Duress and undue influence

Question 1

What are the three types of duress?

Answer 1

The three types of duress are duress to the person, duress to property, and economic duress.

Question 2

What is the minimum basic test of subjective causation in economic duress?

Answer 2

The minimum basic test of subjective causation in economic duress is the ‘but for’ test. It must be shown that the agreement would not have been entered into if there had not been the duress.

Question 3

What is economic duress?

Answer 3

Economic duress occurs when a party has no alternative but to accept revised terms that are detrimental to its interest. It involves exerting pressure on another party to enter into a contract or modify existing terms under circumstances that leave the victim with no practical choice.

Question 4

What is the leading case on duress to the person?

Answer 4

The leading case on duress to the person is Barton v Armstrong [1976] AC 104.

Question 5

What is the role of consideration in making a variation binding?

Answer 5

Consideration is crucial in making a variation binding. If a party does no more than it was already bound to do, there is no consideration to make the variation binding. However, if a party goes above and beyond its original contractual obligations, it may amount to good consideration and make the variation enforceable.

Question 6

Can economic duress invalidate a contract?

Answer 6

Yes, economic duress can invalidate a contract if it can be proven that one party exerted illegitimate pressure on the other party, leaving them with no practical choice but to accept the revised terms. The victim must demonstrate evidence of protest at the time the alleged duress was exerted.

Question 7

How does the ‘causation’ aspect of economic duress differ from duress to the person?

Answer 7

In economic duress, the pressure must have actually caused the making of the agreement, in the sense that it would not otherwise have been made either at all or, at least, in the terms in which it was made. On the other hand, duress to the person can be established if the duress is one factor influencing the wronged party’s behavior, even if it is not a decisive factor.

Question 8

What factors might prevent a contract from being formed?

Answer 8

Factors that might prevent a contract from being formed include duress and undue influence.

Question 9

What is the causation test for duress to the person?

Answer 9

The causation test for duress to the person is that once it is established that physical threats contributed to the decision to enter into the contract, duress will be found as long as the threats were one of the reasons for contracting. The burden of proof is on the party who exerted the pressure to show that the threats and unlawful pressure contributed nothing to the victim’s decision to contract.

Question 10

How does practical benefit relate to the doctrine of consideration?

Answer 10

In Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, the Court of Appeal recognized practical benefit as good consideration to make a promise to pay more binding. However, if duress has been exercised to extract the promise to pay more, the promise will not be enforceable.

Question 11

What factors are considered when assessing the legitimacy of pressure in economic duress?

Answer 11

When assessing the legitimacy of pressure in economic duress, factors such as an actual or threatened breach of contract, good or bad faith of the party exerting the pressure, whether the victim protested at the time, and whether the victim affirmed and sought to rely on the contract are taken into account.

Question 12

What is the difference between duress and undue influence?

Answer 12

Duress involves one party coercing another party into a contract, where consent is not present or not given freely. Undue influence, on the other hand, is less about an act that amounts to improper pressure and more about a relationship where one party has influence over the other, which could be taken advantage of.

Question 13

What are the factors considered by the court when determining whether there has been illegitimate pressure in economic duress?

Answer 13

When considering whether there has been illegitimate pressure in economic duress, the court will consider: whether there has been an actual or threatened breach of contract, whether the party exerting pressure has done so in good or bad faith, whether the victim protested at the time of the duress, and whether the victim affirmed the contract after the duress ceased.

Question 14

What is duress to goods and how is it established?

Answer 14

Duress to goods refers to a threat to seize or damage the owner’s property. To establish duress to goods, it must be shown that the agreement would not have been entered into if there had not been the duress.

Question 15

What is the significance of the ‘but for’ test in establishing economic duress?

Answer 15

To succeed in establishing economic duress, it must be shown that the agreement would not have been entered into but for the duress. This test demonstrates the causal link between the duress and the agreement.

Question 16

What is the definition of undue influence?

Answer 16

Undue influence exists when a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will. The court keeps its options open to find undue influence in any situation that falls within this test.

Question 17

What are the three elements required to establish economic duress?

Answer 17

In order to establish economic duress, the three elements that must be present are compulsion/lack of practical choice for the victim, which is illegitimate, and which is a significant cause inducing the claimant to enter into a contract.

Question 18

What is the significance of protest and affirmation in cases of economic duress?

Answer 18

Protest at the time of alleged duress and timely action to set aside the contract are important factors in cases of economic duress. Failure to protest or delayed action may be taken as acquiescence or affirmation of the revised terms, which can weaken the claim of economic duress.

Question 19

What are the two types of undue influence?

Answer 19

The two types of undue influence are overt acts of improper pressure or coercion, which overlap with the idea of duress, and situations where one party has influence or ascendancy over the other and takes advantage of that influence. In the latter case, there may be no specific act of pressure or coercion, but the underlying relationship is sufficient for undue influence to be exercised.

Question 20

What is the legal effect of duress on a contract?

Answer 20

A person who has entered into a contract under duress has not done so under their own free will. The contract is considered ‘voidable’, meaning that 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 for duress is rescission, which involves attempting to return the parties to the situation they were in prior to the contract being entered into.

Question 21

How does the variation of a contract relate to economic duress?

Answer 21

Parties can vary a contract, effectively agreeing to replace the old set of terms with a new set. However, if the variation is the result of improper pressure, such as economic duress, it may not be binding. The material provided on economic duress will help you understand this concept.

Question 22

How does a threat to breach a contract relate to economic duress?

Answer 22

A threat to breach a contract is an unlawful threat and usually amounts to illegitimate pressure in cases of economic duress. Breaching a contract by failing to comply with its terms is considered a breach and can give rise to a right of the innocent party to claim damages.

Question 23

How does the court determine if undue influence exists?

Answer 23

The court determines if undue influence exists by considering whether a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will. The court wants to keep its options open to find undue influence in any situation that falls within this test.

Question 24

What happens if a contract is affirmed after duress has ceased?

Answer 24

If a contract is affirmed after duress has ceased, the remedy of rescission may be lost. Affirmation occurs when the innocent party fails to challenge the contract in a timely manner or acts in compliance with its terms. The court may conclude that the contract is affirmed, which operates as a bar to rescission.

Question 25

What role does good or bad faith play in economic duress?

Answer 25

If an unlawful threat to breach a contract is made for illegitimate ends, it is considered bad faith and will almost inevitably lead to a finding of economic duress. However, if the pressure is exerted in good faith, it may be considered legitimate commercial pressure.

Question 26

What are the three types of duress and their respective definitions?

Answer 26

The three types of duress are duress to the person, duress to property, and economic duress. Duress to the person refers to actual or threatened violence that influences the decision to enter into a contract. Duress to property involves a threat to seize or damage the owner’s property. Economic duress occurs when one party lacks practical choice due to illegitimate pressure, and the agreement would not have been entered into without the duress.

Question 27

What is the effect of undue influence on a transaction?

Answer 27

If a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will, the transaction will not be allowed to stand. Undue influence can invalidate a transaction if it is proven to have been exerted.

Question 28

What are some relevant factors to consider when assessing the legitimacy of pressure in economic duress?

Answer 28

Relevant factors to consider when assessing the legitimacy of pressure in economic duress include an actual or threatened breach of contract, good or bad faith of the party exerting the pressure, whether the victim protested at the time, and whether the victim affirmed and sought to rely on the contract.

Question 29

What are the key elements of undue influence?

Answer 29

The key elements of undue influence are a relationship of influence/ascendancy and taking unfair advantage.

Question 30

What is the proper remedy for duress in a contract?

Answer 30

The proper remedy for duress in a contract is rescission. Rescission involves attempting to return the parties to the situation they were in prior to the contract being entered into. It is a remedy that voids the contract and allows the party subject to duress to avoid it.

Question 31

What are some examples of relationships where undue influence may exist?

Answer 31

Relationships where one party has significant influence over the other, such as parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and doctor and patient, may give rise to a presumption of undue influence. However, there is no definitive list of relationships, and influence can also arise from trust and confidence placed in the other party.

Question 32

How does the presence of a third party complicate the concept of undue influence?

Answer 32

In situations where a third party is involved, such as a bank, and encourages one party to enter into a transaction with another party, further complexities arise. It raises questions about whether the contract between the bank and the party influenced by the business owner should be binding, even though the undue influence did not come from the bank.

Question 33

What is the significance of the burden of proof in cases of duress to the person?

Answer 33

In cases of duress to the person, the burden of proof is on the party who exerted the pressure to show that the threats and unlawful pressure contributed nothing to the victim’s decision to contract. This means that the party exerting the pressure must demonstrate that the threats did not influence the victim’s decision.

Question 34

How does economic duress relate to the concept of consideration in contract law?

Answer 34

Economic duress and consideration are related in cases where an attempt has been made to vary a contract. If a party does no more than it was already bound to do, there is no consideration to make the variation binding. However, if a party does something above and beyond its original contractual obligations, it may amount to good consideration, making the variation enforceable.

Question 35

How does the court determine if a transaction was produced under undue influence?

Answer 35

The court determines if a transaction was produced under undue influence by considering whether the consent to the transaction ought not fairly be treated as the expression of a person’s free will. The court keeps its options open to find undue influence in any situation that falls within this test.

Question 36

What is the effect of duress on a contract?

Answer 36

A contract or variation of a contract that has been entered into under duress is voidable. This 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.

Question 37

What is the significance of the burden of proof in cases of economic duress?

Answer 37

In cases of economic duress, the burden of proof is on the party claiming duress to show that there was illegitimate pressure or a threat that resulted in a lack of practical choice. The party claiming duress must demonstrate that the pressure was a significant cause inducing them to enter into the contract.

Question 38

What factors does the court consider when determining whether there has been illegitimate pressure in economic duress

Answer 38

When considering whether there has been illegitimate pressure in economic duress, the court will consider: whether there has been an actual or threatened breach of contract, whether the party exerting pressure has done so in good or bad faith, whether the victim protested at the time of the duress, and whether the victim affirmed the contract after the duress ceased.

Question 39

What is the significance of affirmation in cases of economic duress?

Answer 39

Affirmation refers to the victim’s action of relying on the contract and not taking timely action to set it aside. Delayed action to set aside the contract can weaken the claim of economic duress as it may be seen as an affirmation or acceptance of the revised terms.

Question 40

What is the test for economic duress and what are its ingredients?

Answer 40

The test for economic duress is that there must be pressure whose practical effect is that there is compulsion on, or a lack of practical choice for the victim. The pressure must be illegitimate and a significant cause inducing the claimant to enter into the contract. These are the ingredients of actionable economic duress.

Question 41

How does economic duress impact the enforceability of a variation in a contract?

Answer 41

Economic duress can impact the enforceability of a variation in a contract. If duress has been exercised to extract a promise to pay more, even if there is practical benefit supporting the variation, the promise will not be enforceable.

Question 42

What are some practical considerations in cases of economic duress?

Answer 42

In cases of economic duress, contracting parties are expected to consider risks such as changes in the cost of materials or labor when entering into a contract. Parties may include clauses to address price escalation or negotiate shorter contracts to mitigate risks. Failure to consider and address these risks may impact the enforceability of the contract.

Question 43

What is the effect of undue influence on a contract?

Answer 43

Undue influence can render a contract voidable, meaning the wronged party may be able to take action to have it set aside. Undue influence occurs when one party takes advantage of a relationship of influence or ascendancy over another party.

Question 44

What is the remedy for duress in a contract and what does it involve?

Answer 44

The remedy for duress in a contract is rescission. Rescission involves attempting to return the parties to the situation they were in prior to the contract being entered into. It is a remedy that voids the contract and aims to restore the parties to their pre-contractual positions.

Question 45

What is the significance of lack of practical choice in cases of economic duress?

Answer 45

In cases of economic duress, lack of practical choice is a key element. The pressure exerted on the victim must result in a lack of practical alternative or options. The victim must have no practical choice but to acquiesce to the demand.

Question 46

What are the potential consequences of affirming a contract after duress has ceased?

Answer 46

If a contract is affirmed after duress has ceased, the remedy of rescission may be lost. Affirmation occurs when the innocent party fails to challenge the contract in a timely manner or acts in compliance with its terms. The court may conclude that the contract is affirmed, which operates as a bar to rescission.

Question 47

How can a party prove that they have been the victim of undue influence?

Answer 47

To prove that they have been the victim of undue influence, a party must show a relationship of trust and confidence (or one of the categories of irrebuttable presumption) and a transaction that requires explanation. If these elements are present, the court will determine that the transaction is the product of undue influence unless the alleged wrongdoer can provide evidence to convince the court otherwise.

Question 48

What happens if a party alleges undue influence and shows a relationship of trust and confidence along with a transaction that requires explanation?

Answer 48

If a party alleges undue influence and shows a relationship of trust and confidence along with a transaction that requires explanation, the burden shifts to the defendant. The defendant must produce evidence to show that there was no undue influence. If they fail to do so, undue influence is established.

Question 49

What are the limits on equitable relief in cases of undue influence?

Answer 49

Equitable relief, such as setting aside a contract or gift by deed, may be granted in cases of undue influence. However, the court has discretion in granting this relief. It may be refused if the innocent party has delayed making their claim or if their conduct has been underhand.

Question 50

What are the criteria for factual consideration to apply in contract law?

Answer 50

According to Glidewell LJ, the criteria for factual consideration to apply are: (1) the parties must have an existing contract for goods or services, (2) the paying party must have reason to doubt the performing party’s willingness or capacity to complete their existing obligations, (3) an extra payment is promised to ensure the existing obligations are completed, (4) the paying party gains a practical benefit or avoids a disbenefit, and (5) the extra payment is made in the absence of duress.

Question 51

Does factual consideration apply to new contracts or only to variations of existing contracts?

Answer 51

Factual consideration does not apply to new contracts, but only to variations of existing contracts.

Question 52

When can a contract be affected by undue influence from a third party?

Answer 52

A contract can be affected by undue influence from a third party when the victim is persuaded to enter into a guarantee or surety contract with a bank or creditor based on undue influence, misrepresentation, or other legal wrong committed by the third party, not by the other party to the transaction.

Question 53

What happens if a contracting party has actual notice of undue influence?

Answer 53

If a contracting party has actual notice of undue influence, the contract will be affected. However, it is highly unlikely that the party will have actual notice of undue influence. More commonly, there are circumstances that might lead the party to realize that a transaction carries a risk of undue influence.

Question 54

What is the first question to consider when determining if there was undue influence?

Answer 54

The first question to consider when determining if there was undue influence is whether there was a relationship of trust and confidence. The party alleging undue influence must prove such a relationship, typically by showing that they placed trust and confidence in the other party.

Question 55

What factors would put a creditor on notice in cases where a wife offers to stand surety for her husband’s debts?

Answer 55

A creditor would be put on notice when the transaction is not financially advantageous to the wife and there is a substantial risk in transactions of that kind that the husband has committed a legal or equitable wrong. In such cases, the creditor needs to take reasonable steps to satisfy itself that the wife’s agreement to stand surety has been properly obtained.

Question 56

How can an agreement to accept less be enforceable in contract law?

Answer 56

An agreement to accept less can be enforceable if a relevant common law exception applies, such as payment of a different place, time, or thing. Additionally, the exceptions of payment by a third party and practical benefit should be considered. Promissory estoppel can also potentially allow a party to defend itself when the other party demands the original amount.

Question 57

What is the test for economic duress in contract law?

Answer 57

The current leading test for economic duress comes from DSND Subsea v Petroleum Geo Services. The test includes three elements: (1) lack of practical choice for the victim, (2) illegitimate pressure, and (3) causation, where the victim must show that but for the duress, they would not have entered into the agreement.

Question 58

What are the two specific points worth noting when considering if a spouse has exercised undue influence over the other spouse?

Answer 58

When considering if a spouse has exercised undue influence over the other spouse, it is important to note that a relationship between spouses does not have an irrebuttable presumption of a relationship of influence or ascendancy. The spouse alleging undue influence will need to prove such a relationship, most likely by showing that they placed trust and confidence in their spouse. Additionally, the court has indicated that a spouse offering their interest in the matrimonial home as security for a loan to their spouse’s business is not a transaction that requires explanation, so the spouse alleging undue influence would need to provide more explicit evidence of undue influence.

Question 59

What happens if undue influence is established in a contract affected by a third party?

Answer 59

If undue influence is established in a contract affected by a third party, the contract may be set aside. However, this relief is discretionary and may be refused if the innocent party has delayed making their claim or if their conduct has been underhand.

Question 60

What are the elements of undue influence in contract law?

Answer 60

The elements of undue influence include: (1) a relationship of influence or ascendancy, where one party trusts and has confidence in the other, (2) unfair advantage taken of that relationship, which can be shown if the transaction requires explanation or does not appear to be in the interests of the person entering into it.

Question 61

What is required to establish undue influence in a contract resulting from a relationship of trust and confidence?

Answer 61

To establish undue influence in a contract resulting from a relationship of trust and confidence, the party alleging undue influence must show that there was a transaction that calls for an explanation. If these elements are present, undue influence is inferred unless the other party can provide evidence to the contrary.

Question 62

What is the summary in relation to undue influence and third parties?

Answer 62

In cases where a ‘victim’ is persuaded to enter into a contract, such as giving security to a bank, based on undue influence by a third party, the contract with the bank can be set aside if the bank had notice of the undue influence. A bank will be held to have constructive notice in every case where the relationship between the party giving the guarantee and the borrower is non-commercial, unless the bank takes reasonable steps to warn the weaker party of the risks of the transaction or to ensure that they get independent advice.

Question 63

What are the implications of delay or failure to come to court with ‘clean hands’ in cases of undue influence?

Answer 63

In cases of undue influence, delay or a failure to come to court with ‘clean hands’ may lead to the refusal of a remedy. Equitable relief may be disallowed if the innocent party has delayed making their claim or if their conduct has been underhand.

Question 64

What is the principle regarding notice of undue influence in contracts affected by a third party?

Answer 64

In contracts affected by a third party, the principle is that if the contracting party has actual notice of undue influence, the contract will be affected. However, it is more likely that there are circumstances that might lead the party to realize that a transaction carries a risk of undue influence. The issue of notice is relevant when determining if the bank will be fixed with constructive notice of undue influence.

Question 65

What is required to prove undue influence in a contract involving a third party and a victim who is persuaded to enter into a guarantee or surety contract?

Answer 65

To prove undue influence in a contract involving a third party and a victim who is persuaded to enter into a guarantee or surety contract, the victim must show that the contracting party (e.g., the bank) had actual notice of the undue influence. However, it is highly unlikely that the bank will have actual notice. Instead, the victim must demonstrate circumstances that might lead the bank to realize that the transaction carries a risk of undue influence.

Question 66

What is the difference between overt acts of improper pressure and undue influence in contract law?

Answer 66

Overt acts of improper pressure and undue influence are two types of situations in contract law where one party takes advantage of the other. Overt acts of improper pressure involve unlawful threats or coercion, while undue influence is concerned with imbalanced relationships where one party has power and influence over the other.

Question 67

What is the legal effect of duress on a contract?

Answer 67

The contract is voidable

Question 68

What is the causation test for duress to the person?

Answer 68

The duress need be only one factor influencing the victim’s decision to enter the contract

Question 69

What is the causation test for economic duress?

Answer 69

The illegitimate pressure must have been decisive in the making of the agreement

Question 70

A and B have a contract. A offers B more money to perform an existing contractual obligation. When does B provide legal consideration in return for the promise of extra payment?

Answer 70

B exceeds their contractual obligation to A.

Question 71

The modern trend is to take a more creative approach when assessing whether consideration for a variation is present and instead test the validity of the renegotiation through the doctrine of economic duress.

Answer 71

True

Question 72

In which of these relationships does the law presume irrebuttably that one person had influence over the other?

A business and its customers

Husband and wife

Employer and employee

Guardian and ward

Answer 72

Guardian and ward

Correct. The law presumes irrebuttably that in a relationship between a guardian and his ward, one party had influence over the other. This is irrespective of the true facts. However, the presumption that the transaction was procured by that influence may be rebutted

Question 73

When will a bank be put on inquiry that a surety transaction might be tainted by undue influence?

Answer 73

Whenever one party in a non-commercial setting is standing as surety for the other party

Question 74

What remedy will a spouse have if they are unhappy with the standard of service provided by a solicitor regarding a surety transaction?

The bank can sue the solicitor in negligence

The spouse can sue the bank for the solicitor’s negligence

The spouse can sue the solicitor in negligence

The spouse can bring a claim for the surety transaction to be set aside

Answer 74

The spouse can sue the solicitor in negligence

Question 75

A publisher contracts to sell 100 books to a shop, with a 14-day credit facility. The books are stored at a warehouse which floods, destroying the books. The publisher knows the books were still its responsibility, but falsely tells the shop it believes the books were their responsibility and unless the shop pays for them, threatens to revoke the credit facility. The shop knows it is not liable for the books, but decides that paying is better than losing the credit facility.

Was the publisher’s threat to remove the credit facility “illegitimate pressure”, for the purposes of establishing economic duress?

Possibly. It depends on whether the shop had access to another credit facility with a third party.

Yes. The publisher was using this as a means of extorting money it knew was not due to it.

No. Until a court decides that the books were still the publisher’s responsibility, it cannot be said the publisher’s threat was improper.

No. The shop took a commercial decision that it was better to pay for the 100 books and the court will uphold the principle of freedom of contract.

No. The shop should have had the courage of its convictions that the books were the publisher’s responsibility.

Answer 75

Yes. The publisher was using this as a means of extorting money it knew was not due to it.

Correct. This answer correctly applies the criterion of illegitimate pressure. The other answers seem plausible, but they are not correct. Duress trumps the principle of freedom of contract. The relevant test for illegitimate pressure looks at the intentions of the person making the threat. Access to another credit facility is not relevant to illegitimate pressure but to a different part of the test – lack of practical choice.

Question 76

A man is approached by a ticket seller outside a concert who offers to sell him a ticket. The man likes the band, but saw them recently so hesitates. The seller holds a knife to the man and says “Buy the ticket now or I’ll cut you.” The man buys the ticket. Whilst queuing later, he sees the seller being arrested. He goes over and asks for his money back.

Was the contract entered into under duress?

Yes. The physical threat was a significant cause of the man’s decision to contract.

Yes. The man had no practical alternative but to enter into the contract.

Yes, but only if the man can prove that the threat of force was more influential on his decision than his desire to see the band.

Yes. The physical threat was one of the reasons the man entered into the contract and duress will be found unless the seller can prove the threat contributed nothing.

No. The man had a reason other than the threat of force to enter into the contract (he liked the band), so there is no duress.

Answer 76

Yes. The physical threat was one of the reasons the man entered into the contract and duress will be found unless the seller can prove the threat contributed nothing.

Correct. This answer correctly applies the leading case on duress to the person, Barton v Armstrong. The other answers seem plausible but are not correct as they do not correctly outline the elements of duress to the person and/or the test of causation applied to duress to the person.

Question 77

An adult daughter acts as her elderly mother’s carer. The daughter asks the mother for a loan to support a new business venture. The mother is reluctant as it is for a very large amount. The daughter is furious and asks her mother why she will not support her given how much she has done for her. The mother reluctantly agrees to the loan as she does not want to upset her daughter as she is so reliant upon her. The daughter’s business fails, and she does not repay the loan. The mother is now in residential care and wants to her money back. Identify the most appropriate cause of action for the mother.

Economic duress

Duress to the person

Lack of consideration

Duress to goods

Undue influence

Answer 77

Undue influence

Question 78

A builder agrees to build a house for a landlady, due for completion on 1 February, for £100,000. The landlady agrees with a third party to rent the property from 2 February, at a premium rate. On 20 January a labour shortage occurs and the builder, knowing the landlady will not find another builder, threatens to stop work unless he is paid an extra £10,000. The landlady protests, but pays the extra £10,000. The house is completed on 1 February. The landlady waits until the third party begins renting the property and then seeks the return of the £10,000.

Which of the following statements best describes the legal position in relation to the landlady’s potential claim for economic duress?

The landlady was presented with no viable alternative but to agree to the builder’s demand, and that suffices for economic duress.

The landlady’s claim for economic duress is likely to succeed. Although the landlady delayed taking action to set the contract aside this is unlikely to amount to an act of affirmation.

The builder was acting in bad faith and that suffices for economic duress.

The builder’s threat was a significant cause of the landlady paying the extra £10,000, and that suffices for economic duress.

The landlady affirmed the contract, so a claim of economic duress will likely fail.

Answer 78

The landlady’s claim for economic duress is likely to succeed. Although the landlady delayed taking action to set the contract aside this is unlikely to amount to an act of affirmation.

Correct. The builder’s demand is likely to amount to economic duress applying the leading test set out by Dyson J in DSND Subsea v Petroleum Geo Services. Although delay in seeking to set aside the contract can prevent a claim in duress succeeding, the land lady’s short delay in setting the contract aside is unlikely to be sufficient to be regarded as an act of affirmation. The other answers seem plausible but they are not correct. All elements of Dyson J’s test for duress need to be considered. It is not correct to state that duress will succeed based on only one element of the test.

Question 79

A high end restaurant is being reviewed by an influential food critic and the head chef wants to make a dish requiring rare truffle oil. It contracts to buy some for £100 from the only UK supplier. The supplier later learns of why the restaurant wants the truffle oil and states that it will now only sell the oil for £1000. The restaurant agrees, but on receipt of the invoice refuses to pay more than £100.

Which of the following statements best describes the legal position in relation to the restaurant’s potential claim for economic duress?

As long as the restaurant can make another high quality meal for the critic, they have sufficient practical choice, such that there was no duress.

This is not duress because the supplier has not threatened to breach its contract with the restaurant.

The restaurant has no practical choice to source the truffle oil elsewhere, meaning there is duress. Expecting the restaurant to make an alternative meal is not a viable practical alternative.

By agreeing without protest to pay to the supplier’s demand of an additional £900 the restaurant has affirmed the amendment to the contract and will not be able to set the contract aside for duress.

This is not duress as the supplier’s demand of an additional £900 was not a threat made in bad faith.

Answer 79

As long as the restaurant can make another high quality meal for the critic, they have sufficient practical choice, such that there was no duress.

Correct – for economic duress, there must be a lack of practical choice. The test is practical choice in relation to acquiescence to the demand. As long as the restaurant can make another dish which is equally likely to impress the critic then they had a practical choice, and did not have to agree to pay £1000. The sellers demand was a threat made in bad faith (but it did not present a lack of practical choice).

Question 80

Presumed undue influence?

Answer 80

For undue influence to be presumed, there must be:
*a relationship of trust and confidence; and
*a transaction that calls for an explanation.

Question 81

Remedy for undue influence and recession?

Answer 81

The effect of both duress and undue influence is to make contracts voidable. The only
remedy is rescission.