ImageUGANDA CHRISTIAN UNIVERSITY

 

NAME:        LUWAGGA  ALLAN

 

REG NO:     BSIBII/375

 

 “Once the parties to a contract are adults, the courts should enforce a contract as valid. After all, this is an era freedom of contract and laissez faire.” Per LLB I student. Discuss the truthfulness of this statement with the aid of relevant authorities and in light of the vitiating factors of a contract.                                                            (30 Marks)

Introduction

A person is said to have contractual capacity at attainment of age 18 years and the law presumes that he or she is adult. However for law to grant him or her freedom of contract, the party must be of sound mind.[1] A person is said to be of sound mind if at the time of contracting he understood the contract or that he or she was capable of forming a rational judgement as to its effects upon his or her interests.[2]

A person who is of unsound mind is deemed in law incapable of exercising freedom of contract or free consent. Likewise a party to a contract may be of adult age, sound mind but failures to exercise free consent or that the consent was obtained through coercion, fraud, misrepresentation mistake of fact. It is at this point that court employs vitiating factors to remedy the innocent party if they are pleaded.

Definitions

Freedom of contract is doctrine to the effect that people have a right to bind themselves legally in contracts.it is also a judicial concept that contracts are based on a mutual agreement and free choice and this choice shouldn’t be hampered with.[3]

Vitiating factors of a contract are terms capable of influencing the consent of a party to a contract even when he or she didn’t really intend to consent to the contract.[4]

Vitiating factors of a contract.

It is believed that if parties are of adult age and sound mind they have freedom of contract and can also exercises free consent, however if the aggrieved party protests that he or she wasn’t at consensus ad idem or non est factum court will deem that their wasn’t ascent to the contract or that it was obtained through a mistake, misrepresentation, duress, undue influence this makes the contract void ab intio or voidable according to circumstances. Among the Vitiating factors of a contract include illegality, misrepresentation, duress and undue influence but I will first deal with a mistake.

1       Mistake.

A mere statement ‘I have made a mistake’ can’t affect the validity of a contract because court can’t save a person from a disastrous economic agreement, it is deemed that the party respected caveat emptor and took due diligence in exercising his freedom of contract.[5] Therefore the plaintiff must prove that;

a)      That it was a mistake of fact and not an erroneous opinion. If successful court will render the contract or agreement void ab intio.[6] Therefore mere puffs can’t be regarded a mistake as lord denning held that it is’ mere sales talk’.[7]

b)      The alleged mistake must have affected an essential element of the agreement especially subject matter.[8] This can arise if the subject matter is no longer owned by either parties ,it is therefore logical as house of lords held that’ you can’t sell what doesn’t belong to you’. [9] Subject matter can also mean the way the goods are to be transported if parties are at cross road on such a fact court will conclude that there was no contract due to absence of ad idem.[10]

c)      The party must prove that the mistake influenced her or his consent and that had he or she known it to be a mistake he wouldn’t have consented to the contract.

Mistakes can also be manifested in signed documents where a party ascent to a document due to a misrepresentation from a superior party or that he or she is illiterate and incapable of understanding what is in writing. Court may employ the doctrine of non est factum if it is pleaded and this also renders the consent and the contract void ab intio.[11] Tthere are also common and mutual mistake as I have discussed above.

2       Misrepresentation

3       A misrepresentation is a misleading or untrue statement of fact that induces the other party to enter into the contract.[12] But not every misleading statement amounts to a misrepresentation, the plaintiff must prove the following;

a)      The untrue statement was party of the contract and it induced him or her to enter the contract. Once a misleading untrue statement of fact is made after the contract has been concluded it can’t therefore be relied on as a misrepresentation because it didn’t induce the party to contract.[13]

b)      The statement must have been of fact. A statement of opinion can’t be a misrepresentation as early discussed in a mistake. Court deems a statement of an expert even when untrue, a fact because the other party trusts the expert. A statement made by a professional sales man to an innocent buyer is of fact and can be relied on as a misrepresentation.[14] A party without prior experience in a particular field his or her statements can’t be misrepresentations.[15] Therefore a statement of law can’t amount to a misrepresentation because the law deems that ignorance is no defence.[16]

c)      The statement must have induced the party to enter into the contract. It only makes sense when a party‘s consent was influenced by the misrepresentation and hadn’t it been that statement the party wouldn’t have entered into the contract.[17]

Their exists different types of misrepresentations that include;

a)      Fraudulent misrepresentations. It is one which is made knowing to the person who makes it to be untrue[18]. Prove of fraudulent statement should be a companied by evidence to establish that the person who made the statement knew that it wasn’t right[19]. Possible remedy here is rescission of the contract so that parties return to their original positions as if they hadn’t contracted or award of damages of the party that suffered loss due to the statement.

b)      Negligent misrepresentation. It is an untrue statement made by a superior party who should have the knowledge in believing it but he or she doesn’t.[20] if a tenant was influenced to take lease of a petrol station acting on a statement of an experienced salesman in the field viewing future returns and the party doesn’t get returns he can sue successfully.[21]

            

4       DURESS

This is means that the consent of a party was obtained through actual threats of violence or actual threats of bodily harm to the contracting party; this may also include threats to life.[22] Accordingly threats of violence to the family of one contracting party can also amount to duress. A direct threat to kill a party if he doesn’t ascent amounts to duress and therefore it is set aside.[23]  For duress to succeed the plaintiff must prove the following;

a)      That some kind of pressure was exerted on the contracting party.it can be actual pressure or economic pressure. If parties early agree to perform a contract on a specific charge, a request by the other to increase the charge amounts to economic stress.[24]

b)      That the pressure induced the claimant into the contract.

c)      The claimant had no choice but enter the contract

d)     The claimant protested at the time or shortly after the contract.

If duress is successful it renders the contract voidable and may be rescinded.

5       Undue influences.

This is some kind of pressure exerted on a claimant to consent to a contract without actual violence. It can be manifested in relationships like, parent and child[25], religious adviser and disciple[26], doctor and patient[27], trustee and centuique trust[28] and lawyer client[29]. The contract will be set aside unless it is proved that it was also to the disadvantage of the defendant[30].

Once party to a contract doesn’t exercise freedom of contact, regardless of his contractual capacity in particular age, the contract will be vitiated.

BIOLOGRAPHY

BakibingaD,J. contract: law of contract in Uganda (Kampala: fountain publishers, 2001)

Hodgin.R.W.contract; law of contract in east Africa (Nairobi: Kenya literature bureau)

 

 

[1] Contracts act 2010, section 11.

[2] Contracts act, section 12

[3] Black law dictionary pg 689 8th edition

[4] Free online legal dictionary dictionary

[5] Tamplin v. James [1927]  All E.R Rep. 676

[6] Contracts act section 17.

[7] Dimmock v. hallet (1866) L.R.2 Ch. App.21.

[8] Supra 6

[9] Couturier v. Hastie (1852) 8 Exch. 40.

[10] Raffles v. wichelhaus (1864) 2 H and C 906.

[11] Foster v. MacKinnon (1869) L.R.C.P. 704.

[12] D.J.Bakibinga contract: law of contract in Uganda (Kampala: fountain publishers, 2001), 64.

[13] Roscorla v.thomas (1847) 2 Q.B.234.

[14] Harling v. eddy [1925] 2 K.B.739,746

[15] Bisset v.wilkinson [1977] A.C.177.

[16] Rashdall ford (1866) L.R.2 Eq.750.

[17] Edginton v.fitzmaurice(1885) 21 CH.D 459.

[18] R .w.Hodgin.contract; law of contract in east Africa (Nairobi: Kenya literature bureau),115.

[19] Derry v peek (1889) 14 App. Cas.337.

[20] Supra Law of contract in Uganda, 68.

[21] Esso petroleum co Ltd v mardon[1976] Q.B.801

[22] Supra  Law of contract in east Africa ,130.

[23] Barton v.Armstrong (1976) A.C.104.

[24] Atlas express v.kafco,.Uganda tanks hips of Monrovia v international transport workers federation (1982) 2 ALLER 67.

[25] Ottoman bank v. mawani [1965] E.A.464.

[26] Allicard skinner (1887) 36 Ch.D.145.

[27] Dent v. Bennett (1839) 4 My 269.

[28] Ellis v. barker (1871) L.R.7Ch.App.104.

[29] Wright v. carter [1903] 1 Ch.27.

[30] National west minster bank PLC v. Morgan [1985] A.C.686.

 

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