Duress Flashcards
What is the effect of successfully raising duress or undue influence on a contract?
A contract made under duress or undue influence is voidable. It remains valid until rescinded. Damages are not available for duress or undue influence. Consequential matters between the parties are regulated by the law of restitution.
What are the five conditions for a finding of duress?
1) Pressure was exerted on the contracting party. 2) The pressure was illegitimate. 3) The pressure induced the claimant to enter the contract. 4) The claimant had no practical alternative but to comply. 5) The claimant protested at the time or shortly after the contract was made.
What is economic duress?
Economic duress arises when a party is compelled to enter a contract due to illegitimate pressure, which can include threats of economic harm.
What constitutes illegitimate pressure in duress?
Illegitimate pressure may include threats to commit an unlawful act, such as breaching a contract or committing a crime. A threat to resort to lawful acts does not generally constitute duress.
What is the ‘practical benefit’ rule established in Williams v Roffey?
If a promise to pay extra for performing an existing contractual duty results in a practical benefit to the promisor, that benefit can be consideration for the promise, provided it was not obtained by fraud or economic duress.
What must be proven for a claimant to show they had no real choice but to enter a contract?
The threat must have affected the claimant’s perception of their position, leaving them feeling they had little choice but to agree to the contract.
What is undue influence?
Undue influence is an equitable doctrine where one party uses their influence over another to persuade them to enter a contract.
What are the two forms of undue influence?
1) Actual undue influence. 2) Presumed undue influence.
What is presumed undue influence?
Presumed undue influence exists when there is a pre-existing relationship of confidence between the parties, leading one to place trust in the other.
What relationships automatically presume undue influence?
Automatic presumption exists in relationships such as parent and child, religious adviser and disciple, guardian and ward, solicitor and client, trustee and beneficiary, and doctor and patient.
What should a bank do to avoid constructive knowledge of undue influence?
A bank should insist that the guarantor attend a private meeting to explain their liability, warn of risks, and urge them to seek separate legal advice.
What remedies are available for duress?
Duress renders the contract voidable, and the innocent party can set the contract aside by rescission. Damages are not available.
What remedies are available for undue influence?
Undue influence also renders the contract voidable, allowing the innocent party to set the contract aside by rescission. Damages are not available.
