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Date Created: 03/08/16
[VITIATING FACTORS] ILLEGALITY Statutory illegality 3) Licence: a) (Legal) the purpose of licence is merely to raise revenue b) (Illegal) the purpose is to protect the public interest Case law • General rule: 1) A contract tainted with illegality is void and not enforceable. 2) No party may claim on an illegal contract. Contracts in Restraint of trade • restrict a person from carrying out his trade, business or profession 1) Restraints on employees – Employment contracts * not work for a competitor of the employer * not set up a rival business in a specified location for specified period. To be enforceable i) To protect some legitimate or proprietary interest Lansing Linde Ltd v Kerr (1991) ii) Reasonable. (Duration, space, scope test, geographical limitation) iii) Not against the public interest (monopoly is against) Thomas Cowan v Orme (1961), 2) Restraint on sale of business British Reinforced Concrete Engineering Co Ltd v Schelff (1921) To be enforceable i) There’s a legitimate interest to protect e.g. business goodwill. ii) Reasonable. (Duration, area of restraint, the scope of restraint) 3) Severance “blue pencil” test. Removal of the void part of a contract from the rest of the contract. MISREPRESENTATION Sue for misrepresentation: 1) False statement of existing fact or past event a) • opinion is not actionable Bisset v Wilkinson (1927) • unless he has expertise or special knowledge Smith v Land & House Property Corporation (1884) b) • Existing fact not future intention Edgington v Fitzmaurice (1885) 2) In the course of negotiation (i.e. prior to contract formation); 3) He was induced to enter into contract by statement. a) The false statement need not be the sole inducement Edgington v Fitzmaurice (1885) b) no inducement if he did not rely on the statement Attwood v Small (1838) c) he has generally no duty to verify the statements Redgrave v Hurd (1881) 4) He relied on the statement and altered his position by entering into contract. Silence not a representation Keates v Lord Cadagan (1951) Exceptions: a) change of circumstances made representation untrue, failure to disclose is a misrepresentation - With v O’Flanagan (1936) b) half-truths - Dimmock v Hallett (1866) c) utmost good faith e.g. insurance; d) fiduciary relationship: in contract of Partnership, partners owe fiduciary duties to each other. Types of Misrepresentation 1) Fraudulent Misrepresentation: can claim, can rescind 2) Negligent Misrepresentation: can claim, can seek rescission 3) Innocent Misrepresentation: cannot claim, can rescind