Duress and undue influence Flashcards
Lecture 6
What is Duress under Common Law?
- Exists when illegitimate pressure was exerted on a contracting party which induces that party to enter into the contract.
- Focusing on intention of parties and consent
Generally, when does duress occur?
When the contract is induced by unlawful or other illegitimate forms of pressure of intimidation [illegitimate vs unlawful]
(we also focus on the process of HOW the contract came to a particular result)
What are the different types of duress?
- To person: threat against the physical wellbeing of a person or their family. Causation is more relaxed, as you only need to prove a threat is “a” cause or reason to enter the contract
- To goods: actual damage/threat of causing damage to the goods or property of the victim {Skeate v Beale}
- Economic: use of superior economic power to illegitimately threaten financial consequences to coerce the other contracting party to agree to a particular set of terms, relatively new {The Siboen case link}
How would you establish duress? (to persons and goods)
- Pressure of an improper nature applied or harm threatened
- Claimant had no other choice but to accede to the defendant’s pressure (no reasonable alternative
- Casual impact of pressure sufficient to influence party to take course of action desired by one exerting pressure (absence of consent)
What are the elements of economic duress? {link to R v Attorney-General for England and Wales [2003]}
- two elements: “One was pressure amounting to the compulsion of the will of the victim and the second was the illegitimacy of the pressure”
What is the significance of compulsion and coercion of the will and consent in economic duress.
- Traditional approach: compulsion or coercion vitiates consent
- Criticism: duress does not eliminate consent, but consent is result of illegal/illegitimate pressure or threats
- Emphasis on com and coer of the will is still the main approach
What is the significance of illegitimate pressure as an element to set aside contracts based on duress?
- Lord Hoffman: “the fact that threat is lawful does not necessarily make the pressure legitimate”
- Unlawful threats generally amount to illegitimate pressure {Pao On}
- Lawful threats - seen as illegitimate duress only in exceptional circumstances
What are the relevant factors to establish illegitimate pressure?
- Threat itself (whether there’s an actual threat to break the contract)
- Whether the person doing that was in good or bad faith
3) Realistic practical alternative
4) Whether victim protested
5) Whether victim affirmed or sought to rely on contract
What is the significance of causation as an element to set aside contracts based on duress?
- There should be a causal link between threat and entering into the contract
- Al Nehayan case: “test of causation differs according to the nature of the duress”
- Evia case: pressure is a significant cause
- Kolmar case: more recent cases adopting “but for” test
What is the significance of reasonable alternative causation as an element to set aside contracts based on duress?
- Only for economic duress
- Courts may consider whether the innocent party had any other alternatives open them as part of examining causation {Huyton SA case}
- Claimant prove no reasonable alternative but to enter into contract
- Time Travel: can contract be set aside?
What are the consequences of Duress?
- Renders contract voidable (not void), giving rise to a restitution claim to recover money paid
- Must be within reasonable time after duress ceases to be operative, otherwise contract is seen to be affirmed
What is undue influence?
- Equitable doctrine
- “concentrated in particular upon the unfair exploitation of one party of a relationship which gives him ascendancy or influence over the other.” {R v A-G}
- Two elements: relationship cabale to give rise to necessary influence + influence generated by relationship must have been abused {National Commercial Bank}
- Focus on defendant
What is actual undue influence? (has some overlap with duress)
- “unconscionable for the dominant party to enforce his legal rights against the other”
- Claimant must show domination or that defendant has abused relationship of trust between parties
- Generally does not arise where transaction is innocuous (harmless) {Etridge}
What is presumed undue influence?
- Relationship of trust and confidence, or one party in a position of vulnerability or dependence
- Claimant must call for explanation at “manifest disadvantage”, shifting burden of proof to the defendant
What are the two ways of proving pressure in presumed undue influence?
a. No special relationship (claimant gave trust to defendant who misused it and prove undue influence)
b. Special relationship (claimant must prove existence of relationship of trust and confidence compared to ordinary transaction)
For undue influence, is causation needed and how?
- Sufficient causal link between undue influence and decision to enter into contract, but not principle reason {UCB}
- UI “part of process” by which consent was obtaoned {Libyan Investment Authority}
- Consequences: renders contract voidable (recission) + lost by affirmation if not rescinded after UI withdrawn
What are issues and problems of undue influence?
- Broader issue: inequality of bargaining power
- Courts unwilling to develop doctrine of inequality of bargaining power + principle of good faith in contract
- 1) Uncertainty, 2) role of Parliament
- Less discussion of political/philosophical influences
- Role of liberal-individualism and capitalism
