Unit 21: Business Law P3
P3
Unit – 21 (Business Law)
BTEC National Diploma In Business Level 3
The Date
Author: Your Name
Your Teacher
1
,Unit 21: Business Law P3
Unit 21 – Business Law
On completion of this unit I should:
1) Understand the legal requirements for a valid contract
2) Understand the meaning and effect of terms in a standard form contract
3) Understand the impact of statutory consumer protection on the parties to a contract
4) Know the remedies available to the parties to a contract
Task 3:
a) Describe what misrepresentation is and the effect it has on contracts
b) Describe the different types of misrepresentation that exist
c) Interpret a legal case that you think is relevant and useful
d) Give an advice in relation to particular situation
The Senior Solicitor of Contract Law has asked me to assist her on a case she is working on
that involves misrepresentation within a contract. I have been requested to write a letter on
her behalf to the client outlining misrepresentation and any points related to their situation.I
am to write a letter to the client describing the law with respect to misrepresentation.
2
, Unit 21: Business Law P3
Factors affecting validity of a contract
There is an area of English contract law, which allows a person to escape a contractual
obligation, if person can proof that he entered an agreement because of Duress, Undue
Influence, Misrepresentation or Mistake.
Duress: An illegal pressure used by the stronger party to induce the weaker party to
enter into a contract by threatening the weaker party with financial mental or physical
harm. Financial duress may occur when one party is using economic pressure or
threats in intention to force another party do what it is not willing to do. Mental
duress is usually blackmail; e.g. one person tells another one if he would not sign the
contract, he will be physically harmed or killed. Physical duress is simply when one
party physically harms another party in order to force it to an agreement, which it’s
wouldn’t do otherwise.
Undue Influence: Exists where a contract has been entered as a result of pressure.
Undue influence operates where there exists a relationship between the parties
which has been exploited by one party to gain an unfair advantage.
Misrepresentation: misrepresentation is a false statement of fact or law which
induces the party to enter a contract. There are three types of misrepresentation:
1) Fraudulent Misrepresentation:
A false statement that is known to be false or is made recklessly – without
knowing or caring whether it is true or false. See Spice Girl’s case on page
5.
2) Negligent Misrepresentation:
A careless or inadvertent false statement in circumstances where care
should have been taken. Example: If person hasn’t checked previously
whether phone is works and sold it, confirming it is works.
3) Innocent Misrepresentation:
It is a misrepresentation made by someone who had reasonable grounds for
believing that his false statement was true. Example: Person was not aware
that the phone he sold was blocked on IMEI.
Mistake: A contract can be voided under common law rules for mistake in the
following situations:
1) Common mistake (where the mistake is shared by both parties, is
fundamental and directly affects the basic definition of what the parties are
contracting for). The mistake will render the contract void if it robs it of all
substance.
2) Mutual mistake (where the parties are at cross-purposes with one another).
If, from the parties’ words and conduct, only one possible interpretation of
what was agreed can be deduced, the contract will still be valid. Otherwise
contract would be void.
3
P3
Unit – 21 (Business Law)
BTEC National Diploma In Business Level 3
The Date
Author: Your Name
Your Teacher
1
,Unit 21: Business Law P3
Unit 21 – Business Law
On completion of this unit I should:
1) Understand the legal requirements for a valid contract
2) Understand the meaning and effect of terms in a standard form contract
3) Understand the impact of statutory consumer protection on the parties to a contract
4) Know the remedies available to the parties to a contract
Task 3:
a) Describe what misrepresentation is and the effect it has on contracts
b) Describe the different types of misrepresentation that exist
c) Interpret a legal case that you think is relevant and useful
d) Give an advice in relation to particular situation
The Senior Solicitor of Contract Law has asked me to assist her on a case she is working on
that involves misrepresentation within a contract. I have been requested to write a letter on
her behalf to the client outlining misrepresentation and any points related to their situation.I
am to write a letter to the client describing the law with respect to misrepresentation.
2
, Unit 21: Business Law P3
Factors affecting validity of a contract
There is an area of English contract law, which allows a person to escape a contractual
obligation, if person can proof that he entered an agreement because of Duress, Undue
Influence, Misrepresentation or Mistake.
Duress: An illegal pressure used by the stronger party to induce the weaker party to
enter into a contract by threatening the weaker party with financial mental or physical
harm. Financial duress may occur when one party is using economic pressure or
threats in intention to force another party do what it is not willing to do. Mental
duress is usually blackmail; e.g. one person tells another one if he would not sign the
contract, he will be physically harmed or killed. Physical duress is simply when one
party physically harms another party in order to force it to an agreement, which it’s
wouldn’t do otherwise.
Undue Influence: Exists where a contract has been entered as a result of pressure.
Undue influence operates where there exists a relationship between the parties
which has been exploited by one party to gain an unfair advantage.
Misrepresentation: misrepresentation is a false statement of fact or law which
induces the party to enter a contract. There are three types of misrepresentation:
1) Fraudulent Misrepresentation:
A false statement that is known to be false or is made recklessly – without
knowing or caring whether it is true or false. See Spice Girl’s case on page
5.
2) Negligent Misrepresentation:
A careless or inadvertent false statement in circumstances where care
should have been taken. Example: If person hasn’t checked previously
whether phone is works and sold it, confirming it is works.
3) Innocent Misrepresentation:
It is a misrepresentation made by someone who had reasonable grounds for
believing that his false statement was true. Example: Person was not aware
that the phone he sold was blocked on IMEI.
Mistake: A contract can be voided under common law rules for mistake in the
following situations:
1) Common mistake (where the mistake is shared by both parties, is
fundamental and directly affects the basic definition of what the parties are
contracting for). The mistake will render the contract void if it robs it of all
substance.
2) Mutual mistake (where the parties are at cross-purposes with one another).
If, from the parties’ words and conduct, only one possible interpretation of
what was agreed can be deduced, the contract will still be valid. Otherwise
contract would be void.
3
