Duress And Undue Influence

Question 1

What are the three types of duress?

Answer 1

1. Duress to the person
2. Duress to property
3. Economic duress

Question 2

What constitutes duress to the person?

Answer 2

Actual or threatened violence influencing the decision to enter into the contract.

Question 3

What is duress to property?

Answer 3

Seizure or damage to the owner’s property or threat of this, leading to an agreement that would not have been entered into but for the duress.

Question 4

What defines economic duress?

Answer 4

Lack of practical choice caused by illegitimate pressure, leading to an agreement that would not have been entered into but for the duress.

Question 5

What is the effect of duress on a contract?

Answer 5

The contract is voidable.

Question 6

What is the remedy for a voidable contract?

Answer 6

Rescission, which attempts to return the parties to their pre-contract situation.

Question 7

What happens if a contract is affirmed after duress?

Answer 7

The remedy of rescission may be lost.

Question 8

What must be shown to establish economic duress?

Answer 8

The agreement would not have been entered into but for the duress.

Question 9

What is required to demonstrate illegitimate pressure in economic duress?

Answer 9

Evidence of actual or threatened breach of contract, good or bad faith of the party exerting pressure, protest by the victim at the time of duress, and affirmation of the contract after duress ceased.

Question 10

What is the significance of consideration in economic duress?

Answer 10

If a party does no more than what they were already bound to do, there is no consideration for a binding variation.

Question 11

What is the leading case on undue influence?

Answer 11

RBS v Etridge (No 2) [2002] 2 AC 773.

Question 12

What are the two types of undue influence?

Answer 12

1. Overt acts of improper pressure or coercion
2. Relationship of influence or ascendancy.

Question 13

How is undue influence established?

Answer 13

By showing a relationship of trust and confidence and a transaction that requires explanation.

Question 14

What is the burden of proof in cases of undue influence?

Answer 14

The burden shifts to the defendant to prove there was no undue influence.

Question 15

What are the limits on equitable relief for undue influence?

Answer 15

Relief is discretionary and may be denied due to delay or unclean hands.

Question 16

What is required for undue influence to be established in a spousal relationship?

Answer 16

The spouse must prove a relationship of trust and confidence and that undue influence was exercised.

Question 17

What must a creditor do when one party is a surety for another in a non-commercial setting?

Answer 17

The creditor must take reasonable steps to ensure the innocent party is aware of the risks and has independent advice.

Question 18

What is constructive notice in the context of undue influence and third parties?

Answer 18

A bank will have constructive notice of undue influence in non-commercial relationships unless it takes reasonable steps to warn the weaker party.