Variations + some frustration Flashcards
When might obligations end by?
-Performance e.g time limit.
-Frustration, it becomes not possible or illegal to carry out the contract.
-Breach
-Agreement.
What renders a contract void?
Mistake
What is duress?
A form of pressure.
-Too much pressure can damage someone’s consent to contract. Or deny the party of a reasonable alternative.
What two ways can the pressure on both parties be evaluated?
1)The degree of wrongdoing involved (legitimacy of the pressure).
2)The effect it has on party autonomy (or genuine freedom of choice).
What happens when a party acts under duress?
It makes the contract voidable.
What test is used in economic duress?
A stricter test of causation whereby the threat must be a significant cause.
This involves showing that but for the threat the transaction would not have been entered into.
What is the use of security?
This reassures a lender that the debtor will repay the money in due course.
How are security rights taken?
Over the property of the debtor.
When can security rights be enforced?
If the debtor fails to repay the loan.
What is the discredited ‘overborne will’ theory?
The courts originally insisted that the pressure must overbear the will of the victim in duress for there to be no consent.
How was the ‘overborne will’ theory rectified in Pao On v Lau Yiu Long?
The Privy Council stated that duress must ‘amount to a coercion of will, which vitiates consent. That the it was not a voluntary act’.
What is best focused on instead of the ‘overborne will’ theory?
Focusing on the nature of the choice made and the extent to which it has been compromised, how reasonable the alternatives are.
What do the courts assess for the nature or effects of the pressure?
1) Legitimacy of the pressure.
2) Causative effect of the pressure.
3) Whether there was ‘no reasonable alternative’.
1) How is Williams v Roffey an example of what may be a more legitimate demand?
The main contractors offered to pay more rather than the sub-contractors demanding more.
Yet when even when circumstances change it is harsh to deny another party of their bargain.
1) When can there be illegitimate pressures?
When a party acts in bad faith by taking advantage of another part’s position.
1) What happened in Atlas Express Ltd v Kafco?
-Atlas Express waited until last minute at the height of the Christmas rush until it threatened to breach its contract.
-Kafco (basket-weavers) faced losing their lucrative pre-Christmas contract with Woolworths if they could not have their baskets delivered and so they were forced to agree to the demand.
1) Why did Atlas sue Kafco?
Kafco only paid what the bill would have been on the other contract.
1) Why did Atlas lose?
It was a case of economic duress, the degree Kafco would lose out would be greater.
1) What is the obvious problem with the ‘bad faith test’ and legitimacy test?
Where to draw the line.
1) What was Atlas v Kafco an example of?
Sometimes a party acts in ‘bad faith’ by taking advantage of the other party’s weak position.
1) What is Progress Bulk Carriers v Tube City IMS LLC, an example of?
The pressure need not come from a threat to breach the contract.
What happened in Progress Bulk v Tube City?
Tube City (shipowners) had already breached the charter contract and demanded Progress Bulk (charterer) to waive all its claims for damages before it provided another ship.
1) In Progress Bulk what was the decision?
Progress Bulk sued Tube City for economic duress.
-Progress Bulk won, the contract was voidabele for duress.
1) In Progress Bulk what was lawful and unlawful?
Asking for a waiver is lawful but Tube City’s prior breach of contract placed Progress Bulk in vulnerable position, amounting to illegitimate pressure.
2) For economic duress the threat to breach be?
A ‘significant cause’ in inducing the claimant to enter into the contract.
2) What happened in Huyton v Cremer?
Mance J explained that the victim must show that he or she would not have entered the transaction ‘but for’ the threat.
2) What happened in Morley v Royal Bank of Scotland?
- The appellant’s claim of economic duress by the bank failed as the threats had not been the cause of entering the contract.
- It was clear that the threats against him were ineffective as they were successfully resisted by him and the impugned agreement was closer to the one originally proposed by the appellant.
3) In Huyton v Cremer what did Mance J state was needed alongside the ‘but for’ test?
The victim must also show that there was ‘no reasonable alternative’.
3) In Pakistan International Airlines v Times Travel what did Lord Burrow state?
‘Three elements need to be established for … economic duress: an illegitimate threat; sufficient causation; and that the threatened party had no reasonable alternative to giving in to the threat’.
What is undue influence?
Undue influence inquiry identifies when some pressure becomes too much.
What was duress and undue influence initially?
Duress was a common law doctrine and undue influence the creation of equity.
What does both duress and undue influence show the courts’ aversion to?
The ‘puppet effect’ where one party makes the other do things that they would not otherwise do independently.
How would William v Baley decision differ today?
It was decided on the grounds of undue influence, but really the bank pressurised the father through an unspoken threat - it would be lawful act duress.
What is undue influence reserved for?
When too much influence arises from an existing relationship between the parties.
What two classes can undue influence be decided into?
1) Evidence of actual undue influence being exercised.
2) No direct evidence of undue influence but can be inferred based on the party’s relationship and the transaction.
For duress where is the influence derived from?
Pressure alone.
Where is undue influence derived from?
-An existing relationship of trust and confidence between two parties.
-Proof that excess influence was exercised in the relationship.
-Rebuttable presumption that too much influence was exercised and calls for an explanation.
What is becoming less common?
Actual undue influence which cannot be brought under economic duress.
What is presumed undue influence?
When a party will be unable to prove that undue influence was exercised over them, instead the courts can infer that one party has failed to safeguard the otehr party’s interest.
What facts do the courts look for to infer undue influence?
- That the complainant reposed trust and confidence in the other party, or the other party
acquired ascendancy over the complainant; and- A resulting transaction that is ‘not readily explicable by the relationship of the parties’ or which ‘calls for an explanation’.
This can be rebutted by the defence.
- A resulting transaction that is ‘not readily explicable by the relationship of the parties’ or which ‘calls for an explanation’.
For undue influence to be inferred what must the party do?
-Prove there was a relationship between them.
-A transaction calling for an explanation.
How can the defendant rebut the presumption of there being a relationship of trust and confidence and a transaction calling for an explanantion?
By showing that the party acted independently from any influence e.g had independent advice.
-Etridge showed this may tip the balance.
What will the court do if it finds a contract was the result of undue influence?
It will refuse to enforce it.
What will the court do if the undue influence is executed or partly performed?
It will undo it through the remedy of recission.