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Six Contract Vitiating Factors

There are six vitiating factors that can invalidate a contract:

 

Misrepresentation: It is a false statement of fact or law which induces someone to enter into a contract. The false statement must be a major factor leading the person to enter into a contract. It does not matter even if the representee could verify but he did not do so.

 

Mistake: It is a factual error or erroneous belief held by one or both contract parties. The contract is void if both parties enter into a contract under a factual mistake that is fundamental to the contract.Illegality — contracts that are tainted with unlawful elements are not enforceable, e.g. a contract to commit fraud. A party should not be permitted to recover damages that arise from his own illegal or immoral conduct.

 

Duress: It arises where a person enters into a contract as a result of violence, threat, coercion, or other pressure. So long as a threat is just one of the reasons a person enters the contract, even if not the main reason, the contract is voidable.

 

Undue influence: It is power used to push a person in a weaker person into making a decision which would not otherwise have been made. It operates where there exists a relationship between the parties which has been exploited by one party to gain an unfair advantage. Any contract formed under this situation is voidable.

 

Restraint of trade: A contractual undertaking not to trade may be void and unenforceable against the promisor as contrary to the public policy of promoting trade, unless the restraint of trade is reasonable to protect the interest of the purchaser of a business.

 

Incapacity: It refers to the mental ability of a contract party to enter into legally binding relations. If a party does not have the capacity (i.e. of full age and sound mind) to do so, then subsequent contract is voidable.


You can learn more about this topic with our Contract Law notes.

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