1. Contract Enforcement
When a contract is breached it can have very costly outcomes.
Who can sue for breach of contract?
The people affected by the breach? or
The people who performed the contract? or
The people who were party to the contract?

2. Privity of Contract Privity = being party to a contract.
In other words, the people who came to an agreement together.
Only people who are party to a contract can sue for breach of contract.

3. Privity of Contract The rule has 3 effects:
A person can not enforce contractual rights unless they were a party;
A person can not be sued as liable for breach if they were not a party to the contract; and
A remedy (damages) for breach is only available to parties of a contract not to third parties (people not in the contract).

4. Privity
Tweddle v Atkinson [1861]: Plaintiff was engaged to G’s daughter. G and plaintiff’s father entered agreement that they would both pay G for getting married. After the marriage G died. Result:
Plaintiff was not party to the contract so G’s estate refused to pay and he could not sue.
Plaintiff’s dad could not sue as he hadn’t suffered any damage (his son had).

5. Privity
Plaintiff was not party to the contract so G’s estate refused to pay and he could not sue.
Plaintiff’s dad could not sue as he hadn’t suffered any damage (his son had).
Robert Dunne 2017

6. Privity Exceptions: Statutory exceptions nowadays –
Insurance contract for benefit of spouse and/or child. Can be enforced by them.
Someone injured due to faulty vehicle can sue for breach of contract even if they are passenger or not party to the contract due to Sale of Goods Act 1980.

7. Excuses to Contract Formation
Contract has been formed and a party is sued for breach of contract.
One defence to avoid liability is to plead that the contract was not formed properly due to a valid excuse...
Contract excuses deem the contract to never have been formed at all and neither party is then bound to perform it. It is void ab initio.

8. Excuses Capacity; Duress; Undue Influence Misrepresentation; and
Illegality.

9. Capacity
One excuse to avoid liability and claim the contract never validly formed is to argue the person did not have capacity.
This means the person would be deemed not capable (according to law) of entering a contract.
Three examples are: being a minor, mentally ill or intoxicated.

10. Capacity Minors: Any person under the age of 18.
Any contract with a minor is automatically unenforceable by the other party.
Two exceptions:
If it is a contract for “necessaries” – things the child needs.
Beneficial contracts of service – employment contracts, club memberships, grinds etc.
These contracts can be enforced by the other party.

11. Capacity
Minors: If a minor enters a contract it is the minor’s decision to request it be voided or not. Otherwise, it will continue.

12. Capacity
Mental Illness: A contract with someone who is mentally ill may be voidable if it is shown:
The person did not know the nature of the contract when it was agreed, and
The other person knew (or should have) of the mental illness at the time.

13. Capacity
B v O’D and Bank of Ireland: 77 yr old woman in nursing home who had mental illness though was sometimes lucid. Neighbours discharged her for a day, took her to bank and she withdrew over €100k. Bank manager took her aside and told her to get legal advice but she insisted.
After, the woman remembered nothing. She sued for the money back. Held

14. Capacity Intoxication:
Same rules as for mental illness. Intoxication is only an excuse to contract formation if:
So intoxicated that you were not aware of what you were doing; and
The other person knew, or should have known, you were that intoxicated.

15. Duress
If a party proves they were under duress and forced to sign a contract, this will take away their consent and the contract will not be enforceable.
The threat needs to be an immediate threat which takes away the persons own capacity/consent.

16. Undue Influence As in the B v O’D + Bank Of Ireland case (Earlier).
Situation where there is a close relationship between two people, a relationship of some sort of trust.
E.g family members, solicitor-client etc.

17. Undue Influence
Due to this close relationship, one person can influence the other more than is acceptable when entering contracts.
If they have influenced more than they should, then this takes away that person’s consent to entering the contract.
No consent to contract = no contract.

18. Undue Influence To get out of the contract (Burden of Proof):
You must prove that there is this close relationship.
This leads to a “presumption of undue influence” and shifts the burden of proof onto Defendant.
It is then up to the Defendant (or other party) to prove there was no undue influence used (“rebut the presumption”).

19. Misrepresentation
A misrepresentation made to the other party in the contract can lead to the contract being voided.
When would this be fair to do?
What type of misrepresentation?
When should it have been made?

20. Misrepresentation
Definition: A false statement of fact that induced the other party to enter into the contract.
Three elements needed:
False statement of fact; that
Induced the party into contract; and
The statement must have been directed at them.

21. Misrepresentation
1. False statement of fact – this means it can not be an opinion or intention.
Eg. “This car will change your life” etc
Or, when selling a car, seller saying “I think it’s probably good for another 30k miles”. This would be an opinion.
If the statement was made by a car dealer - because they have specialist knowledge it would be deemed more than just opinion and could lead to a misrep claim.

22. Misrepresentation – Opinion v Fact
Bisset v Wilkinson [1927] AC: Plaintiff bought land from Def for sheep farming. During negotiations Def said that if worked properly the land would carry 2,000 sheep.
Both parties knew Def had not done sheep farming on the land.

23. Misrepresentation – Opinion v Fact
“In ordinary circumstances, any statement made by an owner who has been occupying his own farm as to its carrying capacity would be regarded as a statement of fact.... This, however, is not such a case.... In these circumstances... the defendants were not justified in regarding anything said by the plaintiff as to the carrying capacity as being anything more than an expression of his opinion on the subject.”

24. Misrepresentation Esso Petroleum v Mardon
Mardon, when entering a franchise agreement, was told by Esso that the site would generate 200,00 gallons in the third year.
It only generated 60 – 70k gallons.
Marlon lost money and was unable to pay Esso for petrol/franchise costs.
What is different about this representation?
Should Marlon succeed?

25. Misrepresentation
Even though Esso’s comments were a forecast, Court held that Esso had special knowledge – they knew all the facts (throughput of nearby stations etc.)
Held Marlon entitled to rely on the statement and that it was a misrepresentation.

26. Misrepresentation
..1… Silence can not normally be deemed to lead to misrepresentation.
But, certain contracts where “utmost good faith” is expected, silence can be a misrepresentation.
Eg. Insurance contracts – case where woman did not disclose her husbands conviction for theft. She was refused the insurance money for her stolen jewellery as she didn’t. Court held her silence was a misrep.

27. Misrepresentation 2. Induced the party to enter the contract:
The misrep has to be made before or at the time of the contract to be considered to have induced them.
Ex: Landowner says to buyer: “This land is good for 200 sheep.” Deal is done. Land is only good for 50 sheep. Can buyer be excused from the contract due to the misrep.

28. Misrepresentation
…2…
If buyer did not intend to use the land for sheep?
If buyer didn’t intend to use the land for rearing sheep it will be hard for him to argue this statement actually induced him.
If he did – he was likely induced + can avoid contract
The representation does not have to be the sole reason why the other party enters the contract but it must have been a substantial reason.

29. Misrepresentation
…2…
If the representation did not induce or was not a substantial reason why that person entered the contract – they can not avoid the contract.

30. Misrepresentation
3. Last step – it would be unfair to allow someone to avoid a contract if the false statement was not made to them and was not intended to be heard by them.
It is designed to prevent contractor’s from making false promises.
Therefore, the representation must have been directed at them.

31. Illegality
Contracts that are illegal are void and can not be enforced.
This includes: contracts for the commission of crimes,
Contracts promoting immorality,
Contracts to defraud Revenue,
Corruption etc.

32. Other excuses to contract formation
Mistake;
Contrary to public policy;
Certain contracts must be in writing and are unenforceable if not signed.