Escaping a Contract Cases

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  • Escaping a Contract
    • Bell v Lever Brothers 1932
      • Facts: Two employees were given compensatory payments for redundancy. However, they had undertaken offending transactions in their position that meant they could have been fired without payment.
      • Principles: If a case is focused on fraud, it should not be able to be amended to include mistake. A contract is not void if each party gets what they bargained for even if it could have been terminated otherwise.
      • Outcome: The payment agreements still stood as they had stopped employment and the other side had received payment.
    • Pao On v Lau Yiu Long 1979
      • Facts: An agreement to sell shares in exchange for other shares was set up with a protected value of $2.50 per share as the claimants had been asked to retain 60% of the shares until a certain date. The claimants then asked to change to an indemnity otherwise they would not continue with the main contract. On the shares losing their value, the defendants refused to pay.
      • Principles: An act done before the giving of a promise could be valid consideration for that promise. Although commercial pressure had been applied, this did not amount to economic duress.
      • Outcome: The defendants had to pay the charge liable on the indemnity.
    • William Sindall v Cambridgeshire CC 1994
      • Facts: A property developer bought a property said to have no other easements other than those noted in the contract. However it was found to have a sewer.
      • Principles: The seller could not have been said to misrepresent what he did not know at the time and could not have known (evidence had been destroyed). A contract may contain terms that leave no room for recission on the grounds of mistake.
      • Outcome: The contract could not be rescinded as the sewer did not seriously affect the use of the land. The seller had no way to tell that the sewer existed.
    • Great Peace Shipping v Tsavlaris 2002
      • Facts: The Great Peace was hired in order to help with crew evacuation on a ship that had been damaged. Both parties believed they were closer than they actually were. When found out, the defendant refused to pay any fees for their services.
      • Principles: For mutual mistake, the effect of the mistake must be fundamental to the contract.
      • Outcome: The defendants had to pay the fee for the use of the Great Peace as they had not cancelled the contract straight away when they found the disparity in distance. Therefore the timing was not fundamental to the contract.


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