Vitiating factors-Economic Duress Flashcards
Any contract made where a party is forced into it should not be valid.
True or false?
True
Undue influence.
Occurs where one part enters the contract as a result of pressure put on them by someone in a positions of trust, such as between a doctor and patient, a solicitor and client, or a religious leader and follower
Case example for undue influence.
Allcard v Skinner -Mother superior got a nun to hand over all her money
What might a contract signed under duress involve?
Threats, e.g., blackmail or even violence, to persuade one party to sign the contract
Case example for duress.
Barton v Armstrong (1976)-death threats were made
3 types of duress. [NOT IMPORTANT]
- Undue influence
- Duress
- Economic duress
Economic duress
Where a party signs a contract due to an improperly coercive threat to damage them or their business, financially.
Case which demonstrates economic duress.
Atlas Express v Kafco (1989)
Examples of economic duress.
Tough business bargaining
Exploiting weaknesses to advantage
What is not considered economic duress e.g., where do courts draw the line?
“Sign my contract or you will be ruined!”
Facts of Atlas Express v Kafco (1989)
-Kafco had contract with Woolworths to supply their good to Woolworth stores
-Kafco signed with Atlas Express to deliver the goods
-Atlas discovered fewer boxes fitted on their lorries than they expected, so demanded more money than originally agreed
-Kafco had no other option but to agree they would pay more, as they wouldn’t be able to find another haulage company in time to avoid losing the Woolworths’ contract
-However they then claimed economic duress
-Court decided in favour of Kafco
3 tests deriving from Atlas Express v Kafco (1989). [ALL TESTS MUST BE MET]
- Pressure must have the practical effect of which is that, there is compulsion on, or a lack of practical choice for, the victim
- Pressure must be illegitimate
- Pressure has to be a significant cause inducing the claimant to enter into the contract
Case court used to identify factors which would help decide whether the pressure was illegitimate.
Pao on v Lau yiu Long (1979)
4 factors deciding whether pressure is illegitimate coming from Pao on v Lau yiu Long (1979):
- Did the person claiming to be coerced protest about the pressure?
- Did that person have any other available course of action that was reasonable?
- Was he or she independently advised before taking the action?
- After entering into the contract, did he or she take steps to make the contract void?
Case where it was decided that pressure could be illegitimate even when it was lawful.
Progress Bulk Carriers Ltd v Tube City (2012)
