A)The impact of misrepresentation, mistake, duress and undue influence Essay

A)The impact of misrepresentation, mistake, duress and undue influence on the validity of a contract.b)The circumstances in whic - Essay Example For a statement to be actionable misrepresentation, it must satisfy several requirements: it must be a statement by one party of a contract, to the other party. A misrepresentation by a third party, as a general rule, shall have no effect to the contract. The statement must have been of an existing fact or law, but not an opinion (Bisset v Wilkinson). Finally, the misrepresentation must have formed part of the reason why the claimant entered into the contract. The effect of misrepresentation in a contract generally, is that it makes the contract voidable at the option of the innocent party. That is, the contract remains valid, but may be set aside by the innocent party. However, the remedy available to the innocent party depends on the type of misrepresentation. There are three types of misrepresentation: Innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation. Once one has established presence of misrepresentation, the next course of action is to det ermine the type of misrepresentation in order to determine the remedy available. There are several remedies available. The contract may be rescinded under the common law; damages may be recovered under the Misrepresentation Act 1967: the tort of deceit can provide further avenues to claim damages. Rescission is available for all types of misrepresentation. Rescission involves returning the parties to their pre-contractual position, as though the contract was never entered into; any party that has already gained benefit is required to make it up for the other party. The injured party may rescind the contract by giving notice to the injured party or by any act evidencing rescission. However, rescission is an equitable remedy, given at the discretion of the court. Some things act as a bar to rescission. They include where the injured party affirms the contract by, with full knowledge of misrepresentation, they expressly state they wish to proceed with the contract. Secondly, where the innocent party fails to take action within a reasonable time, the equitable right is lost. Finally, the court will not order rescission if restitution in integrum is impossible: that is, the parties cannot be restored to their original positions. Secondly, the injured party may recover damages under the tort of deceit. This happens if there is fraudulent misrepresentation. Additionally, for negligent misrepresentation, the injured party may recover under the tort of negligent misstatement. In Royscott v Rogerson [1991] 2 QB 297, it was held that the principle of fraudulent misrepresentation under the tort of deceit also applies to negligent misrepresentation. The purpose of damages is to restore the innocent party to their pre-contractual position. The injured party recovers all the direct loss incurred as result of the fraudulent misrepresentation. If there is innocent misrepresentation, the remedies available is rescission or damages in lieu of rescission. The innocent party canno t claim both. Mistake Mistake exists when one or both parties to the contract believe that an event or a condition exists when in reality it does not. One of the key requirements of existent of a contract is that the parties must be at consensus ad idem, that is, both parties must have a uniform understanding on the terms of the contract. Mistake negates the presence of a common mind understanding meaning that