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In English law, a voidable contract is a valid agreement that can be affirmed or rejected (rescinded) by one of the parties due to specific issues affecting consent.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When rescinded, parties are restored to their original positions, as if the contract never existed.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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Mr Lewis sold his car to a rogue who fraudulently impersonated the film actor Richard Greene. The rogue then sold the car to Mr Averay, an innocent purchaser. The Court of Appeal held that the contract between Lewis and the rogue was voidable for fraud, not void for mistake, so...
Caldwell sold his Jaguar to Norris, who paid with a worthless cheque and absconded. Caldwell immediately informed police and the AA to trace the car. The Court of Appeal held that where a fraudulent buyer deliberately absconds, the defrauded seller can rescind the contract without communicating directly with the fraudster,...
Armstrong, chairman of Landmark Corporation, threatened to have Barton, the managing director, killed unless he executed a deed purchasing Armstrong's shares. The Privy Council held that a contract may be avoided for physical duress even if the threats were not the main reason for entering the agreement. Facts Alexander Barton...