Duress Flashcards
What is duress in contract?
It involves one party coercing another into a contract
What is the effect of a contract entered into under duress?
Contract is voidable
What is the effect of a contract being voidable?
The wronged party may be able to have the contract set aside and have the parties returned to the position they were in before the contract was entered into
What are the three types of duress?
- duress to the person
- duress to property
- economic duress
What is duress to the person?
Actual or threatened violence
When will duress to the person mean that a contract is voidable?
When the physical threats were a reason for contracting
Who bears the burden of proof in relation to duress to the person?
Once established that there were physical threats, it is on the party who exerted the pressure to establish that the threats and unlawful pressure contributed nothing to the victim’s decision to contract
What is duress to goods?
Threats to seize the owner’s property or to damage it
How does a claim for duress to goods succeed?
Must be shown that the agreement would not have been entered into if there had not been the duress
What elements are required for there to be economic duress according to DSND Subsea v Petroleum Geo Services?
There must be pressure:
i) whose practical effect is that there is compulsion on, or lack of practical choice, for the victim
ii) which is illegitimate and
iii) which is a significant cause inducing the claimant to enter int the contract
What amounts to ‘significant cause’ in relation to economic duress?
Must be shown that the agreement would not have been entered into if there had not been duress
What is ‘lack of practical choice’ in relation to economic duress?
The pressure must result in a lack of practical choice for the victim ie they have no practical alternative but to acquiesce to the demand
Is a threat to breach contract ‘illegitimate pressure’ in relation to economic duress?
Yes - threat to breach contract will always be illegitimate pressure
Is pressure applied in bad faith ‘illegitimate pressure’ in relation to economic duress?
Any unlawful threat made in bad faith will almost always mean there is illegitimate pressure
What impact do the actions of the victim have in finding ‘illegitimate pressure’ in relation to economic duress?
In order for there to be illegitimate pressure the victim should demonstrate evidence of protest at the time the alleged duress was extorted
Also needs to be considered whether the victim affirmed the illegitimate pressure by not taking immediate action once the pressure has ceased to operate
