BUSN7052 Chap.8 Vitiating Factors and Genuine Consent
Vitiating Factors and Genuine Consent
A contract can be properly formed and still be set aside because consent was not genuine. This chapter covers misrepresentation and its fraudulent, negligent and innocent forms, the narrow doctrines of common, mutual and unilateral mistake, rectification and non est factum, and the unfair-dealing grounds of duress, presumed and actual undue influence and unconscionable conduct under Amadio.
It also explains illegality, the statutory claim under the ACT Wrongs Act, the ACL provisions on unconscionable conduct and unfair terms, and the bars to rescission.
What this chapter covers
- 01
Four elements and three types of misrepresentation
- 02
Silence, half-truths and changed circumstances
- 03
Common, mutual and unilateral mistake
- 04
Duress and presumed or actual undue influence
- 05
Amadio special disadvantage and guarantees
- 06
Rescission, its bars and illegality
Worked example · free
Two yellow excavators and two different beliefs
- +1Each party held a different belief, so this is mutual mistake, not common or unilateral mistake.
- +2The court asks objectively whether a reasonable person could say what was agreed.
- +1As with the two ships named Peerless in Raffles v Wichelhaus, nothing identifies one machine, so there is no objective agreement.
- +1No contract was formed.
Key terms
- Misrepresentation
- A false statement of fact that induced the other party to enter the contract.
- Rescission
- Setting a contract aside and restoring the parties to their pre-contract positions.
- Special disadvantage
- A condition, such as illiteracy or illness, that seriously affects a person's ability to protect their interests.
- Non est factum
- A narrow defence for a signer who, without carelessness, signed a document radically different from what they believed.
- Economic duress
- Illegitimate pressure on a party's commercial interests that induces a contract.
Vitiating Factors and Genuine Consent FAQ
What makes a misrepresentation fraudulent rather than innocent?
Fraud requires that the maker knew the statement was false, had no belief in its truth, or was reckless about it. An innocent misrepresentation is made with an honest belief on reasonable grounds. The difference matters because fraud supports damages as well as rescission, while innocent misrepresentation at common law supports rescission only.
Does a mistake about value let me escape a contract?
Usually not. A mistake about quality, such as believing a painting is by a famous artist, does not make a contract void, as Leaf v International Galleries shows. Common mistake must go to the existence of the subject matter, and unilateral mistake matters only if the other party knew and took advantage.
How is undue influence proved?
In presumed cases, a relationship of trust and confidence such as solicitor and client or religious leader and follower shifts the burden to the stronger party to show the transaction was freely entered, often through independent advice. In actual cases, the weaker party must prove domination of their will, as Thorne v Kennedy illustrates.
Why did Kakavas lose against Crown?
The High Court found he was not under a special disadvantage when gambling, and even if he had been, Crown had not exploited it. Amadio requires all three elements, so a claimant who cannot show special disadvantage and unfair exploitation cannot rescind for unconscionable conduct.
Exam move
Start with a trigger list, because vitiating factors are recognised from facts: a false statement points to misrepresentation, a shared or private error to mistake, a threat to duress, a relationship of trust to undue influence, and a vulnerable party dealing with a knowing stronger party to unconscionable conduct. Practise naming the trigger in one sentence before choosing the doctrine.
Then learn each doctrine's elements in order: the four misrepresentation elements, the three mistake categories, Amadio's three elements, and the Petelin requirements for non est factum. For remedies, keep a short card with the bars to rescission and the statutory alternatives, s 177 of the ACT Wrongs Act and the ACL, because problem questions often run past the point where rescission is still available.
Guarantee scenarios recur in past papers; practise one with a vulnerable guarantor and one with a capable business person in a close relationship, and explain why the second may lack a special disadvantage. Finally, compare undue influence and unconscionable conduct side by side, writing which facts go to the weaker party's will and which go to the stronger party's conscience.
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