What factors can undermine an apparently valid contract, and what is their effect?
Vitiating factors: misrepresentation (fraudulent, negligent and innocent), its requirements (a false statement of fact that induces the contract) and remedies (rescission and damages), and an outline of other vitiating factors such as duress and economic duress.
An Eduqas A-Level Law guide to the vitiating factors in contract. Explains misrepresentation (fraudulent, negligent and innocent), its requirements and remedies, and other vitiating factors, with worked scenario answers and the AO2 application the paper rewards.
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What this dot point is asking
Eduqas contract requires you to know the vitiating factors that undermine an apparently valid contract, focusing on misrepresentation: its requirements (a false statement of fact that induces the contract), its types (fraudulent, negligent and innocent), and its remedies (rescission and damages), plus an outline of other vitiating factors such as duress. The skill is to apply the law to a scenario (AO2) and to evaluate it (AO3).
The answer
What is a misrepresentation
Silence and the exceptions
The general rule is that silence does not amount to a misrepresentation (Smith v Hughes): there is no duty to disclose. But there are exceptions: a half-truth (a statement true as far as it goes but misleading by omission), a change of circumstances that falsifies an earlier true statement before the contract is concluded (With v O'Flanagan), and contracts of utmost good faith (uberrimae fidei) such as insurance, where material facts must be disclosed.
The three types and their remedies
Rescission, its bars, and other vitiating factors
Rescission is an equitable remedy that unwinds the contract and restores the parties to their pre-contract position. It is barred where the claimant has affirmed the contract, where there has been undue lapse of time (Leaf v International Galleries), where restitution is impossible, or where an innocent third party has acquired rights in the subject matter. Other vitiating factors (which the spec treats more briefly) include duress, the use of illegitimate pressure to force agreement (including economic duress, The Atlantic Baron; Pao On v Lau Yiu Long), and undue influence, the abuse of a relationship of trust.
Examples in context
A strong answer establishes the misrepresentation, classifies its type, and matches the remedy, watching for the bars to rescission.
Try this
Q1. Explain the three types of misrepresentation and the remedies for each. [10 marks]
- What the marker wants. Precise AO1: fraudulent (Derry v Peek, rescission and tortious damages), negligent (s2(1) Misrepresentation Act 1967, reversed burden, rescission and damages), and innocent (rescission, damages in lieu at discretion under s2(2)).
Q2. A gallery honestly tells a buyer a painting is by a famous artist, having reasonable grounds, but it turns out to be a copy. Advise the buyer on the remedy available. [20 marks]
- Cue. An AO2 application: this is an innocent misrepresentation (an honest statement on reasonable grounds); the remedy is rescission, subject to the bars (affirmation, lapse of time, Leaf v International Galleries), with damages in lieu possible at the court's discretion under s2(2).
Exam-style practice questions
Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Eduqas Component 2 2022 (scenario)20 marksA seller tells a buyer that a car has 'done only 20,000 miles', having taken no steps to check the odometer, which has in fact been altered. The buyer relies on this and buys the car, which has done 100,000 miles. Advise the buyer on a claim in misrepresentation. [a scenario in the style of Component 2; the real paper tariff is 25, AO1 and AO2]Show worked answer →
A mainly AO2 scenario on misrepresentation.
A misrepresentation. The statement is a false statement of fact (the mileage), not opinion or sales puff (Bisset v Wilkinson contrasts with Smith v Land and House Property; here it is a factual assertion). It induced the buyer (he relied on it, Attwood v Small), and silence is not in issue.
Type. Did the seller believe it? He took no steps to check, so it is at least negligent under s2(1) Misrepresentation Act 1967 (the seller cannot show reasonable grounds for belief; the burden is reversed, Howard Marine). If he knew the truth or was reckless, it is fraudulent (Derry v Peek).
Remedies. Rescission (setting the contract aside and returning the parties to their pre-contract position), subject to bars (affirmation, lapse of time, third-party rights, impossibility of restitution), plus damages, measured generously for fraud and under s2(1) on a tortious basis (Royscot).
A top answer establishes the misrepresentation, classifies its type, and states the remedies, applying the cases.
Eduqas Component 3 2021 (essay)20 marksAnalyse and evaluate the law on misrepresentation. [an essay in the style of Component 3; the real paper tariff is 25, AO1 and AO3]Show worked answer →
A mainly AO3 essay. Explain the types and remedies, then evaluate the law.
The law. A misrepresentation is a false statement of fact inducing the contract. Fraudulent (Derry v Peek): made knowingly, without belief in its truth, or recklessly; rescission plus tortious damages. Negligent: under s2(1) Misrepresentation Act 1967 (the burden is on the maker to show reasonable grounds, Howard Marine) or at common law (Hedley Byrne). Innocent: rescission, with damages in lieu at the court's discretion under s2(2).
Evaluation. Strengths: the law protects parties misled into contracts and offers a range of remedies; the reversed burden under s2(1) helps claimants. Weaknesses: the boundary between fact and opinion is uncertain (Bisset; Smith v Land and House); the rule that silence is not a misrepresentation can be harsh; the measure of damages under s2(1) (Royscot's fraud measure) is criticised as too generous; and the bars to rescission are technical.
A top answer explains the types and remedies and evaluates the coherence and fairness of the law, then concludes.
Related dot points
- Formation of contract: offer and acceptance (including invitations to treat, the postal rule and revocation), consideration (sufficiency, adequacy and past consideration), and the intention to create legal relations.
An Eduqas A-Level Law guide to the formation of a contract. Explains offer and acceptance, the postal rule, consideration and the intention to create legal relations, with worked scenario answers and the AO2 application the paper rewards.
- The terms of a contract: express and implied terms (including statutory implied terms), the classification of terms (conditions, warranties and innominate terms), and exclusion clauses and their statutory controls.
An Eduqas A-Level Law guide to the terms of a contract. Explains express and implied terms, conditions, warranties and innominate terms, and exclusion clauses and their controls, with worked scenario answers and the AO2 application the paper rewards.
- Discharge of contract: discharge by performance (and the softening doctrines), by agreement, by breach (actual and anticipatory), and by frustration (impossibility, illegality and radical change, and the consequences under the Law Reform (Frustrated Contracts) Act 1943).
An Eduqas A-Level Law guide to the discharge of a contract. Explains discharge by performance, agreement, breach and frustration, and the consequences of frustration, with worked scenario answers and the AO2 application the paper rewards.
- Remedies for breach of contract: the aim and measure of damages (expectation loss, causation, remoteness under Hadley v Baxendale and mitigation), liquidated damages and penalties, and the equitable remedies (specific performance and injunction).
An Eduqas A-Level Law guide to the remedies for breach of contract. Explains the aim and measure of damages, causation, remoteness and mitigation, liquidated damages and the equitable remedies, with worked scenario answers and the AO2 application the paper rewards.
- The evaluation essay (AO3): structuring a balanced argument, analysing strengths and weaknesses, using examples, cases and reform proposals, and reaching a reasoned conclusion.
An Eduqas A-Level Law guide to the evaluation essay (AO3). Explains how to structure a balanced argument, analyse strengths and weaknesses, use examples and reform proposals and reach a conclusion, with worked examples and the technique the Component 3 paper rewards.
Sources & how we know this
- Eduqas A Level Law (A150) specification — WJEC Eduqas (2017)
- Misrepresentation Act 1967 — UK Parliament (1967)