Duress Flashcards
Define Duress
Duress refers to a situation where a person enters into a contract as a result of threats or pressure, which vitiates their consent.
The most important feature of duress is that it generally involves pressure applied by means of an illegitimate threat, although occasionally a highly reprehensible demand coupled with a threat to do something lawful will suffice. An express threat is not necessary.
State the 3 forms of duress
There are 3 forms of duress;
- Duress to the Person
- Duress to Goods/business interests
- Economic Duress
Explain Duress to a person and its effect on the contract
Duress by the threat of violence - established in Barton v Armstrong [1976]
Duress by threat of violence is self-explanatory. If a party is able to prove they were coerced into a contract due to a threat of violence, the contract will be voidable.
Threats of violence can vitiate consent. The Privy Council held that if threats were ‘a’ reason for entering into a contract, relief is justified even if the victim might have entered the contract without the threats. The transaction is considered void, not merely voidable.
However there is also duress via creating a threatening environment - Antonia v Antonia [2010]
In contract law, there has been unwillingness to accept the position in Northern Ireland v Lynch. It has been suggested that the claimants will must be overborne and he must have no choice.
Overall, the threat must be one which is illegal if carried out.
Explain Duress to goods
Case Law Example: Astley v Reynolds (1731)
Unlawful seizure or detention of goods, or the threat thereof, can constitute duress. The court held that if the victim has no realistic alternative but to comply with the demand, it is considered duress.
Define economic duress
In contract law, economic duress also called business compulsion, refers to one party’s improper or illegal conduct that causes the other party’s fear of economic hardship and the fear prevents the party from engaging in a commercial agreement with free will.
Economic duress is a defense that can be used by a party to argue against the formation of a binding contract between two parties.
Explain which case established the concept of economic duress and which cases you would refer to in a scenario question
The doctrine of economic duress was established in the case of Pao On v Lau Yiu Long [1980] however these requirements have since been altered
Duress by economic pressure:
- D & C Builders v Rees [1966]
- Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991)
- B & S Contracts & Design Ltd v Victor Green Publications Ltd [1984]
Explain economic duress and the criteria that has to be satisfied
There are 3 elements of Economic Duress that must be satisfied (Carillion Construction Ltd v Felix (UK) Ltd (2001))
Illegitimate Pressure or Threat:
- The pressure must be improper or unlawful.
Subjective Causation:
- The pressure must have caused the victim to act.
Objective Causation:
* A reasonable person in the victim’s position would have felt compelled to act similarly, with no realistic alternative which therefore induces the claimant to enter the contract.
The court considers a range of factors to determine if there has been illegitimate pressure, including whether;
- there was an actual or threatened breach of contract
- the presence of good or bad faith
- the availability of realistic alternatives,
- whether the victim protested, and
- whether they affirmed the contract.
Explain the key distinction between acceptable commercial pressure vs economic duress
Inequality of bargaining power or commercial influence does not amount to duress i.e. threats to take business elsewhere, loose a discounted price, refusal to do business in the future are all acceptable commercial influence.
It’s only where there’s been an amount of pressure which the law says amounts to duress, that the contract will be rescinded or set aside and if proven the innocent party will have the option to render the contract voidable not be bound by it.
The key aspect to look for is a threat to breach contract which is most common, i.e. pay more or I won’t deliver goods as agreed etc - which in itself is a dispute about whether a valid upward/downward variation of a contracts occurred.
Who holds the burden of proof for economic duress?
The Burden of Proof:
R v Bone, 52 Cr. App. R - Once the defendant has raised sufficient evidence of duress to allow it to be considered by the magistrates/district judge/jury, the legal burden then falls upon the prosecution to prove beyond reasonable doubt that the defendant was not acting under duress
Explain the remedy available for duress, and the bars to that remedy
Duress renders a contract voidable. However, Economic duress requires a nuanced analysis of the pressure exerted and the victim’s response in order to determine if recessions available.
The 3 bands for rescission to be available as a remedy:
- The contracting party seeking the remedy must not have affirmed the contract. Where the part treats the contract as ongoing - this amounts to affirmation preventing them from going back on it
- When duress is present the innocent party must inform/give notice to the other party that they intend to rescind the contract. Undue delay - must raise the issue/give notice of desire to rescind the contract as soon as possible/straight away.
- There can’t be a bona fide purchaser for value without notice must not have taken an interest in property which would be affected by the rescission - a third party who has interest in it
restitutio in integrum must be substantially possible: both sides of the transaction must be able to be undone, which is there’s a third party interest or if goods are destroyed we cant undo that.
Contracts entered into under duress can be set aside, but if rescission is barred, the victim may be without a remedy unless the conduct constituting duress also gives rise to separate tortious liability.
If a contract was valid and then duress forced the party to accept an upward variation of the contract - is the entire contract voidable?
Remember, it’s only the later variation of the contract thats done under duress then if rescission is possible its only from the point that the duress took place that the contracts unwinded/rescinded its not the entire main contract its just the variation of the contract - thats the part that will be rescinded.
