Economic Duress (vitaiting Factor)

Question 1

Types of vitiating factors

Answer 1

Vitiating factors are things that make the contract either void (i.e. it never had any legal effect) or voidable (i.e. it can be made void in certain circumstances but if the right to make it void is not exercised the contract remains valid).
2 vitiating factors are:
Misrepresentation
Economic Duress

Question 2

Economic duress contract

Answer 2

Any contract made where one party is forced into it shouldn’t be valid. This could be as a result of:
Undue influence – i.e. pressure which deprived the victim of independent judgement

Question 3

Economic duress

Answer 3

threat to damage a business or person financially. Threats must be “improperly coercive” – though not necessarily unlawful.

Question 4

Economic duress test

Answer 4

There must be pressure:
The effect of which is that there is a lack of practical choice for the victim
Which is illegitimate; and
Which is a significant cause inducting the claimant to enter the contract.

Question 5

Evidence that the pressure was illegitimate can look for the following factors (Pao On v Lau Yiu Long)

Answer 5

Did C protest about the pressure
Did C have any other available courses of action that were reasonable
Was C independently advised
After entering the contract did C try to make the contract void.