Duress/Undue Influence Flashcards
Duress, actual or threatened violence to the person:
Barton v Armstrong [1975]
Facts: the claimant was the managing director of a company of which the defendant was the former chairman. The defendant threatened to kill the claimant if he did not purchase shares from the defendant. The claimant purchased the shares but sought a declaration that the transaction was void for duress. He also bought because they were a good move for him and the company.
Held: the contract was voidable because the threats of personal violence were a factor in the claimant’s decision to purchase shares.
Economic duress, main case:
North Ocean Shipping Co v Hyundai Construct Co (The Atlantic Baron) [1979]
Facts: a contract existed for the construction of a boat but the shipbuilders sought to increase the price after building had commenced due to fluctuations in exchange rate. Purchaser did not want to agree but feared the refusal would delay and would miss out on a lucrative charter agreement so agreed and then eight months after sought to recover the additional sum.
Held: pressure of this nature could amount to duress. There had been a ‘compulsion of will’.
Economic duress, elaboration for requirements case:
Pao On v Lau Yiu Long [1980]
Facts: the claimants threatened not to proceed with the sale of shares unless the defendants agreed to renegotiation in other peripheral issues. Defendants wanted to avoid litigation so agreed. Claimants tried to enforce the agreement but claimants resisted on basis of duress. PC found in favour of claimants in the basis that the facts disclosed ordinary commercial pressure not duress.
Held: PC stated duress requires ‘coercion of the will which vitiates consent’. Lord Scarman identifies four factors:
1) Did the person who claims to have been coerced protest at the time?
2) Did he have an alternative course of action open to him?
3) Did he have access to independent advice?
4) Did he take steps to avoid the contract after it was formed?
Duress, threats of unlawful action:
Atlas Express Ltd v Kafco [1989]
Facts: Kafco a small company and secured a contract with Woolworths. Engaged the claimant to transport the goods but due to a miscalculation in costs the claimant increased the price of delivery after the contract had commenced and threatened to cease delivery if the new price was not accepted. As failure to supply goods in the pre-Christmas period would make it lose its customer, the defendant felt compelled to accept but later refused to pay.
Held: Did amount to economic duress and illegitimate pressure, due to the time frame involved would have been unable to find alternative means.
Duress, threats of lawful action:
CTN Cash & Carry v Gallagher [1994]
Facts: the defendant supplied cigarettes. An order was placed by the claimants and it went astray so the defendant agreed to re-deliver the goods but these were stolen. Defendants delivered finally but demanded payment for stolen ones also and threatened that their credit facilities would be withdrawn.
Held: court held the threat of lawful action could amount to illegitimate pressure but that it did not in this situation. Extreme circumstances required before ‘lawful act of duress’.
Undue influence established in which case and what was established?
Bank of Credit and Commerce International v Aboody
- Class 1: actual undue influence
- Class 2: presumed undue influence (2A from a special relationship and 2B from no special relationship but relationship of trust and confidence).
Actual undue influence, case:
Williams v Bayley (1866)
Facts: young man forged a father’s signature on some promissory notes and presented them to a bank, which discovered the forgery. At a meeting between the bank and the father and son, the bank threatened to prosecute unless the father re-mortgaged his house to pay for the notes.
Held: the agreement was set aside on the grounds of undue influence since the father could not be said to have entered the agreement voluntarily.
Presumed undue influence - Special relationship, case:
Must prove the existence of the relationship (the party alleging the influence). Parent and child, religious leader and disciple, trustee and beneficiary, doctor and patient, solicitor and client.
Husband and wife specifically excluded as in Midland Bank v Shepherd [1988].
2B, presumed undue influence from a relationship of trust and confidence, case:
Royal Bank of Scotland plc v Etridge [2001]
Facts: a bank had taken charge over a wife’s property as security for a loan for her husband’s business overdraft. Wife signed the charge in the presence of her husband and had taken advice from a solicitor appointed by the bank but thought it was instructed by her husband. Bank tried to enforce the charge and the wife claimed undue influence.
Held: HoL consisted that where a bank hopes to be protected by the fact that the wife will be advised by a solicitor it should communicate directly with the wife informing her that for her own protection it will require written confirmation from a solicitor and he has to explain to her the nature of the documents and the practical implications.
