victimisation Flashcards
how many elements of duress did Hammond J lay out in Pharmacy Care Systems
7
what has the CA described Hammond J’s 7 elements of duress as
not as elements of duress, but as legal propositions of relevance to duress
a threat to commit a crime, a tort or a breach of contract is likely to be regarded as ?
illegitimate
a plea of economic duress will not succeed in cases where?
at the time the pressure is exerted there are no existing contractual relations between the parties and one does no more than strike a hard bargain
or where there is an existing contract and one induces a new agreement simply by threatening to enforce it
the CA has spoken of the need for care in distinguishing between illegitimate ___ and legitimate ____
illegitimate threats and legitimate warnings
what may be an alternative basis for a finding of illegitimate pressure
showing bad faith
what are some examples of legitimate pressure?
- a party to a contract performing unsatisfactorily and then agreeing under some pressure to do further work
- a bank insisting on security to guarantee the continued provision of finance
- a contractor refusing to do further work while past work had not been paid for unless the defendant director guaranteed payment of the debt
- the Australian Rugby Football League, genuinely believing in its entitlement to exclude clubs from its competition, insisting that the clubc sign a loyalty agreement with it
whether an illegitimate threat actually constitutes duress must be determined by reference to?
its coercive effect in the particular case
the proper approach is to ask whether any _____ ____ induced the victim to enter into the contract and to ask whether that ____ ___ ____ what the law is prepared to countenance as ____
applied pressure
pressure went beyond
legitimate
what is the effect of duress?
to render an agreement voidable, rather than void
a right to avoid a contract for economic duress can be lost if?
the threatened party affirms the contract
a contract induced by duress which has been affirmed cannot ?
be avoided against a person acquiring rights under it for value and without notice of duress
a contract induced by duress which has been affirmed may be?
avoided against purchasers for value with notice and against volunteers
what are the three types of victimisation?
duress, undue influence and unconscionability
part of the philosophy of contract law is that contracts arise from ? and the courts should ?
the exercise of free will and therefore should be enforced and courts should not intervene
to have a valid and binding contract there must be ?
true consent from both parties when entering into the contract
a contract may be ___ or ___ ____ by the victim if he or she entered into the contract under duress, undue influence or if the contract results from an unconscionable bargain
vitiated or made voidable
where does duress occur
where there is a pressure exerted by one party to coerce another party to act in a particular way.
what are the three types of duress
- duress to the person
- duress to goods
- economic duress
what does duress to the person consist of
- actual violent
- a present threat of violence or
- actual or threatened imprisonment
may also consist of:
- threats to prosecute
- extortion and black mail
what happened in Barton v Armstrong
Managing director of a company was threatened with death if he didn’t agree to buy shares from the defendant at a substantial overvalue.
PC held the transaction could be set aside because it was obtained under duress.
to constitute duress, threats must be/do what three things
- be of death, bodily harm or imprisonment
- be calculated to cause fear
- actually cause that fear
what happened in Director of Public Prosecution of Northern Ireland v Lynch
“the will is defected not destroyed”
- people don’t need to have their will completely overridden, the will might be there but they just might not follow it
when does duress to goods occur
when one party unlawfully seizes, detains, damages or destroys another’s goods - or threatens to do so - but the pressure exerted over the goods must be truly irresistible
what is economic duress
threats affecting a party’s economic interests or well-being which are illegitimate and induce the contract
there is a distinction between economic duress and ?
normal economic pressure
what happened in Atlas Express Ltd v Kafco
Kafco had a contract with Woolworths to supply some baskets. They had a trading agreement with Atlas Express for 6 months to do the delivery to Woolworths.
Atlas realised they had underestimated the size of the baskets so it was going to cost them more to deliver those baskets to Woolworths. They said to Kafco they need to vary the price in the contract. Kafco said no - this is business, you made a mistake, too bad. Atlas sent an empty truck to Kafco with a piece of paper - you want your contract, you pay more or we’re not delivering. Under time pressure to retain their big contract with Woolworths, Kafco agreed to pay more to Atlas.
Later, Kafco refused to pay and argued they were under economic duress and that there was no new consideration.
Held: it is economic duress, the contract was voidable (or at least the term signed under duress).
When the head of Kafco signed, he did so unwillingly and under compulsion - no bargaining power, no commercial negotiation. Kafco would’ve gone bankrupt without their big contract to Woolworths.
what are the two elements of duress as per Per Universe Tankships Inc of Monrovia v International Transport Workers Federation
- the pressure must be illegitimate
and
- it must coerce the other party to enter into the contract
what happened in Per Universe Tankships Inc of Monrovia v International Transport Workers Federation
ITWF had blackened a ship (remove the ability for that boat to leave the harbour and do its business), unless a number of demands were agreed - money and employment conditions.
The ship owner paid to leave the harbour and later they tried to recoup the money, arguing the money was extracted under economic duress.
HOL held: money was paid under duress and identified two main elements of duress: compulsion of the will (lack of choice) and the illegitimate pressure, which has now evolved to the above.
how does NZ law go further than Per Universe Tankships?
in Pharmacy Care Systems Ltd v Attorney-General, 7 elements of duress are outlined:
- there must be a threat of pressure
- that threat or pressure must be improper
- the victim’s will must have been overborne by the improper pressure so that his/her free will and judgement have been displaced
- the threat or pressure must actually induce the victim’s manifestation of assent
- the threat or pressure must be sufficiently grave to justify the assent from the victim (it left the victim no reasonable alternative)
- duress renders the resulting agreement voidable at the instance of the victim
- the victim may be precluded from avoiding the agreement by affirmation
what is the difference between legitimate and illegitimate pressure from A-G for England and Wales v R
the person does not have a reasonable alternative/practical choice in what they are going to be doing when there is illegitimate pressure.
it is easy to show it is illegitimate where it is an illegal act (e.g. blackmail)
what are the 3 steps to deciding whether there is illegitimate pressure for a problem question
- was there a threat against that person, or the exertion of illegitimate pressure on the party?
- if so, did the threat result in the victim being coerced into entering into the agreement?
- if we have duress, did the victim affirm the agreement?
pressure is illegitimate if it ?
- consists of unlawful threats or
- it involves unconscionable conduct
was the pressure illegitimate in Universe Tankships
yes - though not illegal, it was illegitimate because they could not leave the harbour
what happened in the atlantic baron
the US dollar declined in value during the period the tanker was to be paid over and so they asked for a compensatory increase in the price.
this was economic duress (paying 10% more) but ultimately the claim failed because the plaintiff had affirmed the contract
what happened in CTN Cash and Carry v Gallagher Ltd
cigarettes were delivered to the wrong warehouse and supplier insisted they should be paid for because they thought they had delivered to the right place - good faith for requesting payment.
therefore because it was good faith it wasn’t illegitimate pressure
what was found in Atlas Express Ltd v Kafco Ltds
held unlawful and coercive threat amounting to duress = illegitimate pressure considered highly coercive
what happened in Williams v Roffey Bros for duress
there was some practical benefit in paying more to have the contract be delivered but not economic duress or illegitimate pressure
what happened in Haines v Carter
she said we’re separating and I’m keeping all these things and if you don’t agree to that I’m going to report you to Inland Revenue for your shady things. He agreed. Held: there is lawful and unlawful acts here - not illegal to report someone for tax but it is blackmail here which is unlawful. The act doesn’t have to be unlawful in order for illegitimate threat to be found.
what cases are some examples of illegitimate pressure
Moyes & Groves Ltd v Radiation NZ Ltd
McIntyre v Nemesis DBK Ltd
Crown Commercial Construction Ltd v Lee
what happened in Moyes & Groves Ltd v Radition
goods ordered from india took 2 years to come. the buyer genuinly believed the contract had been abandoned. seller wanted an increase in price because by the time they arrived they cost more. this was a genuine request and there was no duress here.
Cook J: economic duress should not be used lightly as a way to avoid contractual obligation
what happened in McIntyre v Nemesis
a developer that was developing a piece of land for a trust wanted more money. court agreed the developer was a pain in the ass but his demand was not illegitimate. this is something more - putting them into a difficult/untenable situation.
what happened in Crown Commercial Construction Ltd v Lee
reporting somebody who is not living in NZ under the appropriate visa is not unlawful but this threat could be considered blackmail and therefore constitute illegitimate pressure
how does the concept of coercion play into illegitimate pressure
the pressure must be a factor in coercing the other party to contract. it must also be irresitible meaning that the person coreced chooses to submit to the demand rather than take an alternative course of action because a reasonable person would not be able to resist it.
how does Pao On v Lau Yin Long say constitutes coercion
there should be “coercion of the will, which vitiates consent”
what are the criteria to consider for coercion
- did the victim protest
- was an alternative course open to the victim
- did the victim get independent advice
- did the victim take steps to avoid the contract
what happened in Pao On v Lau Yin Long
two parties owned a building and one agreed to sell the building to the other party by exchanging shares from each others’ companies. there was a clause that if the value of the shares dropped in 2 years the other party would give compensation.
the share fell more than the percentage agreed and it was argued there should be larger compensation.
this case, after looking at the criteria set out in it, was commercial pressure not coercion under duress and the court restated the two elements (illegitimate pressure and coercion needed)
what cases are examples of coercion
Dimskal Shipping Co v ITWF
Haines v Carter
A-G for England and Wales v R
what happened in Dimskal Shipping Co v ITWF
a boat was threatened to be blackened by the ITWF for exploiting its workers. The threat of strike actions would’ve come at an astronomical cost to Dimskal so they agreed to the demands.
The boat claimed economic duress and under the English law applied the threat of strike would’ve been an unlawful act and an illegitimate pressure because the cost was so astronomical it would’ve bankrupted the company so they had no other choice but to agree
what happened in Haines v Carter
Young J considered there was a coercion element to a significant degree which left the victim with no practical choice but to submit to the demand. the blackmail led to no real choice
is there coercion in AG for England and Wales v R
there was no illegitimate pressure or coercion - he had other choices even if they weren’t palatable or fun for him
what are 3 effects of duress
- effect of duress is to render an agreement voidable rather than void - the agreement is valid until it is void
- the right to avoid can be lost by ratification or affirmation (Atlantic Baron)
- damages may be awarded in the tort of intimidation
was there affirmation in Pharmacy Care Systems Ltd v Attorney-General
the party had taken too long to make their claim so they lost it
is there affirmation in Haines v Carter
if you have taken steps to implement the contract then you have affirmed (effectively ratified)
what happened in Dimskal Shipping Co v ITWF
a boat was threatened to be blackened by the ITWF for exploiting its workers. The threat of strike actions would’ve come at an astronomical cost to Dimskal so they agreed to the demands.
The boat claimed economic duress and under the English law applied the threat of strike would’ve been an unlawful act and an illegitimate pressure because the cost was so astronomical it would’ve bankrupted the company so they had no other choice but to agree
what happened in Haines v Carter
Young J considered there was a coercion element to a significant degree which left the victim with no practical choice but to submit to the demand. the blackmail led to no real choice
is there coercion in AG for England and Wales v R
there was no illegitimate pressure or coercion - he had other choices even if they weren’t palatable or fun for him
what are 3 effects of duress
- effect of duress is to render an agreement voidable rather than void - the agreement is valid until it is void
- the right to avoid can be lost by ratification or affirmation (Atlantic Baron)
- damages may be awarded in the tort of intimidation
was there affirmation in Pharmacy Care Systems Ltd v Attorney-General
the party had taken too long to make their claim so they lost it
what does the complainant have to prove for undue influence under Barclay’s class 2
- there is a relationship of trust and confidence and
- the circumstances of the transaction call for an explanation
if the complainant can meet this requirement there is a rebuttable evidential presumption that the transaction was procured by undue influence and the dominant party then must produce evidence to rebut the presumption
what is undue influence
the person in the dominant position uses their position in order to influence the will of the servient person
Richardson J in Contractors Bonding Ltd v Snee said that “undue influence consists in the gaining of …. “
unfair advantage by an unconscientious use of power by a stronger party against a weaker in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by the stronger party”
what are the classes of undue influence from Barclays Bank v O’Brien
Class 1 - influence shown to actually have happened - no necessity for a relationship as such
Class 2 - influence is presumed to have happened due to a relationship of trust and confidence between the parties
2A - certain relationships as a matter of law raise the presumption that undue influence have been exercised e.g. lawyer to client, doctor to patient, trustee and the beneficiary, employers and employees
2B - there may be no particular relationship but if the complainant proves de facto existence of a trust and confidence relationship, such relationship will raise the presumption of undue influence - have to show the trust and confidence relationship
what are some relationships of presumed trust and confidence - the complainant must show that there is a special relationship in which the law presumes trust and confidence
- parent and child
- guardian and ward
- doctor and patient
- solicitor and client
- trustee and beneficiary or
- religious adviser and disciple
if there is no relationship of trust or confidence (class 1), the complainant must prove there was undue influence on the facts as per Contractors Bonding v Snee, as per which 5 things
- that the other party to the transaction had the capacity to influence the complainant
- that the influence was exercised
- its exercise was undue
- its exercise brought about the transaction
- that the transaction was to the manifest disadvantage of the complainant
what does the complainant have to prove for undue influence under Barclay’s class 2
- there is a relationship of trust and confidence and
- the circumstances of the transaction call for an explanation
what happened in Etridge
husband needed a guarantee for business loan and guaranteed it against the family home on which the husband and wife had a mortgage. therefore, the wife had to give her agreement. she has no direct benefit from the business.
wife claimed she signed under undue influence and wanted the agreement voided.
this lump of cases went before the HOL and they held banks have obligations to make them obtain independent legal advice especially for a couple and to watch out for undue influence or misrepresentation. But the wives also had their own obligation to get independent legal advice aside from the husband
rebuttal of clause 2 presumptions of undue influence is a question of?
evidence
to discharge the burden of proof, two basic facts must be established by the complainant as per Royal Bank of Scotland v Etridge, what are they?
- the complainant placed trust and confidence in the dominant party
- the transaction calls for an explanation or one which is ‘not readily explicable by the relationship of the parties’
the proof of these two facts is prima facie evidence that the dominant party abused the influence that s/he acquired in the parties’ relationship.
it is then for him/her to counter the interference. shifts the burden of proof.
what happened in Re Brocklehurst
an old man with an estate granted shooting rights to his mechanic friend and the executor claimed he had taken advantage. the man did not get legal advice.
it was not a case of undue influence and there was no relationship of trust and confidence where the plaintiff had put their affairs into the hands of the other man. this was a genuine friendship and if anything Brocklehurst was the dominant personality
automatic presumption of influence excludes those between?
- husband and wife
- engaged persons
- a child over a parent
what happened in Roche v Sherrington
Roche was bound by a vow of poverty, chastity and obedience as a member of a catholic sect.
he left and wanted the repayment of his substantial donation. the court held it was between an incorporated body and not a person alongside Roche so the case failed (relationship of trust and confidence must be between person and person)
what happened in LEAD Training Trust Ltd v Evans
students had set up a business venture and the teacher set up a contract and was getting all the money.
there was a relationship of undue influence
what happened in Re Craig
Craig, after his wife died, employed Mrs Middleton as his secretary, helper and companion. He gave her approximately £28,000 in gifts over the next 6 years. When he dies, the beneficiaries sue for recovery of the gift due to undue influence.
The relationship was not in the special category of 2A but there was a high order relationship of trust and confidence by her being with him all the time.
a relationship of trust and confidence was established and the transaction called for an explanation
what happened in Re Brocklehurst
an old man with an estate granted shooting rights to his mechanic friend and the executor claimed he had taken advantage. the man did not get legal advice.
it was not a case of undue influence and there was no relationship of trust and confidence where the plaintiff had put their affairs into the hands of the other man. this was a genuine friendship and if anything Brocklehurst was the dominant personality
what happened in ASB Bank v Harlick
daughter and son in low asked the daughters father to guarantee a loan of a business venture for those two which failed.
a relationship must involve a certain degree of reliance in order to be one of trust and confidence for undue influence. This was a normal loan issue and the father did not give up his rights to manage his own affairs so this was not a matter of trust and confidence
what happened in UDC Finance Ltd v Down
Down (director and shareholder) guaranteed loan to the company on husband and accountants advice.
company failed and she claimed undue influence.
the transaction was in need of an explanation because she wasn’t getting anything in return for her guarantee (no consideration obvious)
what happened in Public Trust v Ottow
PT advanced money to a family trust and husband and wife beneficiaries personally guaranteed this.
money was to better their joint property so this was not a transaction called into question
does a transaction need to constitute a manifest disadvantage for there to be the change of undue influence in nz
no - you only need a transaction that is not quite readily explainable (Etridge)
the presumption of undue influence may be rebutted by showing ?
that the servient party:
1. had taken fully informed independent advice before entering into the transaction or
- would have ignored that advice anyway or
- had the ability to exercise, and did freely exercise, an independent will in entering into the transaction
what happened in Inche Noriah v Shaik Allie Bin Omar
you have to show that the advice is independent (doesn’t necessarily have to be from a lawyer) and that the advisor knows all the circumstances of that person in that transaction.
here, the legal advisor was not aware of some material facts so the presumption could not be rebutted
what happened in Hammond v Osborn
a disabled man gave a £300,000 gift to his helpful neighbour. there was a trust and confidence relationship between them and it raised question because this was 90% of his estate.
Osborn hadn’t abused the relationship and he had given the money after free and full informed consent but the court voided the gift even though there was no proof of undue influence.
by applying etridge, the defendant should be able to rebut the evidential presumption by stating evidence there was no abuse of the person in the dominant position, they have not influenced their will or exploited the weaker party
here the court went outside Etridge and found it was too much of a gift
what is the effect of undue influence
the victim is entitled to rescind the transaction - the contract or the gift - they were induced to enter into by the exercise of the undue influence
what are the restrictions to relief for undue influence
right to relief may be lost through affirmation or acquiescence, inordinate delay in taking action after the influence ceases or where a third party has acquired an interest in good faith and for good consideration
undue influence might be imputed in 2 situations (Barclays Bank v O’Brien)
(a) the third party, who exerts undue influence is acting as an agent (actual or ostensible) of the bank; or
(b) the bank has actual or constructive knowledge of the undue influence (or misrepresentation) - the bank is put on notice
what happened in Kings North Trust v Bell
husband fraudulently misrepresented the business to the wife and she did not get legal advice.
held: bank entrusted husband with getting the wife to sign the document = agent of the bank = principal is bound by the wrongdoing = bank cannot implement guarantee against the wife
what happened in Contractors Bonding Ltd v Snee
son pressures alcoholic elderly mother to guarantee a loan to run a travel agency
it fails - he had unduly influenced his mother but bank not affected because he was only given the documents to give to her (no instruction to get signature)
what happened in ANZ National Bank Ltd v Smith
low income earner and solo mother was the co-borrower of a loan with her friend to buy a property.
had the friend unduly influenced her and was she an agent of the bank?
only gave document to friend, no tasks set up for the friend and bank had even organised an independent solicitor for Smith which showed they were not trying to have the friend as agent
what are the 4 doctrines for victimisation
- duress
- undue influence
- unconscionability
- incapacity
what do you have to prove for duress
pressure (illegitimate in economic situations but in domestic just pressure is enough) (CTM Cash and Carry v Gallagher)
coercion (4 requirements): did he protest, did he have independent advice, did he take steps to avoid the contract, did he have an alternative course open to him
cannot affirm the contract and go to court later to claim duress (Atlantic Baron)
what do you have to prove for undue influences
Etridge:
must be a relationship of trust and confidence and a transaction that requires an explanation (is one party being disadvantaged/it is a large transaction/have they had independent advice)
once you prove these two things, it gives rise to a rebuttable presumption of undue influence and the party can rebut it by showing they’ve acted independently
what must be proven for unconscionability
Gustav:
- a position of disadvantage (give the list of factors that makes them disadvantaged)
- knowledge or ought to have known about that disadvantage
- victimisation - either active extortion or passive acceptance of an unconscionable bargain
what must be proven for incapacity
Scott v Wise:
- you must be able to understand the general nature of the transaction as opposed to the details
O’Connor v Hart:
- knowledge of that incapacity
what are some circumstances in which the bank would be put on notice (or not)
Barclays Bank v O’Brien - any emotional relationships covered. as soon as there is a serious disadvantage, the bank should be looking into the relationship
Credit Lyonnais Bank Nederland v Burch - bank had constructive notice the employee whose employer acted as a father figure might have been in issues of undue influence guaranteeing the business loan - there was no benefit or independent advice for her and this should’ve raised the banks suspicions.
CIBC Mortgages v Pitt - husband used remortgaged second house money to play on the stock market instead. the bank was not put on notice because they believed the money was going to be used for both the husband and the wife.
Etridge - if they have an interest in the commercial business its fine but if they go for a commercial loan the bank is not put on notice.
how does Royal Bank of Scotland v Etridge outline the steps a bank should take when put on inquiry
reasonable steps to satisfy itself the wife has understood, in a meaningful way, the practical implications of the proposed transaction:
- communicate with the wife directly
- disclosure of financial information
- inform the wife’s solicitor of belief or suspicion
- the bank should insist on advice being given to the wife by a solicitor independent of her husband
—- in this case, the bank will not be put on notice —
what cases adopt Etridge in NZ/
Horgan v Commercial Factors Ltd - all kinds of lenders are covered - banking system and products being sold in NZ are very similar to England so it can be transferred.
Rawleigh - solicitors have to take information from the bank seriously and have duties towards the wife. If they don’t they might be put on notice or be in breach of their duty.
UDC Finance Ltd v Down - also makes reference to Etridge
what is the difference between a harsh term and an unconscionable bargain
- mere harshness of a contract does not affect its enforceability at common law (applying the will theory of contract)
at most the courts would merely require that the proferens expressly put the other party on notice of the term
equity was however prepared to intervene where the stronger party had acted unconscionably
what do you have to show to plead unconscionability
- show that a stronger party took some undue advantage of the weaker’s position
the weaker party must be able to show:
- that an unfair bargain was struck and
- it was reached by the stronger party taking unfair and improper advantage of some disability by which the weaker was affected
what happened in Hart
trustee of a trust owned a family farm and his brothers and him worked and lived on the farm.
solicitor recommended they step aside from farming as they are getting old.
they lease to neighbour with an option to buy the farm.
neighbour wants to buy within a few months so they enter into a sale of land under unfair conditions (sold for $180,000 but valuation $197,000).
Jack dies and two surviving brothers take action against the neighbour claiming Jack was old and had become senile due to a condition = unconscionable bargain.
dismissed because needs to be an action of unconscionability - party should’ve been active in obtaining an unfair contract. the terms also came from Jack and his solicitor and the solicitor did not know Jack was unwell. There was no action against the neighbour as the terms did not come from him
what did Attorney-general for England and Wales v R claim about unconsciionability
claimed an unconscionable bargain but unconscionability was linked to a serious disadvantage on the part of the weaker party known by the stronger party and the exploitation of a disadvantage
what is the difference between unconcsionability and undue influence
undue influence = pleaded where the stronger party has played some part in influencing the will of the weaker party so the weaker party does not reach a fully independent decision
unconscionability merely requires that the stronger party took undue advantage of a ‘special disability’ suffered by the weaker
what are the elements of unconcionsbility from Gustav
- weaker party is under a significant disability
- stronger party knows or ought to know of that disability
- stronger party has victimised the weaker in the sense of taking advantage of the weaker’s disability, either by:
- active extortion of the bargain
- passive acceptance of it in the circumstances where it is contrary to conscience that the bargain should be accepted - there is a marked inadequacy of consideration and the stronger party either knows or ought to know that to be so and
5, there is some procedural impropriety either demonstrated or presumed from the circumstances
what happened in Bowkett v Action Finance Ltd
- elderly couple under pressure from son Michael to use house as loan security
- did not seek legal advice though Action Finance advised them to. Action explained the general nature of the transaction to them.
- son defaulted on loan and Action sought to foreclose. Bowkett’s got an injunction to stop the sale and pleaded an unconscionable bargain but Action wanted the injunction lifted
- the court held the Bowkett’s were under special disability when they entered the transaction because they were elderly, unversed in business matters and under pressure from their son. Action knew or ought o have known of their disability and they passively accepted the situation.
- it was against good conscience for Action to go through with the contract so the court refused to lift the injunction
what happened in Gustav
a seller of land had cancer and the purchaser knew about it. court decided it couldn’t be set aside because the seller was capable of conducting their affairs at the time of the transaction
what are the 3 critical elements of an unconscionable bargain as per Tipping J in Bowkett v Action Finance
- the weaker party is under a significant disability
- the stronger party knows, or ought to know, of that disability
- the stronger part has victimised the weaker in the sense of taking advantage of the weaker’s disability
how is a special disability or disadvantage met for there to be an unconscionable bargain
- not satisfied by proof of a mere disadvantage or inequality of bargaining power
- has to be some disabling condition or circumstance which significantly diminishes the affected party’s ability to make rational decisions in his or her own best interests
- can take the form of ignorance, lack of education, illness, age, mental or physical infirmity, stress or anxiety and other disabilities depending on the circumstances
what happened in Blomley v Ryan
possibilities of disabilities were listed: poverty, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy, lack of education, lack of assistance
what happened in Commercial Bank of Australia v Amadio
- elderly migrant italian couple didn’t speak must English but were pressured by their son to guarantee his loan against their house, which he doesn’t pay so the bank wants to sell there house
- court found: little English understanding, did not get professional independent advice, bank manager had knowledge of their lack of knowledge in this area and did not suggest they should get advice, bank knew son was in unstable business and knew the parents did not know of the situation, bank did not inform they were liable for the full amount of the loan (£50,000)
- so bank knew about the special disability and did nothing to help, instead taking advantage
what happened in Moffat v Moffat
in a separation case, husband got everything including full custody of the children. the wife signed but didn’t seek the independent advice the solicitor told her to get. she was pregnant with her lover and felt bad so was vulnerable. she also didn’t know the true value of the marital home.
the husband was aware of all of these circumstances and took advantage of the situation so the transaction should be set aside
what happened in Nichols
back neighbour wanted to do a property development to make 12 flats in the back and convinced front neighbour to agree to pay for a part of the new driveway.
he was a real estate agent manager so knew about these things while she was a nurse so didn’t.
she signed the first contract but it had her wrong maiden name and she refused to sign the new contract. he said she’s bound because she signed the wrong name first one.
court held she doesn’t have to sign - its an unconscionable bargain
in Hart v O’Conner, the Privy Council held that victimisation consists of either ?
- active extortion
- passive acceptance of a benefit in unconscionable circumstances
what is the effect of unconscionability
- the contract is voidable at the instance of the weaker party
- in appropriate cases the court may simply reduce that party’s liability instead of extinguishing it completely
- the right to relief can be lost through ratification, affirmation, delay, intervention by a third party or even unconscionable conduct by the weaker party
what is a disadvantage for unconscionable bargain
a condition or characteristic which significantly diminishes a party’s ability to assess his or her best interests
what are some factors that show an unconscionable bargain
inadequacy of consideration, procedural impropriety, such as unfair pressure being applied to obtain the other’s consent, and the absence of independence advice
