Duress and undue influence Flashcards
Define undue influence and duress.
with situations where free and independent consent to contract has not been given, and accordingly, the contracts concerned are not allowed to stand.
Is a contract made under duress enforceable?
No, they are voidable.
What are the 3 types of duress?
1- duress to person
2- duress to property
3- economic duress
Define duress to person.
threaten of violence
- Amounts to one factor influencing the decision to enter into the contract (need not be decisive)
Define duress to goods and property.
threat to seize the owner’s property or to damage it
- But for the duress, the agreement would not have been entered into
Define economic duress.
There must be pressure,
(a) whose practical effect is that there is a compulsion on, or a lack of practical choice, for the victim,
(b) which is illegitimate and
(c) which is a significant cause inducing the claimant to enter into the contract.
What is the remedy to duress?
Rescission
Define the term ‘lack of practical choice’ within economic duress.
Pressure must result in a lack of practical choice for the victim.
What factors does the court take into account when determining if there has been illegitimate pressure within economic duress?
-Has there been a threatened breach of contract?
- pressure applied in good or bad faith?
- did victim protest
- did victim affirm?
What does it mean for victim to affirm in illegitimate pressure?
Unless the victim of duress takes immediate action once the pressure has ceased to operate, they may be taken to have affirmed the contract.
If there is doubt whether to bring claim under undue influence or duress, what should claimant do?
Bring claim on both grounds
Define undue influence.
What are the 2 types of undue influence?
1- Overt acts of improper pressure or coercion (e.g. unlawful threats). Overlap with duress.
2- taking advantage of relationship influence/ascendancy
What is overt acts of improper pressure or coercion?
similar to duress, influence is of a deceitful / fraudulent nature
What are the relationships of irrebuttable presumption where one party has influence over the other?
- parent & child
- Solicitor & client
- guardian & ward
- Trustee & beneficiary
- Doctor & patient
How is taking advantage of influence/ascendancy proved?
- Party alleging undue influence shows
- relationship of trust and confidence AND
- transaction which requires
explanation
Why is the case Barclays Bank plc v O’Brien significant in regard to the doctrine of undue influence?
It provided guidance for lenders concerning how they might avoid being fixed with notice of a contracting party’s undue influence
When will a bank be put on inquiry that a surety transaction might be tainted by undue influence?
Whenever one party in a non-commercial setting is standing as surety for the other party
What step should a bank take to satisfy itself that that a surety transaction is not affected by undue influence?
If the bank is aware that the spouse may have been misled, the bank should tell the solicitor of this.
What remedy will a spouse have if they are unhappy with the standard of service provided by a solicitor regarding a surety transaction?
The spouse can sue the solicitor in negligence.
