The Blip Blop Blog (Team Entity)

There are certain contracts which are known as contracts of good faith and the most common example of these type of contracts would be insurance policies whereby the party taking out or purchasing the policy is required to divulge personal details without concealing or hiding any facts. Failure to divulge the necessary information will allow the other party to rescind the contract without recourse to damages. The principle in Latin is called “Uberrimae Fidei”. In Carter v Boehm (1766) the governor of Fort Marlborough in Sumatra took out an insurance policy with Boehm in the eventuality that the fort was attacked. The fort was built by the British East India Co. At the time the policy was taken out there was a possibility that the fort may be attacked on two fronts – by the inhabitants of the island and the French who were keen to exert their authority in the area. Both conflicts revolved around different issues. The locals were trying to take back what was rightfully theirs and th

A mere statement of fact though it may sound like a misrepresentation does not in actual fact constituent or amount to a misrepresentation. In Bisset v Wilkinson (1927) the plaintiff purchased some land from the defendant for the purpose of sheep rearing. The land had never before been used for the intended purpose but during the negotiations the defendant had told the plaintiff that he thought that the land may be able to support up to 2,000 heads of sheep. As it turned out the land was unsuitable for sheep farming and the plaintiff sued. The court held that a misrepresentation must be distinguished from a mere statement of fact. With the sale of certain items, unless the defendant professes to have special knowledge in the area, as in the case of Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965) – where the defendant professed to have specialized knowledge of Bentley cars, it is difficult for either party to know the outcome. It was decided that there was no misrep

Misrepresentation is a false statement that has induced another party to enter into a contract. In Curtis v Chemical Cleaning and Dyeing Co. (1951), the plaintiff took her wedding dress into the dry cleaners to be cleaned. She was then asked to sign a document and when she queried the defendants as to the terms in the document, she was told that it exempted the defendants from being liable for the loss of beads or sequins, when in fact the document exempted the defendants from liability for any damage done to the dress. When the plaintiff went to collect her dress, she realized that there was a stain on it that wasn’t there before. The plaintiff brought an action against the defendants and her claim was successful because she was misrepresented as to the nature of the document that she was signing. In most instances or under most circumstances a person is bound by the terms of an agreement he or she has signed, unless of course, there was misrepresentation, fraud or some other s

There are a few factors that influence a court’s decision when it comes to determining if a mistake had been made or otherwise. The mistake must precede the contract i.e. the mistake must be made prior to the contract coming into existence or before the contract is entered into. In Amalgamated Investment & Property Co Ltd v John Walker & Sons Ltd (1977) the seller sold the buyer a warehouse knowing that the buyer intended to redevelop the property. A day later the Department of Environment designated the property a listed building – a mechanism that is used to protect buildings of historic importance or significance. The buyer brought an action in court to render the contract void on the grounds that a mistake had been made. The court held that there was a valid and enforceable contract. At the time the parties entered into the contract neither of the parties knew that the building was to become a listed building. The mistake must have induced the party to enter into the c

Vitiation Vitiation occurs when the parties in a contract reach an agreement based on facts or circumstances that are non-existent for example as in instances of mistake, illegality, duress, undue influence, and misrepresentation. Mistake When deciding whether there has been a mistake or otherwise the courts will apply the objective test and will not look at the matter from the perspective of the contracting parties but rather from the perspective of the man on the Clapham omnibus or the common man. Mistakes can be divided into three different categories: - 1.     Common mistakes 2.     Mutual mistakes 3.     Unilateral mistakes Common Mistakes Common mistakes occur when both the contracting parties make the same mistake. In Griffith v Brymer (1903) the plaintiff had entered into an oral agreement with a landlord to view the coronation procession from the landlord’s premises. The procession did not take place as intended and the plaintiff sought to recover the money

There are four ways in which a contract can come to an end. They are as follows – 1.     When a contract expires or expiration 2.     Termination 3.     Vitiation 4.     Frustration Expiration A contract expires or meets a natural demise when all the terms in the contract have been fulfilled or complied with. Let’s say for example that Alex contracted to supply Fred with 10 tonnes of coal on the 1st of June and the delivery was to be made by the 30th of June. On the 15th of June, Alex delivered 10 tonnes of coal to Fred’s residence and was reimbursed accordingly. The contract has ended or has run its course and no further action needs to be taken by any of the parties in the contract. Termination A contract can be terminated when there has been a breach. A breach of a condition for example allows the innocent party to terminate the contract. A breach of contract can be divided into actual breaches and anticipatory breaches. Actual Breach An actual breach occurs whe

The impact of a term depends on the importance that is attached to it and from the perspective of the courts terms can be either express or implied, oral or written and can be divided into the three following categories: - i) Conditions ii) Warranties iii) Innominate Terms Conditions Conditions are terms of paramount importance. In Poussard v Spiers (1876), the plaintiff an opera singer of some note was contracted by the defended to perform at an opera but a week prior to the opening, she fell ill and the defendants subsequently had her replaced. Once the plaintiff had recovered she contacted the defendants wanting her spot back but the defendants refused stating that the contract had been terminated. The plaintiff sued. The court held that, the plaintiff’s performance on the stipulated date was a condition in the contract and therefore the defendants were entitled to terminate the contract. In Bunge Corp. v Tradax Export SA (1981) the contract concerned the sale and pur