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• For immoral purpose, e.g. prostitution • Contrary to public policy, e.g. to restrict someone's liberty to work or trade ---contracts in restraint of trade ---such contracts are VOID unless the restriction can be shown to be reasonable to both parties involved and to the general public. ---Schroeder Music Publishing Company v MacAuley (1974)
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4.3 Misrepresentation
• Four types of misrepresentation Innocent Misrepresentation Fraudulent Misrepresentation Negligent Misrepresentation Concealment of Facts
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• Bluebell Apparel Ltd v Dickinson (1980) • Fitch v Dewes (1921) ---in some restrictive agreements there may be a number of restrictions listed. The court has the power to “sever” these restrictions and pronounce certain ones fair, certain ones void. The following case illustrates this: • Mulven v Murray (1908)
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4.1.3 three main types of restrictive covenants: Contracts between employer and employee Contracts between seller and purchaser of a business “Solus” agreement
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III. “Solus” agreements -----this type of agreement exists when a retailer or dealer binds himself to one particular manufacturer or supplier in return for favourable terms e. g. discount on goods. ---- garages and petrol company; pubs and breweries ---Esso Petroleum Co Ltd v Harper’s Garage (1968)
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a). Errors Relating to the Identity of the Parties
• An error concerning identity will make a contract void if the identity is important. • Morrison v Robertson (1908)
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b). Illegal by Common Law
A contract can still be illegal if there is no Act of Parliament to state that it is illegal. The following types of contract are regarded as being illegal at common law: • For criminal purpose, e.g. to murder someone • For fraudulent purpose, e.g. to defraud the taxman
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b). Errors Relating to the Subject Matter of the Contract
• Raffles v Wichelhaus (1864)
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c). Errors Relating to the Nature of the Contract
• Foster v MaKinnon (1869)
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a). Innocent Misrepresentation
• If the innocent misrepresentation causes an error in the substantial then it will mean that the contract is void • If the misrepresentation only concerns a minor detail then the contract is only voidable and usually the court will let it stand.
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ห้องสมุดไป่ตู้
---the court will still consider most of the factors mentioned previously with employees and employers ---Dumbarton Steamboat Company v MacFarlane (1899)
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4.2 Error
4.2.1 definition of Error ---no consensus in idem due to misrepresentation or mistaken about some important element of the contract ---the contract will be void if there is no “consensus in indem” (fundamental error) ---unilateral error will not affect the validity of the contract
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d). Errors Relating to the Price of the Contract
• Wilson v Marquis of Breadalbane (1859) • Woods v Tulloch (1893)
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• The general rule is: If there is an error in the substantial in the mind of one or both of the parties to the contract then the contract is void.
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4.1.2 types
a). Illegal by Statute • If an Act of Parliament provides that a particular type of contract is illegal then the contract will be void • Jamieson v Watts Trustees (1950)
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---the following factors will be considered when coming to a decision
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• Extent of the restriction in terms of area and population of the area • Extent of the restriction in terms of time • How common the business concerned is • The nature of the job the employee was doing ---Stewart v Stewart (1899) ---Mason v Provident Clothing & Supply Co Ltd (1913)
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4.2.2 there are four “errors” in the substantial's: a). An error concerning the identity of the parties b). An error concerning the subject matter of the contract or its quality, quantity or extent c). An error concerning the nature of the contract d). An error concerning the price of the contract
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The party must prove that it is reasonable to both parties concerned and to the general public if the party want to enforce the agreement. If they are unable to do so then the contract will be considered void and unenforceable.
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---In the cases of Stewart and Mason the nature of the employee’s job was not really an important factor. ---It becomes important however when the employee is in the position to learn trade secrets or become well known to clients. ---The following cases illustrate the importance of these factors
Section Four: Illegality, Error and Misrepresentation
4.1 Illegality 4.1.1 definition: contract against the law; ---known as pacta illicita ---prohibited by law May be illegal by statute May be illegal by common law ---will not be enforced by the court
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II.
Contracts between Seller and Purchaser of a Business ---the seller of a business may agree not to set up a similar business within certain area for a specified time ---it is not to say that all restrictions agreed upon between buyer and seller will be binding
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4.1.4 Contracts in Restraint of Trade---Factors Considered by the Courts
I. Contracts between employer and employee ---employer may feel the restriction is unfair, then he may break it. Employer may take him to the court, or seek an interdict forbidding him to break the agreement.