Voidable contract CASES
In English law, a voidable contract is a valid agreement that can be affirmed or rejected (rescinded) by one of the parties due to specific issues affecting consent.
Definition and Principles
Voidable contracts initially create legally binding obligations but contain defects, such as misrepresentation, duress, undue influence, or minority, allowing the disadvantaged party to rescind if they choose.
Grounds for Voidability
- Misrepresentation: False statements inducing agreement.
- Duress: Improper pressure or threats.
- Undue Influence: Exploitation of trust or power imbalance.
- Minority: Contracts entered by minors.
Consequences
When rescinded, parties are restored to their original positions, as if the contract never existed. Affirmation makes the contract fully enforceable.
Practical Importance
Recognising voidable contracts protects parties from exploitation, allowing them to correct agreements compromised by unfairness or deception.
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A rogue impersonated a reputable person to obtain a ring from a jeweller with a false cheque. The court held the contract was voidable for fraud, not void for mistake, as the jeweller intended to contract with the person physically present. Facts A man named North entered the plaintiff’s (Phillips) jewellery shop and selected pearls and a ring. He identified himself as ‘Sir George Bullough’ and provided a corresponding address. The plaintiff verified the name and address in a directory and, believing the representations, allowed North to take the ring in exchange for a cheque. The cheque was subsequently dishonoured
Lewis sold his car to a rogue impersonating a famous actor, accepting a fraudulent cheque. The rogue sold the car to Averay, an innocent purchaser. The court held the initial contract was voidable for fraud, not void for mistake, so Averay acquired good title. Facts The claimant, Mr Lewis, a postgraduate chemistry student, advertised his Austin Cooper S for sale. A man, who was in fact a rogue, arranged to see the car and offered the asking price of £450. When it came to payment, the rogue produced a chequebook. Mr Lewis was hesitant to accept a cheque. To allay
Plaintiffs sold a car to a rogue impersonating another person, accepting his cheque only after verifying the identity in a directory. The rogue sold the car to an innocent defendant. The court held the contract was void due to mistake of identity. Facts The plaintiffs, three elderly ladies, advertised their car for sale. A rogue, introducing himself as ‘Hutchinson’, offered to buy it for £717. When he produced a chequebook, one of the plaintiffs stated they would not accept a cheque and the deal was off. To persuade them, the rogue gave his full name as P.G.M. Hutchinson and an
A car was sold to a rogue who paid with a fraudulent cheque. The original owner, upon discovering the fraud, immediately informed the police. This action was held to be a valid rescission of the contract, preventing title from passing to a subsequent innocent purchaser. Facts On 12th January 1960, Mr Caldwell, the defendant, sold his Jaguar motor car to a man named Norris. The sale was induced by fraudulent misrepresentation, as Norris paid with a cheque that was later dishonoured. Upon discovering the fraud the next morning, Mr Caldwell immediately reported the matter to the police and the Automobile
Facts Mr Barton was the managing director of a company, and Mr Armstrong was its chairman. Following a power struggle, Barton agreed to buy Armstrong’s shares in the company through the execution of several deeds. Barton subsequently sought a declaration that these deeds were void, alleging that he had been coerced into signing them by Armstrong’s threats to have him murdered. The trial judge found that Armstrong had indeed made death threats and that Barton had taken them seriously. However, the trial judge also found that Barton had entered into the agreement for what were considered sound business reasons, primarily
