to all types of misreps -if all three requirements are met, then contract is rendered voidable = person can rescind contract or uphold contract. 2. Delictful Damages - a delict is a wrongful act that causes harm (financial loss) -deals with negligent or fraudulent misreps |
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When will common law apply in misrepresentation? |
If seller isnt acting in ordinary course of business or if the party isnt a consumer (juristic person with annual turnover of more than R2m then the usual common law will apply, otherwise CPA will apply |
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When does the CPA apply? |
When supplier is acting in ordinary course of business, and/or dealing with consumer which is a natural person or juristic person with an annual turnover of R2m or less |
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Explain misrepresentation under the CPA: |
1. Misrep by words, conduct or silence is not allowed 2. There is a general duty to speak in all circumstances, seller must disclose all facts. 3. Opinions will render a contract voidable. |
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What are differences between common law and the CPA? |
CPA -fraudulent; innocent; negligent -general duty to disclose all info -misrep can also regard an opinion Common law -no general duty to speak except exemptions -misrep must be regarding a statement of fact |
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What is the difference between fraudulent, negligent and innocent misrepresentation? |
Fraudulent - the person knows that the statement of fact is untrue - they have no believe in the truth of the statement Negligent - the person does have a belief in the truth of the statement but they have been careless and don’t check the facts like a reasonable person would. The information is incorrect. They have been careless in not verifying info. Innocent - misrep without fraud and without being careless. |
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Are there any damages that can be claimed for an innocent misrep in common law? |
No, there cant be a delictual damages But there can be an option of cancelling contract. If it was negligent misrep then there can be damages. |
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What are the damages that can be claimed by a incidental misrep? |
If misrep is incidental, the contract is still valid (not voidable - only voidable if misrep was causal) -but there is the possibility of damages if misrep was fraudulent or negligent |
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When will a contract be voidable on the basis of duress in common law? What are the 5 requirements? |
1. It was a threat of considerable evil (harm) to a person (including his reputation/ personality), his family or property 2. The threat of harm must be immediate or inevitable 3. The threat must have induced the person to enter into contract or to contract on leas favourable terms 4. The threat must be unlawful or contra bonos mores 5. The fear must be reasonable |
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What are the requirements that will render a contract voidable on the basis of duress in the CPA? |
- supplier must not use physical force against consumer or any similar conduct -supplier must not take advantage of physical or mental disability, illiteracy, ignorance, inability to understand |
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Explain undue influence under CPA |
Supplier must not use coercion or similar conduct -should not take advantage |
