Vitiating factor
Name Vitiating factors comes because they harm or invalidate the consent. Vitiating factors that the law considers to be a breach of contract are false information, errors, coercion, undue influence and illegality. A clause, provision or term which affects the contract in whole or in part or renders it void, or voidable[1].
Vitiating factors in contract law give a very simple picture of 'consent, disagreement' which is, however, distorted normatively, lacking in lawfulness, wanting to clarify, lacking in transparency and taking an unrealistic and disregardful view of the complainant's reasonableness[2].
PICC, PELC and DCFR versus US Restatement of Contracts
PECL and PICC are 'opt-in' codes: i.e. they do not apply to a contract unless the parties agree to do so. The DCFR is part of the ongoing review of EU-wide contract law2. It is an academic-oriented document which is not yet intended as an 'opt-in' code. Nevertheless, it is important to analyse the DCFR as it is an official step towards the intended political Common Frame of Reference, which will be formally adopted by the EU legislative institutions. The DCFR contains ten "books", each focusing on a different area of private law, while Book II is a book, a general aggravating factor, therefore all references to articles in the DCFR are to vitiating factors[3].
The US legal system is important for the whole world, especially in the commercial world. Due to the fact that the Federal legal system, with different legal traditions in different, potentially efficient, that an indirect comparison of case law would be complicated. Legal in relation to contract violations. In fact, the unified commercial code does not address this topic at all. That's why you chose Restatement as the main element of my comparison with American law. Restatement is not binding legislation; it is not actually intended for PECL[4].
Types of contracts
Types of contracts in which the most often is analyzed vitiating factors[5]:
- Purchase and sale transactions, leasing and other real estate transactions
- The sale and purchase of a business issue and the sale of shares in the company
- Joint venture agreements and partnership agreements
- Loan letters and performance bonds
- Bills of exchange and financial investments
- Insurance contracts
- Loan and loan agreements and guarantees
- Credit references and characteristic
- Building contracts
- Settlement agreements and layoffs
- Charter contracts and transport and storage contracts
- Employment contracts
- Wasted expenses
- Marriage and family misrepresentation
Examples of Vitiating factor
- Misrepresentation: Misrepresentation is a false statement of fact made by one party to another party which has the effect of inducing that party to enter into a contract. Misrepresentation may be a statement of fact, law, intention or opinion.
- Undue Influence: Undue influence is when one party takes advantage of their position of power over another person to pressure them into entering into a contract. This could include a parent or spouse pressuring a child or partner to enter into a contract.
- Duress: Duress is when one party threatens the other party with physical harm or harm to their reputation in order to get them to enter into a contract.
- Mistake: A mistake is when one party has a misunderstanding of the terms of the contract, or a misunderstanding of the facts or circumstances of the contract. This could include an incorrect belief about the identity of the other party or a misunderstanding of the subject matter of the contract.
- Fraud: Fraud is when one party deliberately misrepresents the facts of the contract in order to induce the other party to enter into the contract. This could include falsifying documents or lying about the terms of the contract.
Advantages of Vitiating factor
Vitiating factors are important elements in contract law that enable parties to invalidate a contract if certain conditions are not fulfilled. The primary advantages of vitiating factors are:
- They provide a form of protection for parties to a contract from being forced into an agreement they do not wish to enter into.
- They allow parties to invalidate a contract if the terms are not fair or if the parties are misled by false information.
- They can be used to protect parties from being taken advantage of by a more powerful party.
- They can be used to protect parties from being tricked or deceived by another party.
- They can provide a way to cancel a contract if one of the parties is unable to fulfill their obligations.
Limitations of Vitiating factor
- Vitiating factors cannot be used to override the terms of a contract that are already agreed upon.
- Vitiating factors do not apply in cases where a person has consented to a contract but later changes their mind or experiences a change in circumstances.
- Vitiating factors may be difficult to prove in court, as the burden of proof lies with the party claiming the invalidity of the contract.
- Vitiating factors are not always applicable in cases where a contract is voidable.
- Vitiating factors do not necessarily invalidate a contract, as the court may be able to identify a remedy that would allow the contract to remain in effect.
An introduction to vitiating factors is that they invalidate consent, making a contract voidable or void. Other approaches to vitiating factors include:
- Misrepresentation: This is when one party makes false statements or omits important information, misleading the other party and causing them to enter the contract under a false belief.
- Mistake: This is when both parties have a misunderstanding of the terms of the agreement, causing them to unintentionally enter a contract they would not have otherwise.
- Duress: This is when one party is under pressure or fear to enter a contract, because of threats or intimidation.
- Undue Influence: This is when one party has control or authority over the other, such as in a fiduciary relationship, and uses it to enter into a contract against their will.
- Unconscionability: This is when one party takes advantage of the other party’s ignorance or lack of bargaining power to enter into a contract that is unfairly beneficial to one side.
In summary, vitiating factors are elements that can invalidate consent, making a contract voidable or void, and include misrepresentation, mistake, duress, undue influence, and unconscionability.
Footnotes
| Vitiating factor — recommended articles |
| Clear title — Objective theory of contract — Mutual agreement — Equitable lien — Mutual assent — Material misrepresentation — Material alteration — Warranty of title — Limited warranty deed |
References
- Klass G., Letsas G., Saprai P. (2015), The Nature of Vitiating Factors in Contract Law, Oxford Scholarship Online, p. 288
- MacDonald Egger P. (2017), Vitiation of Contractual Consent, Informal Law from Routledge, New York, p. 671
- Spark G. (2012), Vitiation of Contracts: International Contractual Principles and English Law, Cambridge University Press, New York, p. 11-12
- Vaince S.A. (2019), Vitiating Factors , "VLC Publishers ", p. 1
Author: Anna Syjud
