Vitiating factors in contract law (notes & cases)

Hellow! and welcome once again, to the series of notes on Contract Law tailored specifically fo law students in Tanzania.

Today we are going to have a deep coverage of the vitiating factors in a contract.

These notes will cover;

  • Meaning of Vitiating Factors
  • Coercion
  • Undue influence
  • Fraud
  • Misrepresentation
  • Mistake

We will cite legal provisions and use case laws to make these notes more helpful and authoritative.

Let’s get Started

Meaning of vitiating factors in Contract

For a contract to be considered legally binding upon the parties, there must be free consent (consensus ad idem), meaning the parties must be in agreement about the same thing in the same sense.

This implies that both parties willingly enter into the contract and agree to be bound by its terms and conditions.

In contract law, “vitiating factors” refer to elements that can undermine or invalidate the consent or agreement between the parties, potentially rendering the contract void or voidable.

These factors affect the validity and enforceability of a contract and can lead to legal remedies or allow a party to escape from their contractual obligations.

See also  Representative suit notes in Tanzania (+PDF)

In Tanzania Viatiatin factors are provided under Section 14 of the Law of Contract Act (LCA) which provides that; Consent is said to be free when it is not
caused by

  1. Coercion
  2. Undue Influence
  3. Fraud
  4. Misrepresentation
  5. Mistake

These vitiating factors ensure that contracts are entered into freely, fairly, and with a clear understanding of the terms. If any of these factors are present, the affected party may have legal grounds to avoid the contract or seek remedies.

Now let’s break them down one by one;

Coercion/Duress

Duress in contract law refers to situations where one party is forced or coerced into entering a contract under the threat of harm or other wrongful pressure, rendering the agreement involuntary.

This pressure can be physical, economic, or psychological.

When a contract is entered into under duress, it undermines the principle of free consent, and the contract may be declared voidable at the option of the coerced party.

Section 10 of the LCA define Coercion as threatening to commit or committing any act forbidden by the penal code or unlawful detaining or threatening to detain any property to the prejudice of any person whatever with the intention of causing any person to enter into an agreement.

In Barton v Armstrong [1975] 2 W.L.R. 1050, Barton, the managing director of a company, was threatened with death by Armstrong if he did not sign a contract to sell certain shares.

Held: The Privy Council held that Barton was under duress, and the contract was voidable. It was sufficient that the threats were a reason for Barton’s agreement, even if he had other reasons for signing the contract.

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Elements of Duress

To establish a claim of duress, the following elements typically must be proven:

  1. Illegitimate Pressure: The pressure exerted must be unlawful or improper. This could be a threat of illegal action, breach of contract, or other wrongful acts.
  2. Causation: The pressure must have induced the coerced party to enter into the contract. It must be shown that the contract would not have been agreed to but for the duress.
  3. Lack of Reasonable Alternative: The coerced party must have had no reasonable alternative but to agree to the contract terms.

A contract entered into under duress is not automatically void but is voidable at the option of the coerced party. Section 19(1) LCA

This means the party subjected to duress can choose to either affirm the contract or repudiate it.

If the contract is repudiated, the parties are typically restored to their pre-contractual positions, and any benefits conferred under the contract must be returned.

Undue Influence

Undue influence is a vitiating factor in contract law that occurs when one party exerts excessive pressure on another party to enter into a contract, taking advantage of a position of power or trust.

This pressure compromises the free will of the influenced party, making their consent to the contract not truly voluntary.

Unlike coercion, which involves committing or threatening an unlawful act or detaining or threatening to detain some property, undue influence involves the improper use of power to affect somebody’s character, beliefs, or action through for example fear, administration, examination, etc.

When define Undue Influence Section 16 of LCA provides that A contract is said to be induced by “undue influence” where the relationship subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

Elements of Undue Influence

  1. Relationship of Trust and Confidence: There must be a relationship where one party is in a position of trust or confidence relative to the other. Common examples include relationships between parent and child, solicitor and client, doctor and patient, or spiritual adviser and follower.
  2. Abuse of Position: The dominant party uses its position to obtain an unfair advantage or to coerce the other party into the contract. This can involve moral, social, or domestic pressure rather than physical force or threats.
  3. Unfair Terms or Transactions: The resulting contract or transaction is significantly one-sided or otherwise unfair to the influenced party. The fairness of the transaction is often scrutinized to determine if undue influence was present.
See also  Third-party procedure notes in Tanzania

Let us take a look on the following Scenario and case for more clarification on what amounts to undue Influence;

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Final remarks

I hope you have found these notes useful.

Please don’t hesitate to share your thoughts or pose any questions you may have regarding this discussion. Your feedback is greatly valued and encouraged.

Don’t forget to like and share these notes with your colleagues

This post was originally written by Kelvin John and edited, fact-checked, and enhanced by Isack Kimaro.

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