Duress & Undue Influence Flashcards
What are the elements of duress?
Improper or illegitimate threats pressure
That coerces a party into entering a contract or varying a contract.
What is the only remedy for duress and undue influence?
Rescission
What is the burden of proof for duress?
The burden of proving duress is on the party who alleges it.
Must duress be the main reason for entering or varying the contract?
Duress need not be the only reason why the innocent party
entered the contract, but it must have induced the contract in some way.
What does not constitute duress?
A threat to take business elsewhere, sell to a competitor or not to give a discount in future
are all likely to be regarded as legitimate commercial pressure.
What constitutes pressure?
Pressure that is illegitimate and whose practical effect is that there is compulsion on, or lack of practical choice for, the victim
What are the guidelines that the court will take into account when determining whether there has been illegitimate pressure?
Whether:
There has been an actual or threatened breach of contract;
The threat was made in good or bad faith; or
The victim protested at the time.
What is the effect of duress?
It makes the original or renegotiated contract voidable. The innocent party can notify the other party that it wants to rescind or apply to the court for an order of rescission unless it is barred.
What constitutes undue influence?
Influence that goes beyond what is regarded as acceptable or where one party is in a position to influence another and takes unfair advantage of that position.
When is undue influence presumed?
Where there is a fiduciary relationship or a relationship of trust and confidence between the parties and a transaction occurs that calls for explanation.
When is a relationship of trust and confidence not presumed?
In a spousal relationship.
When must a transaction call for an explanation?
Where a party enters a contract that is not for their benefit or that exposes them to risk.
When is the presumption of undue influence rebuttable?
If there was evidence to show that the innocent party had taken independent advice.
When will a creditor have constructive notice of undue influence?
If it ought to have been put on inquiry and it did not take reasonable steps to ensure that the surety was aware of the implications of what they were signing.
When will a creditor be put on inquiry?
In all cases where the relationship between the debtor and surety is non-commercial and the loan is not for their joint benefit.
