Vitating factors - Duress and Undue Influence

Question 1

Duress

Answer 1

May take the form of violence or illegitimate threats or pressure that coerce a party
into entering a contract or varying a contract.

Burden of proving duress is on the party who alleges it.

Duress need not be the only reason why the innocent party entered the contract.

To amount to economic
duress, the threat must be an improper or illegitimate threat. Not taking business elsewhere.

Question 2

Duress - effects

Answer 2

Makes an original, or renegotiated, contract voidable if the victim chooses it.

Recession still bared in 4 circumstances already look at:
(a) Affirmation
(b) Undue delay
(c) A bona fide purchaser
(d) Impossible to restore goods or property

Question 3

Link between economic duress and consideration

Answer 3

Normally upwards variations need consideration.

For commercial contracts - performing an existing contractual obligation can be good consideration for a promise of
more money, provided the person promising the money obtains a practical benefit in return.

If later promise effected by duress then only the variation that will be rescinded, not the original contract.

Question 4

Undue influence

Answer 4

Makes a contract voidable. Same bars apply as duress.
No remedy of damages.

Defintion:
* influence that goes beyond what is regarded as acceptable; or
* where one party is in a position to influence another and takes unfair advantage of that
position.

Question 5

Actual and presumed undue influence

Answer 5

Actual = proved on the facts.

Presumed undue influence = where there is a fiduciary relationship or a relationship of trust and confidence
AND
transaction calls for an explanation.

Question 6

Presumed undue influence - Relationship of trust and confidence

Answer 6

Relationship presumed between solicitor/client, parent/child, doctor/patient, religious advisors/followers.

Where relationship not presumed e.g. husband and wife, innocent party must prove this.

Question 7

Undue influence - position of third parties

Answer 7

What if wife and creditor want laws protection?

Hinges on whether the creditor had actual or
constructive notice of the debtor’s (husband’s) undue influence then any security contract obtained is voidable.

Constructive notice if:
* it ought to have been put ‘on inquiry’
(cases where the debtor and
surety is non- commercial and the loan is not for their joint benefit e.g say its for couple to buy holiday home but wants it for stock market)
and
* it did not take reasonable steps to ensure that the surety was aware of the
implications of what they were signing.
(private meeting with surety to explain risks and advise independent legal advice)