Vitiating Factors

Introduction

Even where the parties have formed an agreement and agreed its content, the contract may be undermined — **vitiated** — by factors present **at the time of formation**. This chapter examines the five vitiating factors examined in SQE1 FLK1: **misrepresentation**, **mistake**, **duress**, **undue influence** and **illegality**. Each has its own elements, remedies and bars. Some render a contract **void ab initio** (sufficiently fundamental common mistake; some forms of illegality); most render it **voidable** at the election of the innocent party (misrepresentation, duress, undue influence, and unilateral mistake as to identity in face-to-face dealings).

Assessment focus

For SQE1 FLK1 you must be able to **identify the relevant vitiating factor** from a client scenario, **state its elements**, assess the **available remedies** (rescission; damages under the Misrepresentation Act 1967; equitable damages in lieu of rescission under s.2(2)), and apply the **bars to rescission** (affirmation, lapse of time, third-party rights, impossibility of restitution). You must distinguish the **three types of misrepresentation** (fraudulent, negligent, innocent) and their differing measures of damages, the **four categories of mistake**, the **three species of duress**, and the **Etridge taxonomy of undue influence** (actual, presumed, Class 2A, Class 2B). Illegality has been reformulated by **Patel v Mirza [2016] UKSC 42** — you must apply its tripartite policy test. SBAQs require **application**, not mere recall, so practise classifying the facts before reaching for a rule.

Study tips

1) For any vitiating-factor question, **classify first**: misrepresentation, mistake, duress, undue influence or illegality. 2) Fix the **effect** in memory: misrepresentation / duress / undue influence = **voidable**; operative mistake = **void**; illegality = void **or** unenforceable on Patel v Mirza analysis. 3) Master the **damages measures**: fraud and s.2(1) = **tort-of-deceit** basis (all direct loss, foreseeable or not, per Royscot v Rogerson); Hedley Byrne = negligence (foreseeable loss); s.2(2) = equitable damages in lieu. 4) For **mistake as to identity** always ask **face-to-face (voidable) or in writing at a distance (void)?** — this decides who keeps the goods. 5) Remember the **four bars to rescission** and the **minimum Etridge steps** a bank must take to avoid constructive notice.