duress and undue influence Flashcards
what is duress?
where there is an illegitimate threat which left the other party with no practical choice and which was a significant factor in inducing them into the contract or variation
what is economic duress?
a threat to breach a contract or commit a tort and be pressure:
whose practical effect is that there is compulsion on or or a lack of practical choice for the victim, which is illegitimate and which is a significant cause inducing the claimant to enter into the contract
in addition to illegitimate pressure, what else does the court take into consideration? (Carillion guidelines)
whether there has been an actual or a threatened breach of contract, whether the person allegedly exerting the pressure has acted in good or bad faith, whether the victim had any realistic practical alternative but to submit to the pressure, whether the victim protested at the time, and whether they affirmed and sought to rely on the contract
what is the effect of duress
onus on innocent party- makes the contract voidable but there is no remedy for damages so only rescission is available
what is undue influence?
influence which goes beyond what is regarded as acceptable
what is presumed undue influence?
undue influence is presumed when there is a fiduciary relationship between the parties and a transaction which calls for explanation
what is actual undue influence?
can be legal threat but there must be proof of this type of influence
what two things need to be established in order to raise a presumption of undue influence
relationship of trust and confidence- irrebuttable presumed that one party places trust and confidence in another
transaction must call for an explanation i.e. transaction is not readily explicable by the relationship between the parties
rebuttable presumption- can be rebutted if there was evidence to show that the innocent party had taken independent advice
what happens if the undue influence is exerted by a third party rather than the other contractual party?
contract is voidable if the contracting party had notice of the undue influence
when will a contracting party have constructive notice?
if it should have been put on an inquiry as to the risk of undue influence and did not take reasonable steps to ensure that the other party was aware of the implications of what they were signing
when will a creditor be put on an inquiry?
every case where the relationship between the debtor and surety is non commercial- creditor has to take reasonable steps to ensure that the other party was aware of the implications of what they were signing- these reasonable steps will be to ensure that the surety is independently advised by a solicitor and that the solicitor sends a written confirmation of this
