Duress Flashcards
Define Duress.
Occurs when one party exerts improper pressure on another party and that party feels they have no choice but to enter into the agreement or transaction as a result.
A contract or variation of a contract which has been entered into under duress is voidable, which means that the wronged party may be able to take action to have it set aside and to have the parties returned to the position they were in before the contract was entered into.
What are the 3 types of Duress?
· Duress to the person
· Duress to property
· Economic duress
PPE
What is the leading case for Duress to the Person?
The leading case on duress to the person is Barton v Armstrong [1976] AC 104. The Privy Council concluded in this case that once it is established that the physical threats contributed to the decision to enter into the contract, duress will be found, so long as the threats were one of the reasons for contracting. They further stated that the burden of proof was on the party who exerted the pressure to show the threats and unlawful pressure contributed nothing to the victim’s decision to contract. Consequently, it can be seen that the causation test for duress to the person is not a difficult one to overcome – the duress need be only one factor influencing the wronged party’s behaviour.
What is Duress to the Person?
Actual or threatened violence
Amounts to one factor influencing the decision to enter into the contract (need not be decisive)
What is Duress to Property?
Seizure or damage to owner’s property (or threat of this)
But for the duress, the agreement would not have been entered into
A contract can also be avoided where there is a threat to seize the owner’s property or to damage it (Occidental Worldwide Investment v Skibs A/S Avanti (The Sibeon & The Sibotre)) [1976] 1 Lloyds Rep 293.
To succeed in establishing duress to goods it seems likely that it must be shown that the agreement would not have been entered into if there had not been the duress. Unlike duress to the person, it is unlikely to be sufficient to show that duress will be one factor (but not a decisive factor) influencing the wronged party’s behaviour.
What is Economic Duress? Key Case?
Lack of practical choice
Caused by illegitimate pressure
But for the duress, the agreement would not have been entered into
case: DSND Subsea Ltd v Petroleum Geo Services ASA [2000] 7 WLUK 875
A definition of economic duress which perhaps best reflects the current position was set out by Mr Justice Dyson:
“The ingredients of actionable duress are that there must be pressure,
(a) whose practical effect is that there is compulsion on, or a lack of practical choice, for the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract … [emphasis added]”
The courts have subsequently clarified that ‘significant cause’ means it must be shown that the agreement would not have been entered into if there had not been the duress.
What is the Legal Effect of Duress?
A person who has entered into a contract under duress has not done so under their own free will. This results in the contract being ‘voidable’, which means whilst it remains in force unless some action is taken, the party subject to duress may choose to avoid the contract after the duress has ceased.
The proper remedy is one of rescission. The remedy of rescission is not detailed in this element, but broadly involves attempting to return the parties to the situation each was in prior to the contract being entered into.
What does voidable mean?
A contract which is voidable remains in force unless some action is taken to void (annul) it.
Define Rescission
A remedy which involves returning the parties to the situation each was in prior to the contract being entered into.
When may the remedy of Rescission be lost?
The remedy of rescission may be lost where the contract is affirmed, as the affirmation will operate as a bar to rescission.
The court might conclude that a contract is affirmed if, after the duress has ceased, the innocent party fails to challenge in a timely way the contract and/or acts in compliance with its terms.
Economic duress results when one party has a…
…lack of practical choice as to whether to enter / vary the contract, and this has been caused by illegitimate pressure.
