Vitiating Elements: Duress and Undue Influence

Question 1

What is the remedy for duress or undue influence?

Answer 1

Contract is voidable by innocent party
* Recission only (if no bars)
* No damages

Question 2

Definition of Duress

Answer 2

Violence or illegitimate threats or pressure that coerce a party into entering or varying a contract

Question 3

What is the test for determining whether pressure amounts to duress?

Answer 3

1. Compulsion or lack of practical choice for victim (e.g. no alternative + breach of another contract)
2. Illegitimate (threat to breach contract or commit a tort); and
3. Significant cause of inducing C to enter contract (need not be only reason)

Question 4

Definition of Undue Influence

Answer 4

Influence that goes beyond what is regarded as acceptable
OR
A party takes advantage of a position of influence

Question 5

Types of undue influence

Answer 5

Actual or Presumed

Question 6

Test to establish actual undue influence

Answer 6

1. D acquired infleunce over C’s mind so as to preclude free will (threat can be legal)
2. Proven on facts

Question 7

Test to establish presumed undue influence

Answer 7

1. Relationship of trust and confidence
   * Automatic: fiduciary / parent and child / religious advisor and follower
   * Proof: husband and wife
2. Transaction occurs that calls for an explanation
   * not for V’s benefit
   * exposes V to risk

Question 8

When can a lender not enforce a security contract (i.e. sue surety)?

Answer 8

1. Undue influence
2. Lender has notice (actual or constructive)
3. No bars to recission

Question 9

When does a lender have constructive notice of undue influence?

Answer 9

1. Ought to have been put on inquiry
   * (non-commercial + not for joint benefit)
2. No reasonable steps
   * private meeting to explain risk + advise take independent advice; or
   * written certificate from independent legal advisor

Question 10

When might duress be used as a defence?

Answer 10

• Other party tries to enforce negotiated terms (promise to pay more)
• other party tries to claim damages for breach (lack of payment)