Grounds for invalidating a shareholder agreement yanic truesdale dating
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To the extent that earlier authorities have suggested that “influence” was sufficient to constitute reliance, they were simply confirming that the representation did not need to be the sole cause of entry into the contract.
The issue in the present case was the extent to which the position is different where, as here, the representation was not merely false but could later be shown to have been fraudulently made.
In holding that the innocent party was nevertheless bound by the agreement, the Court of Appeal’s decision shows the limits, in this context, of the principle that “fraud unravels all”.
Settlement agreements may be set aside on the same grounds as any other contract, including on the basis that one of the parties was induced to enter into it by a counterparty’s misrepresentation concerning a material fact.
However, where the representations relied on comprise the very allegations advanced by the claimant as part of the claim being settled, the courts have generally taken the view that the defendant has, in deciding to settle, taken into account the risk that the statement was false and has foregone the opportunity to challenge it.