Voidable Contract

 
Free «Voidable Contract» Essay Sample

The definitions of terms in the field of contract law are at times intriguing. The distinction between the various notions is often not clear to a significant proportion of people. The expression voidable contract is often confused with a void contract. According to Schaefer, the problem is a trifled issue that is, however, a widespread phenomenon. For instance, during a substantial number of cases in courtrooms, the complainants are usually astonished when a contract they thought to be void is, in reality, a voidable agreement. In numerous contractual disputes, the difference between the two terms becomes the center of focus. Schaefer affirms that there is limited attention paid by scholars on the nature of the distinction. The following paper explores voidable contracts due to duress, misrepresentation, and mistakes. The paper also surveys a case study of falsification.

A voidable contract is alternatively known as an unenforceable contract. The agreement is legally binding; therefore, it is implementable. A voidable contract must involve at least two distinct parties. It is a requirement that one of the participants in the agreement is obligated to the contractual terms stipulated in the deal. Consequently, there must be another party that is not bound by the contract. As a result, the party not obligated to the agreement is at liberty to terminate the pact, thus rendering it invalid. The termination of the deal is only viable before the other unbound participants perform their role. As a result, the terms of the contract are not enforceable. On the other hand, a void contract is an accord that is not tenable under the legal system.

Moreover, voidable contracts also entail scenarios in which an element in the terms is absent. The parties involved in the agreement can mutually agree to execute the stipulations. Additionally, there are treaties in which the conditions are not comprehensible. It is possible that one party has reservations on some of the terms. Again, upon approval of the parties, the contract can be enforced with the missing or ambiguous sections. In the two instances, it is paramount that the entities that are legally unbound give their permission for the execution of the deal. Consequently, a plausible definition of a voidable contract is an official agreement involving two or more parties that is rendered unenforceable due to various legal reasons.

There exist numerous rationales that make a contract considered as voidable. First, when one or even all the participants fail to reveal the required information, the deal becomes voidable. The second reason is when the pact was mistakenly signed. Additionally, if there is an instance of misrepresentation or any fraudulent behavior, then the unbound party may terminate the contract. The fourth basis for a contract to be unenforceable involves scenarios of duress. When a party was under undue influence from other individual to sign the deal, the pact can be annulled. Another reason that causes a contract to be voidable is if one o the parties is legally incapacitated to approve a contract. The incapacitation may stem from the participant being a minor, under the influence of alcohol, or even mentally unstable. Finally, in case of breach of contractual stipulations, the deal is rendered voidable.

Duress

It is imperative that all parties involved in any legal contract do so out of their personal volitions. The parties must freely commit themselves without any undue influence. Consequently, when an individual is either compelled or coerced to sign an agreement, then that contract cannot be enforced against such a person. Therefore, the contract is voidable. Duress is an unfair pressure that someone is subjected to so as to bully the individual into a contract. Without the pressure the party would not enter into such a deal. In essence, duress will deny an individual the opportunity to exercise his/ her free will. Duress entails coercion in either the physical or mental aspects. Some of the dimensions of the compulsion that causes a contract to be voidable include threats to cause physical harm, as well as to disgrace. Moreover, the intimidation may include causing an economic loss. The threats can be towards to the individual who is to sign the contract. Moreover, the threat may also be towards his/ her properties. Additionally, the intimidation may be towards any other person known to the coerced party. Some of the persons may include friends and families.

Misrepresentation

According to Weitzenböck, misrepresentation is a deceptive declaration of information that one party makes with the primary goal of having the other parties involved in the contract to agree to be participants in the deal. The misrepresentation occurs during the process of negotiations. It is likely that one party will provide details that may later turn out to be false. Consequently, the other parties may opt to set aside the contract. As a result, the pact becomes voidable.

Misrepresentation can take three different forms that are innocent, negligent, and fraudulent. An innocent falsification occurs if the party proves substantial basis as to why he/ she considered the information truthful. A negligent misrepresentation occurs when a person lacks sufficient grounds to establish the truth of the details provided. In the majority of the instances, it is very challenging to present the basis of the truthfulness. Lastly, a falsification is considered to be fraudulent if the person is completely aware that the information is wrong, yet the party affirms it is true. Moreover, instances where an individual doubts the accuracy of the information and even does not make an attempt to verify the information also constitute fraudulent misrepresentation. Due to misrepresentation, a contract becomes voidable. The party to whom the falsification was aimed at may opt to set aside the agreement. The judicial systems provide such remedies as rescission or compensation for the damages. However, there are instances where the option to rescind the deal is untenable.

Mistake

Within the context of contract law, a mistake is when a person incorrectly certifies a piece of information as accurate as well as correct, yet it was false. The wrongful certification can involve one or both participants concerned in the contract. Mistakes can be of two different types, mutual or unilateral ones. A mutual mistake occurs in instances where the people involved come to a point of cross purposes. It is a habitual inclination to carry out a non-termination of contracts due to mutual mistakes. The judicial systems often make attempts to remedy the agreement. The courts will employ an objectivity test. If an independent person can establish that the communication between the parties indicated a consistent understanding of the contract, then the deal is valid. Otherwise, the contract is rendered void.

A unilateral mistake occurs where only one participant is misguided. There are two categories of unilateral errors. First, the mistake can be due to the contractual terms. On the other hand, the mistake can be based on identity. On numerous occasions, an error due to individuality results from fraudulent misrepresentation.

Case Study

In 1991 there occurred the case of Royscott Trust versus Rogerson in the appellate court of England. The case file number was EWCA Civ 12. The defendant in the case was Rogerson while the claimant was Royscott Trust. The defendant provided falsified information concerning the particulars hire purchase sale to the Royscott Trust. Based on the operations of Royscott Trust, they provided money on the condition that there was payment of a deposit of twenty percent of the overall cost. Mr. Rogerson stated that the cost of the car was eight thousand pounds. Therefore, the deposit required was to be one thousand six hundred pounds. As a result, the amount that was advanced to Mr. Rodgerson was six thousand four hundred pounds. Moreover, Mr. Rodgerson, later on, defaulted on the payment thus breached the agreement stipulated on the hire purchase. Additionally, Mr. Rodgerson eventually sold the vehicle.

The plaintiff brought initiated the case against the defendant. Royscott Trust sought damages amounting to three thousand six hundred and twenty five pounds. The amount was the difference between the amounts advanced to Mr. Rogerson and the amount he had paid back prior to defaulting. The defendant disputed that his acts did not cause any loss. According to Mr. Rodgerson, he had obtained the title to the car at the cost of six thousand four hundred pounds.

The case in consideration is with regards to the law of misrepresentation, specifically the negligent type. The plaintiff did not make any attempt to verify the information that Mr. Rogerson had provided concerning the price of the vehicle. Moreover, the defendant also deliberately availed pieces of information that he knew were incorrect. Since the Uniform Commercial Code (UCC) law governs dealings in goods as well as material objects, the Royscott Trust vs Rogerson case falls under the UCC law.