This assignment will strive to outline points of law including identifying key vitiating factors, including duress and undue influence and illegality as well as forms of discharge of a contract and remedies for that. It will also apply these laws to the cases provided to illustrate the application of these laws. Vitiating factors represent some sort of defect in the formation of the contract. Examples of this are that the contract is based on a mistake or a misrepresentation. Illegality on the other hand, is much more to do with the actual character of the agreement itself.
It is of a type that the law frowns upon for some reason, for public policy or for other reasons it is not accepted as legitimate. CASE 1: ADAM V CYNTHIA With regards to Illegality the basic principle is that the law will not accept any contract that is tainted with illegality. This area of law is not necessarily straightforward though as contracts that have been declared void are numerous and diverse in their make-up. Also judges have been known to refer to contracts as ‘illegal’, ‘void’ or ‘unenforceable’ however they do not always distinguish the terms.
Some contracts are said to be void and therefore unenforceable meaning there is nothing that prohibits them being formed in a long as the parties involved adhere to the terms they agreed to and no problems arise, however if there is a breach the contract will have no remedy in law. Other contracts are said to be illegal and therefore unenforceable, with these there is a possibility they should not have been made at all and transactions connected with the agreement may be deemed illegal or tainted with illegality.
There are four groups of illegality Contracts void by statue Contracts declared illegal by state (further divided between contracts that are illegally formed and those illegal because of the way are/will be carried out) Contracts void in common law – influenced by public policy Contracts illegal in common law A contract which directly or indirectly promotes sexual immorality is illegal as highlighted in the case Pearce v Brooks 1866. In the case a prostitute hit on the idea of conducting her trade from hired carriages.
She was engaged in this activity with the full knowledge of the party from whom she hired the carriage. When she then failed to pay the fee owned the owner’s action for the price failed. The contract was for immoral sexual purposes and was known to be so by both parties. As a result, it was against public policy and was unenforceable. The question to Adam would be firstly whether or not he knew that she was a prostitute and also soliciting from her residence, his knowledge of just her being a prostitute would be significant in this case if going by the rule outlined in Pearce v Brooks.
The case outline states that the window was her front window, implying that this was also her residence. In this case if he was aware of the fact that she was a prostitute that does not necessarily mean the contract in itself was illegal if he didn’t know she was soliciting from that particular address in which he had repaired the window and enlarged it. In Appleton v Campbell 1826, the action was for the recovery of board and lodging in relation to a room rented from the claimant.
The court held that the claimant could not recover if he knew that the defendant was a prostitute and that she was using the room to entertain her clients. But ‘if the defendant had her lodgings there and received clients elsewhere, the claimant may recover, though she was a woman of the town, because persons of that description must have a place to lay their heads. ’ One could argue that though Adam may have known she was a prostitute he may not have been aware of the fact that her residence was used for clients as well.
However in light of Armhouse lee ltd v Chappel (1996), the case concerned magazines that included advertisements for sex lines and sex dating. The defendant failed to pay for the advertisements and the magazine sued for payment. The defendant won at first instance on the basis that the contract was illegal and unenforceable because of public policy. The claimants appealed successfully. The court of appeal held that it would be ‘undesirable in such a case, involving an area regarded as the province of the criminal law, for individual judges exercising a civil jurisdiction to impose their own moral attitudes’.
In light of this case, I think Adam would have a very strong and pretty straight forward case if he did not know she was a prostitute, however the courts are unlikely to prevent the enforcement of a contract where behaviour concerns to or involves a criminal offence going by the Court of Appeal judgement in Armhouse lee Ltd v Chappel. CASE: MARIA V MR MOHAMMED Transactions, either under contract or as gifts, may be avoided where they have been entered into as a consequence of the undue influence of the person benefiting from them.
The effect of undue influence is to make a contract voidable, but delay may bar the right to avoid the agreement. There are two possible situations relating to undue influence, where there is a special relationship and where one does not exist. Where there is a special relationship between the parties, there is a presumption that the transaction is the consequence of undue influence. The burden if proof is on the person receiving the benefit to rebut the presumption. Examples of special relationships are: Parent and child, while the latter is still a minor Guardian and ward Religious adviser and follower
Doctor and patient Solicitor and client The list above is not a closed one and there are other relationships that may be included within the scope of special relationship as in Re Craig 1971. Where a special relationship exists, then an important way in which the presumption of undue influence can be rebutted is to show independent advice was taken by the other party, although all that is necessary is to show that the other party exercised their will freely. Even where a special relationship exists, a transaction will not be set aside unless it is shown to be seriously disadvantageous.
In National Westminster Bank v Morgan 1985, when a couple fell into financial difficulties, the claimants bank made financial arrangements which permitted them to remain in their house. The re-financing transaction secured against the house was arranged by a bank manager who had called at their home. Mrs Morgan had no independent legal advice. When the husband died, the bank obtained a possession order against the house in respect of outstanding debts. Mrs Morgan sought to have the refinancing arrangement set aside, on the ground of undue influence.
The action failed, on the ground that the doctrine of undue influence had no place in agreements which did not involve any manifest disadvantage and Mrs Morgan had actually benefited from the transaction by being able to remain in her home for a longer period. However recent cases are beginning to question the requirement of manifest disadvantage before a contract can be avoided e. g. Barclays Bank Plc v Coleman (2001). The key element in deciding whether a relationship is special or not was whether one party was in a position of dominance over the other.
National Westminster Bank v Morgan also decided that a normal relationship between a bank manager and his client is not a special relationship, but there may be circumstances where that relationship may be treated as special e. g. Lloyds Bank Ltd v Bundy 1975. Based on these facts I believe Maria is not likely to be successful in her action against Mohammed under undue influence due to a special relationship. As it can now be established that the relationship between Maria and Mohammed is not a special one, the burden of proof would be on Maria as she would be claiming protection under undue influence.
For her to demonstrate that undue influence has indeed taken place she would need to show that there was a very real coercion. Not only this but the coercion must have amounted to a clear dominance to the extent that she was in fact unable to exercise her free will or act independently of the influence of entering the contract. Based on the case notes provided Maria is not likely to win action against Mohammed unless she can prove that she was coerced.