BUSINESS LAW

Business Law

Business Law

Introduction

A validity of a contract depends upon many factors when companies make mergers, buying or selling. Business contracts require genuine consent on the terms and conditions of any corporate activity. An agreement or contract can only take place if the parties are in consent genuinely and independently to its terms and conditions. It is fundamentally an expression of the autonomy and self-rule of the parties, but not an enforcement, trick, fraud, or misinterpretation of business facts. The parties negotiates that results in an honest, rational and genuine consensus ad idem, otherwise no contract can take place.

Analysis of validity of the contract

In order to analyze the impart of misrepresentation, mistakes, duress and undue influence on the validity of a contract, it is pertinent to shed some light on these factors which are functional in nullifying or negating the consent that parties seem to seek in the form of a business contract. These factors are:

Misrepresentation

Mistakes,

Duress and

Undue influence

Misrepresentation

Misrepresentation is a factor that can vitiate content and prevent an agreement to be a contract. Misrepresentation exists when untrue statements about the existing facts or past events that can affect the party to enter into agreement. In this situation, silence from any of the parties does not include in the definition of misrepresentation. Misrepresentation can be negligent, innocent or fraudulent. Each has its own legal implications.

Innocent misrepresentation refers to the untrue statements that are made without knowing that are not true. In generally, the law does not offer any solutions for potential losses except the false statement are included in the rescission of the contract and it can be applied by the injured party can only apply. This implies that if the agreement is ignored, all advantages gained on the basis of consent reinstated to the person who is the owner.

Negligent misrepresentation is made when the party fails to implement sensible concern. The point where this kind of statement can be challenged was espoused by the House of Lords in one of the significant cases of Heller.& Partners Ltd. v. Hedley Byrne & Co. Ltd (1964) A.C. 465. The law enforces that one is accountable to disburse for all possible damages producing from not using sensible concern in order to make statements which in his point of views, other parties will rely on for making a decision of contract.

However, in case a concerned party manages to provide evidence that he has suffered damage as a result of relying on these untrue statements, he can take legal action for losses incurred by this type of misrepresentation.

Fraudulent misrepresentation is very well explained in Peek v. Derry (1889) 14 App. Cas. 337. It involves untrue statements which are made deliberately and believing that they are untrue. This type of misrepresentation is the worst of its kind and secures agreements and consents. As a consequence, the party who is being misguided through a fraudulent misrepresentation can exercise the right to withdraw the contract with the possibility of restoring the parties back ...