Duress & Undue Influence Flashcards
Define duress.
Illegitimate threat or pressure (distinct from legitimate commercial pressure) which induces a party to contract.
3 factors to establish duress. Case.
Carillion Construction v Felix.
- Illegitimate threat pressure (usually to breach contract or commit a tort).
- Leaving the claimant with no practical alternative.
- And was a significant factor in inducing the contract.
What factors will help decide if a threat is illegitimate? Case.
Carillion Construction v Felix.
- Actual or threatened breach of contract?
- Did the defendant act in bad faith?
- Did the claimant have any practical alternative?
- Did the claimant protest at the time?
2 schools of thought on the effect of duress. Cases.
- Void - Atlas Express v Kafco.
2. Voidable - Opel v Mitras.
What are the 4 bars to rescission? Cases applying 2 to duress?
- Undue delay - Atlantic Baron.
- Affirmation - Atlantic Baron.
- Impossible to substantially return the property.
- Innocent party has acquired interest in the property.
If the contract voided was a variation, what is the effect on the original contract?
The variation is voided; the original contract will still stand, if it was formed legitimately.
Define undue influence.
Influence which goes beyond what is acceptable.
What two types of undue influence are there?
Actual and presumed.
How can actual undue influence be shown? Case. Is it easy to prove?
Claimant must provide evidence of the undue influence - CIBC Mortgages v Pitt. This will usually be difficult to prove.
What 2 criteria must be shown to raise a presumption of undue influence? Cases.
- Relationship of trust and confidence. Some relationships create irrebuttable presumption, e.g. doctor/patient, solicitor/client. Husband/wife will NOT create irrebuttable presumption; presumption must be raised on the facts - Barclays v O’Brien.
- Transaction must call for explanation - RBS v Etridge.
Why is it necessary for the claimant to show that the lender has notice of the undue influence?
So that the lender is ‘tainted’ by such notice, and thus that the contract is voidable by the surety.
What 2 types of notice are there? Case.
Actual and constructive - Barclays v O’Brien.
What is actual notice? Case.
Lender witnesses or has knowledge of undue influence - Aboody.
What is constructive notice? In what situation will this always arise? Case.
Where the lender ought to be ‘put on enquiry’ of the risk of undue influence. Occurs in every case where debtor-surety relationship is non-commercial - RBS v Etridge.
Once put on notice, the lender must take reasonable steps to ensure the surety’s consent was freely given. Give 2 examples of such steps. Cases.
- Private meeting with surety, to explain risks and extent of liability - RBS v Etridge.
- Insist on independent legal advice - Credit Lyonnais v Burch.
