Chapter 4: Duress

Question 1

What is Duress?

Answer 1

1)Also known as metus.
2) Improper pressure leading to intimidation.
3.1) If one enters a contract under duress →
3.2) Doing so in fear because of an illegitimate threat.
3.3) Threatened party may set aside and claim restitution and damages

Question 2

Factors of Duress

Answer 2

1) Coercion
2) Reasonableness of the fear
3) Object of the threat
4) Imminence of harm
5) Unlawfulness of the threat
6) Damage

Question 3

Vis compulsive

Answer 3

1) Involves the coercion of the will
2) And not physical force.
3) Coercion involves the operating on the mind of the victim by forcing him to
choose between entering a contract or suffering harm

Question 4

Reasonableness of the fear

Answer 4

1) Notion that the threat must be sufficiently grave to affect the mind of a
reasonable steadfast person.

2) The more unreasonable the fear the more reluctant the court will be to accept that it actually induced the contract.

Question 5

Paragon Business Forms (Pty) Ltd v Du Preez

Answer 5

1) Dealt with the scenario where a former employee had alleged that he felt he had no obligation but to sign an agreement containing a restraint of trade.
The threat of dismissal was not expressed.

2) Court believed there was no threat of dismissal and that the alleged fear by
the respondent was illogical and unreasonable

Question 6

In the case of the object of the threat, at what must this threat be directed?

Answer 6

1) Life
2) Bodily integrity
3) Property
4) Immediate family

Question 7

Prove involuntary nature of the contract

Answer 7

1) Today it is inconceivable that a court today would deny relief merely because a
threat was directed at a distant relative or even a stranger.
2) Especially if that threat was one of physical violence

Question 8

Imminence of harm

Answer 8

1) Threat must be imminent or inevitable.

Question 9

Describe the unlawfulness of the threat?

Answer 9

1) Contra bones mores.
2) Threat of civil action is not unlawful.
3) Threat to institute criminal proceedings:
4) Is unlawful if used to extort a benefit to which the Creditor is not entitled to or if the debtor is innocent of the alleged crime

Question 10

Damage

Answer 10

1) Involves financial loss

Question 11

Duress by a 3rd party

Answer 11

1.1) Where duress (coercion or pressure) comes from a third party who is not part
of the contract and acts without the knowledge of the other contracting party.
1.2)In cases of misrepresentation, the usual remedy is an action for damages against
the third party causing the duress.

2.1) The matter has not yet been decided by the courts. However, it is anticipated
that the old approach of providing ‘restitutio in integrum’ may be rejected.

2.2) An exception might be made in cases like marriage, where public policy demands
that the contract should be voidable, regardless of the source of the duress.
This means that the contract can be annulled if one party was coerced into it

Question 12

Undue influence is a=

Answer 12

1) Form of improper pressure brought upon a person in order to induce him to
enter into a contract.
2) Pressure is more subtle and erosion (limiting) of innocent party’s ability to
exercise a free and independent judgment.
3) Usually a close relationship between parties e.g. doctor/patient.
Attorney/client, parent/child etc

Question 13

Origins of the doctrine

Answer 13

1) The term ‘undue influence’ comes from English law. It was developed by the courts
of equity due to the narrow scope of the common-law concept of duress

Question 14

Requirements for undue influence
Patel v Grobbelaar

Answer 14

1) Aggrieved party was subjected to influence by another.

2) The Influence weakened the aggrieved person’s capacity to resist and
rendered the aggrieved person liable.

3) The other person exploited this influence unscrupulously to persuade the
aggrieved person to agree to a transaction which was both to the aggrieved
persons detriment (Prejudicial) and was a transaction that would not have been concluded had the aggrieved person acted of own free will

Question 15

Undue influence remedy

Answer 15

1) Available for both action and defense.

2) Attempts to as far as possible restore both parties to the position before
they entered into the contract.

3) The remedy entitles the innocent party he set aside the legal consequences
of the contract.

4) A duty arises on either side, to restore any performance that has
been made in terms of the contract.

5) If the innocent party, then chooses to uphold the contract he is then bound
by its terms

6) If he elects to rescind the contract such a decision must be communicated
to the other party and the contract terminates upon receipt of the notice.

7) Remember a duty forms on both parties to restore and return any
performance that has been made in terms of the contract.

8) Also applicable to duress and misrepresentation

Question 16

Misrepresentation

Answer 16

1) A false statement of past or present fact made by one party to another before or at the time of the contract concerning some matter or circumstance relating to it

Question 17

Misrepresentation classification:

Answer 17

A misrepresentation is accordingly classified and determining the remedy available
requires assessing the state of mind with which the misrepresentation is made

Question 18

Forms of misrepresentation:

Answer 18

1) Fraudulent
2) Negligent
3) innocent

Question 19

Fraudulent misrepresentation is one made

Answer 19

1) Knowingly or;
2) Without belief in its truth or;
3) Recklessly, careless whether it should prove to be true or false

Question 20

Requirements for misrepresentation:

Answer 20

1) A false statement of fact or facts.

2) Must be material.

3) Made by a contracting party or someone for whose actions he assumed
responsibility.
AKA the misrepresentation must be made by someone who is part of the contract or by someone who acts for the person part of the contract.

3) Made with the intention of persuading the other party to conclude the
contract.

4) Made in such a way that the other party believed the facts to be as
represented and concludes the contract on the basis of their represented
facts

Question 21

False statement of the facts:

Answer 21

1) Can be an express statement, verbal statement all implied from conduct.
2) Active concealment is a failure to correct a false impression.
3) Design concealment →nondisclosure

Question 22

Briefly state what active concealment is

Answer 22

1) A failure to correct a false impression

Question 22

In what case was the seller of a farm held liable for NoN DISCLOSURE of a
graveyard on a property he sold?

Answer 22

1) Dibley v Furter → F sold a farm to D without disclosing the existence of a graveyard located close to the house.

2) Prior to the sale, F had plowed over the graveyard and removed all visible traces of the graveyard.

3) It was held that F was liable to D for
nondisclosure of existence of the graveyard.

Question 22

In certain circumstances disclosure is obligatory:

Answer 22

1) Where an omission of facts has created a misleading impression,

2) Person made a statement which is no longer correct due to change in
circumstances,
3) Relying on statement of a person with level of skill, in order to contract
4) Law requires full disclosure e.g. insurance contracts regarding risk

Question 23

What is the classic test for distinguishing warranties from representations?

Answer 23

1) The intention of the parties.
2.1) Did they intend the statement to form part of their contract?
2.2)Was the intention that there should be contractual liability in
respect of it?
2.3) A person who warrants or guarantees the correctness of his or her statement agrees to be liable if it should prove to be incorrect.

Question 24

What are the objective criteria that the court uses to determine the intention of
the parties?

Answer 24

1) The importance of the truth of the statement.
2) The stage of the transaction at which it was made.
3) And whether it was made in response to a query by the representee

Question 25

A person can be held to have given a warranty even in the absence
of a genuine animus contrahendi?

Answer 25

1) Even in the absence of a genuine animus contrahendi, a person may be held to have given a warranty, on the basis of estoppel or the principle in Smith v Hughes, if he or she led the other party reasonably to believe that he or she was warranting the truth of his or her statement.

Question 26

What are the usual remedies for breach of a warranty term in a contract?

Answer 26

1) Cancellation of the contract (where the breach is material)
2) And damages measured according to the aggrieved party’s positive
interest

Question 27

What can the aggrieved party demand if a misrepresentation made prior to the
conclusion of a contract is subsequently incorporated into it as a contractual
term?

Answer 27

1) The representee may sue either for misrepresentation or for breach of contract.
2) The aggrieved party may demand to be placed in the financial position he or she
would have occupied had the statement been true.
3)Animus contrahendi → Intention to contract