Definition:

A false statement of fact made by one party to another that induces them to enter the contract.

Elements:

1. False statement of existing fact or law, not opinion or intention (Bisset v Wilkinson [1927]).

2. Made to the other party.

3. It induced the other party to contract (Attwood v Small [1838]).

Types of misrepresentation:

• Fraudulent – made knowingly or recklessly false (Derry v Peek [1889]).

• Negligent – made carelessly without reasonable grounds (Misrepresentation Act 1967, s.2(1)).

• Innocent – made with reasonable belief in its truth.

Remedies:

• Rescission (setting aside the contract).

• Damages, depending on the type:

  • Fraudulent: all losses directly caused.

  • Negligent: as if fraudulent, under s.2(1) Misrep Act.

  • Innocent: discretionary damages under s.2(2) or rescission only.

Definition:

A mistake occurs when one or both parties misunderstand facts or terms at the time of contracting. It can make the contract void (no contract ever formed) if it destroys true agreement.

Categories:

• Common mistake – both parties make the same mistake about a fundamental fact (Bell v Lever Bros [1932]).

  • Rare; must make performance impossible.

• Mutual mistake – both parties misunderstand each other (Raffles v Wichelhaus [1864] – “Peerless” ships).

• Unilateral mistake – one party is mistaken, and the other knows or ought to know (Hartog v Colin & Shields [1939]).

Mistake as to identity:

If one party’s identity is crucial, the contract may be void (Cundy v Lindsay [1878]), but not if parties deal face-to-face (Phillips v Brooks [1919]).

Definition:

Duress occurs when one party enters a contract because of threats or illegitimate pressure, removing their free will.

Types:

• Duress to the person (Barton v Armstrong [1976]) – threats of physical harm.

• Duress to goods (The Siboen and The Sibotre [1976]) – threats to property.

• Economic duress – unlawful commercial pressure (The Universe Sentinel [1983]).

Requirements:

1. Illegitimate pressure,

2. Causation – the pressure induced the contract,

3. Lack of reasonable alternative.

Effect: Contract is voidable; the innocent party can rescind.

Definition:

Undue influence arises when one party uses relationship-based pressure to gain an unfair advantage. It protects individuals whose consent is not freely given but shaped by trust, dependence, or authority.

Categories:

• Actual undue influence – clear evidence of coercion (Williams v Bayley [1866]).

• Presumed undue influence – certain relationships automatically raise a presumption (e.g. solicitor–client, doctor–patient, parent–child).

Key Case: Royal Bank of Scotland v Etridge (No 2) [2001] – confirmed banks must ensure independent advice where potential undue influence exists.

Effect: Contract is voidable; remedy is rescission, subject to equitable limits.

Definition:

Contracts that involve illegal acts or conflict with public policy are void and unenforceable.

Examples:

• Criminal conduct (e.g. contracts to commit a crime).

• Contracts contrary to morality or statutory prohibition (Pearce v Brooks [1866] – hiring a carriage for prostitution was unenforceable).

• Contracts in restraint of trade (Nordenfelt v Maxim Nordenfelt Guns [1894] – valid only if reasonable).

Effect: Courts will not assist either party; money or property transferred may be irrecoverable.