further notes on consent0

8/10/2019 Further Notes on Consent0

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Further Notes on Consent

Notes Prepared by Andrew Dahdal

A few students have found the concepts of a contract being void or voidable confusing. These extra notes will hopefullyclarify any confusion.

When will a contract be void or voidable?

Issue Effect Why?Common Mistake Void There was no agreement because both parties are

mistaken about something central to the contract.Mutual Mistake Void There was never any genuine agreement between the

parties because they were talking about differentthings.

Unilateral Mistake Void There was never any genuine agreement between theparties because one party was mistaken aboutsomething and the other party knew this and did notcorrect the record.

Unilateral mistake(Mistake inrelation to identityof other party)

Void The offer was not directed to the actual acceptor itwas directed to the intended offeree. Whether themistake was caused by fraud or not is irrelevant unlessthe parties met face to face.

Unilateral mistake(Mistake inrelation to identityof other party dueto fraud andparties met face toface)

Voidable When parties meet face to face and create a contract itis reasonable to conclude the parties intended to dealwith the person they saw before them - regardless ofidentity therefore the contract is not void. If howeverthe contract was entered into because of fraud theparty against whom the fraud was committed is giventhe opportunity to repudiate the contract.

FraudulentMisrepresentation

If minor, cannotrepudiate (but can

seek damages).

If actionable(major) then

contract can berepudiated

Recover loss through the Tort of Deceit. Action under TradePractices Act 1974 (Cth) for compensation. A party that findsthemself subject to a contract entered into as a result of amisrepresentation does not have to do anything positiveother than inform the other party of their repudiation of thecontract. If the contract is to be enforced against them thenmisrepresentation is a shield that will protect them from

contractual liability.Innocent If minor, cannot No action in Tort. Can obtain compensation under Trade


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misrepresentation repudiate (but canseek damages).



Practices Act 1974 (Cth) for compensation. A party that findsthemself subject to a contract entered into as a result of amisrepresentation does not have to do anything positiveother than inform the other party of their repudiation of thecontract. If the contract is to be enforced against them thenmisrepresentation is a shield that will protect them fromcontractual liability.

NegligentMisrepresentation

If minor, cannotrepudiate (but can

seek damages).



Recover losses through Tort of Negligence. Action underTrade Practices Act 1974 (Cth) for compensation. A partythat finds themself subject to a contract entered into as aresult of a misrepresentation does not have to do anythingpositive other than inform the other party of their repudiationof the contract. If the contract is to be enforced against themthen misrepresentation is a shield that will protect themfrom contractual liability.

Undue Influence(specialrelationship and

no specialrelationship)

Voidable The party who was unduly influenced has the option torepudiate (reject) the contract such that it no longer hasany force going forward into the future. This option is

granted because it could turn out that the contract isactually a good deal and the influenced party may infact wish to affirm the contract and choose to remainbound.

Duress(to person, toproperty andeconomic duress)

Voidable The party who was subjected to duress has the optionto repudiate (reject) the contract such that it no longerhas any force going forward into the future. This optionis granted because it could turn out that the contract isactually a good deal and the party subjected to duressmay in fact wish to affirm the contract and choose to

remain bound.Unconscionability Voidable The party who was subjected to the unconscionable

conduct has the option to repudiate (reject) the contractsuch that it no longer has any force going forward intothe future. This option is granted because it could turnout that the contract is actually a good deal and theparty subjected to unconscionability may in fact wish toaffirm the contract and choose to remain bound. ss51AA-51AB-51AC Trade Practices Act 1974 (Cth); s43Fair Trading Act 1987 (NSW)


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Example 1:

A enters a contract to sell a car to B

(Contract valid and enforceable into the future)

(A) (B)

1) The contract is declared Void by the court

(There is no contract to enforce into the future)

(A) (B)

2) The contract is declared Voidable (at the option of A) by the court

(A) (B)

Contract remains valid andenforceable into the future until(A) exercises his option anddeclares the contract void. Atthat point the contract is voidand not enforceable into thefuture


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Title to the car never passed from (A) to(B). (A) still has legal title to the car.(B) never obtained title to the car to sellto (C).(C) must sue (B) to get money back.

Example 2: (involvement of 3 rd party)

A enters a contract to sell a car to BB sells the car to C

(A) (B) (C)

1) The contract between (A) and (B) is declared Void by the court after (B) and (C) conclude their transaction

(A) (B) (C)

2) The contract between (A) and (B) is declared Voidable (at the option of A) by the court after (B) and (C)conclude their transaction

(A) (B) (C)

Title to the car passes from (A) to(B) and from (B) to (C).(C) is the legal owner of the car.

Title to the car passed from (A) to (B) and from (B) to (C). When (A) exercises hisoption and declares the contract void (C) already has legal title to the car .Thedeclaration of (A) only applies to the contract between (A) and (B). (C) is safe. (A)must sue (B) to get money back

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