Learning Outcomes
After reading this article, you will be able to identify and apply the main vitiating factors that prevent contracts from being enforceable in English law. You will understand the difference between void and voidable contracts, the nature and consequences of misrepresentation, mistake, duress, and undue influence, and how these are examined in SQE2 client and scenario-based questions.
SQE2 Syllabus
For SQE2, you are required to understand vitiating factors both in theory and in practice. Focus your revision on:
- The specific types of misrepresentation and their remedies.
- The distinction between common, mutual, and unilateral mistake.
- The circumstances in which duress or undue influence renders a contract voidable.
- How these issues may appear in exam client scenarios, where you must spot, explain, and advise upon vitiating factors or defenses.
In preparation, ensure you can:
- Define and distinguish between void and voidable contracts.
- Identify and analyse whether a contract is void for mistake, or voidable for misrepresentation or duress/undue influence.
- Recognise typical fact-patterns likely to trigger vitiating factors in assessment scenarios.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- In which circumstance will a contract be classified as “void” rather than “voidable”?
- What key elements must a claimant prove to establish actionable misrepresentation?
- Under what conditions does undue influence arise, and how does the presumption operate?
- How is economic duress different from mere commercial pressure?
Introduction
Contracts may appear valid but can still be set aside if entered into due to certain legal flaws—a group known as vitiating factors. For the SQE2, it is essential to distinguish contracts that are unenforceable (void) from those where parties may choose to rescind (voidable). This article explains each core vitiating factor and how to analyse typical exam scenarios.
Void and Voidable Contracts
Key Term: void contract
A contract that is treated as never having existed. No legal effect arises, and property may not pass to a third party.Key Term: voidable contract
A contract valid until one party chooses to set it aside (rescinds). If not rescinded, it remains fully effective.
Misrepresentation
Misrepresentation occurs when one party enters a contract based on a false statement of fact made by or attributable to the other party. It renders the contract voidable, giving the innocent party options for rescission or damages in certain cases.
Key Term: misrepresentation
An untrue statement of fact or law that induces the other party to enter into a contract.
Types of Misrepresentation
There are three main types:
- Fraudulent: Made knowingly or recklessly without belief in its truth.
- Negligent: Made carelessly; the maker fails to take reasonable care to ensure truth.
- Innocent: The maker had reasonable grounds to believe it was true.
Remedies for Misrepresentation
- Rescission: The contract can be unwound, putting both parties back to their pre-contract positions, unless a bar applies (e.g. affirmation, lapse of time, impossibility, or third party rights).
- Damages: Available for fraudulent and negligent misrepresentation, and sometimes awarded instead of rescission for innocent misrepresentation.
Mistake
A mistake can prevent a contract from coming into effect or render it void if it is "operative" and fundamental.
Key Term: mistake
A fundamental error about an aspect of the contract that may result in the agreement being void.
Types of Mistake
- Common mistake: Both parties share the same fundamental error (e.g. the subject matter no longer exists).
- Mutual mistake: Each party misunderstands the other; no genuine agreement is reached.
- Unilateral mistake: Only one party is mistaken, but the other party knows or ought to know of the mistake (e.g. terms, identity).
Effect of Mistake
If operative, the contract is void and treated as having never existed. By contrast, minor or non-fundamental mistakes generally do not affect validity.
Duress
A contract may be set aside if entered into due to illegitimate threats or pressure amounting to duress.
Key Term: duress
Actual or threatened pressure (physical, goods, or economic) that coerces a party into agreement and deprives them of free consent.
Types of Duress
- Duress to the person: Physical threats.
- Duress to goods: Unlawful threats against property.
- Economic duress: Illegitimate financial threats, depriving practical choice.
Requirements for Economic Duress
- Illegitimate pressure or threat.
- No practical alternative for the innocent party.
- Pressure is a significant (not necessarily the only) reason for contracting.
- The innocent party protests at or soon after contracting.
Undue Influence
Undue influence arises when a relationship of trust and confidence is exploited to influence another party’s decision.
Key Term: undue influence
Improper pressure or abuse of trust/coercion where true consent is impaired, either actually (overt acts) or presumed (due to a special relationship).
Actual vs. Presumed Undue Influence
Actual undue influence: Clear evidence of wrongful pressure in a specific transaction.
Presumed undue influence: Specific relationships (e.g. solicitor-client, parent-child, religious adviser-disciple) or factual proof of trust and confidence:
- If coupled with a transaction calling for explanation (e.g. gift that has no good reason given the relationship), the burden shifts to the influencer to disprove undue influence.
Third Party Undue Influence
Where a third party (usually a lender or bank) is aware of a relationship giving rise to the risk of undue influence (e.g. one spouse securing the other’s debts), it is "put on inquiry". It must take reasonable steps (usually insistence on independent legal advice) to ensure independent consent, or the contract may be voidable against it.
Illegality and Public Policy
A contract may be void if it is illegal by statute or contrary to public policy (e.g. criminal contracts, unreasonably restrictive covenants, some anti-competitive agreements).
Key Term: illegality
A quality of an agreement that renders it void or unenforceable because it is unlawful or contrary to public policy.
Worked Example 1.1
Scenario: Emma signs a contract to purchase goods from Daniel, based entirely on Daniel’s assurance that the items are brand new. Emma later discovers they are used and would not have bought them had she known.
Answer:
This is actionable misrepresentation. The contract is voidable; Emma may rescind and may be entitled to damages if the statement was negligent or fraudulent.
Worked Example 1.2
Scenario: George agrees to sell a painting to Ruth, believing (as does Ruth) that it is an original by a famous artist. It is in fact a forgery, unknown to both.
Answer:
This is a common mistake as to the subject matter's quality. Unless the forgery is so fundamental as to make the contract essentially different from what was intended (which is unusual for quality), the contract is likely valid. If both believed the painting existed but it had already been destroyed, the contract would be void.
Worked Example 1.3
Scenario: Simon faces a genuine commercial dispute over payment. The other party threatens to report him to the authorities for an unrelated (but true) tax irregularity unless he pays immediately.
Answer:
This is economic duress if Simon’s agreement is induced by the threat, the threat is illegitimate (blackmail), and he protests. The contract may be set aside as voidable.
Worked Example 1.4
Scenario: A parent persuades their adult child to transfer significant funds to them, but the transfer is made without any meaningful explanation or benefit to the child.
Answer:
In a parent-child relationship, the court presumes undue influence. The transaction "calls for explanation." The burden shifts to the parent to show the child’s free and informed consent, usually by showing the child received independent legal advice.
Exam Warning
If you wrongly advise that all contracts induced by threats are void (rather than voidable), or fail to distinguish between types of misrepresentation, you risk losing marks for misidentifying remedies or defences.
Revision Tip
Focus revision on the facts that trigger vitiating factors. You will often see scenarios in the SQE2 assessment involving one party acting under mistake, misrepresentation, or pressure.
Key Point Checklist
This article has covered the following key knowledge points:
- Vitiating factors include misrepresentation, mistake, duress, undue influence, and illegality.
- Void contracts are treated as never having existed; voidable contracts require choice by the innocent party.
- Misrepresentation must be a false statement inducing the contract and is classified as fraudulent, negligent, or innocent.
- Operative mistake can make a contract void; not all mistakes will do so.
- Duress requires illegitimate, coercive pressure depriving the other party of real consent; economic duress needs particular factors.
- Undue influence may be actual or presumed; certain relationships and transactions may shift the burden of proof.
- Illegality or contracts contrary to public policy are not enforceable.
- Remedy may be rescission, damages, or both, depending on the vitiating factor.
- SQE2 scenarios often test the correct classification and remedy for each vitiating factor.
Key Terms and Concepts
- void contract
- voidable contract
- misrepresentation
- mistake
- duress
- undue influence
- illegality