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 hopefully
clarify 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 different
things.
Unilateral Mistake

Void There was never any genuine agreement between the
parties because one party was mistaken about
something and the other party knew this and did not
correct the record.
Unilateral mistake
(Mistake in
relation to identity
of other party)
Void The offer was not directed to the actual acceptor it
was directed to the intended offeree. Whether the
mistake was caused by fraud or not is irrelevant unless
the parties met face to face.
Unilateral mistake
(Mistake in
relation to identity
of other party due
to fraud and
parties met face to
face)
Voidable When parties meet face to face and create a contract it
is reasonable to conclude the parties intended to deal
with the person they saw before them - regardless of
identity therefore the contract is not void. If however
the contract was entered into because of fraud the
party against whom the fraud was committed is given
the opportunity to repudiate the contract.
Fraudulent
Misrepresentation
If minor, cannot
repudiate (but can
seek damages).

If actionable
(major) then
contract can be
repudiated
Recover loss through the Tort of Deceit. Action under Trade
Practices Act 1974 (Cth) for compensation. A party that finds
themself subject to a contract entered into as a result of a
misrepresentation does not have to do anything positive
other than inform the other party of their repudiation of the
contract. If the contract is to be enforced against them then
misrepresentation is a shield that will protect them from
contractual liability.
Innocent If minor, cannot No action in Tort. Can obtain compensation under Trade
misrepresentation repudiate (but can
seek damages).

If actionable
(major) then
contract can be
repudiated
Practices Act 1974 (Cth) for compensation. A party that finds
themself subject to a contract entered into as a result of a
misrepresentation does not have to do anything positive
other than inform the other party of their repudiation of the
contract. If the contract is to be enforced against them then
misrepresentation is a shield that will protect them from
contractual liability.
Negligent
Misrepresentation
If minor, cannot
repudiate (but can
seek damages).

If actionable
(major) then
contract can be
repudiated
Recover losses through Tort of Negligence. Action under
Trade Practices Act 1974 (Cth) for compensation. A party
that finds themself subject to a contract entered into as a
result of a misrepresentation does not have to do anything
positive other than inform the other party of their repudiation
of the contract. If the contract is to be enforced against them
then misrepresentation is a shield that will protect them
from contractual liability.
Undue Influence
(special
relationship and
no special
relationship)
Voidable The party who was unduly influenced has the option to
repudiate (reject) the contract such that it no longer has
any force going forward into the future. This option is
granted because it could turn out that the contract is
actually a good deal and the influenced party may in
fact wish to affirm the contract and choose to remain
bound.
Duress
(to person, to
property and
economic duress)
Voidable The party who was subjected to duress has the option
to repudiate (reject) the contract such that it no longer
has any force going forward into the future. This option
is granted because it could turn out that the contract is
actually a good deal and the party subjected to duress
may 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 contract
such that it no longer has any force going forward into
the future. This option is granted because it could turn
out that the contract is actually a good deal and the
party subjected to unconscionability may in fact wish to
affirm the contract and choose to remain bound. ss
51AA-51AB-51AC Trade Practices Act 1974 (Cth); s43
Fair Trading Act 1987 (NSW)

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 and
enforceable into the future until
(A) exercises his option and
declares the contract void. At
that point the contract is void
and not enforceable into the
future
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 sell
to (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 B
B 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 his
option and declares the contract void (C) already has legal title to the car .The
declaration of (A) only applies to the contract between (A) and (B). (C) is safe. (A)
must sue (B) to get money back