The contract was
defective: it had a defect
from the outset, a
vitiating factor, making
it either void or
1. Misrepresentation: A
representation induces the
contract but is not a term
of the contract; it does not
form part of the contract
In equity: the innocent party can rescind the contract, whatever the state of mind,
which will restore both parties to the pre-contractual position.
Legislation: allows damages for a negligent misrepresentation and damages instead of rescission for an
In tort: damages for a fraudulent misrepresentation in the tort of deceit and for a negligent
misstatement in the tort of negligence. There are no damages for an innocent misrepresentation.
2. Duress: where a person enters into a contract because of violence or threats of violence. Undue influence:
improper pressure is put on someone to enter into a contract. For example, where there is a fiduciary
Non est factum: (for written contracts only) there is a mistake as to the
nature of the document
Mistaken identity: one party is mistaken as to the identity of the other
Common mistake: both parties are mistaken about the same thing.
Mutual mistake: the parties have misunderstood each other. As they
are at cross purposes, there was never any real agreement.
4. Illegality: these are contracts for criminal purposes, or
prohibited by statute, or against public policy or morality.
5. Contracts in restraint of trade: any contract that restricts trade is prima facie
void unless it is reasonable between the parties and not against the public interest.
The contract was a
valid contract: it is
Discharge brings a
valid contract to an
Discharge by performance
Performance: discharge by performance is the aim of a contract. Both
parties have done what was agreed. But that performance must be
complete, exact and precisely what was agreed.
substantial performance; -
contract is divisible rather than entire
Discharge by agreement
The contract ends automatically, or There is bilateral discharge where both
parties have not performed and exchange promises not to enforce the original
contract, or Unilateral discharge, where one party has performed, then
discharge requires accord and satisfaction (i.e. agreement and consideration).
Discharge by breach
Fundamental breach by condition
Anticipatory breach: Refusal to perform
announced before the date due for performance
Discharge by frustration
Destruction of the subject matter of the contract:
Inability to achieve the main object:
Changes in the law or governmental actions.
Death or permanent illness of a party
Remoteness of Damage
Damage must be "proximate"
the harm suffered must
arise naturally from the
nature of the contract
any indirect harm could
be reasonably foreseen by
the contract breaker
because at the time of
the contract he was
aware of special
would lead to additional
Rather than leave it to the court to decide, a contractual clause may
stipulate the amount of damages to be paid in the event of breach
clause: a proper, genuine
estimate of the potential
Penalty clause: to punish the
other party for breach. In
principle this is unenforceable
Quantum Meruit: "as much as he deserves"
Available where the
Available where one party
prevented the other party from
Specific Performance: An order to
make a party perform his
contractual obligations. (the court
must be able to supervise
Prohibitary: porhibiting somebody from doing something