VITIGATING FACTORS- Economic duress

Question 1

what is a vitiating factor? (1)

Answer 1

a vitiating factor is something that makes a contract void (not legally binding) or voidable.

Question 2

what is meant by void? (1)

Answer 2

if a contract is void it has no legal standing.

Question 3

what is meant by voidable? (1)

Answer 3

if a contract is voidable it means that it is valid and binding unless avoided or declared void by a party to the contract who is legitimately exercising a power to avoid the contractual obligations.

Question 4

what is economic duress? (1)

Answer 4

any contract that either party has been forced into should not be valid.

Question 5

what is duress? (1)

Answer 5

where a contract was made under pressure, the party did not make the contract of their own free will.

Question 6

what cases show duress? (3)

Answer 6

Cumming v ince (1874)
Kauffman v Gerson (1904)
Barton v Armstrong (1976)

Question 7

what occurred in the case of Cumming v Ince and when was it? (3)

Answer 7

contract was made under the threat of putting the women into a mental hospital, if she did not make the agreement to transfer property. Court held the contract was made under duress so was therefore void due to the threat of unlawful constraint. (1874)

Question 8

what occurred in the case of Kauffman v Gerson and when was it? (3)

Answer 8

contract was made under the threat to have the women’s husband prosecuted if she did not make the agreement to pay his debts. Contract was made under duress and was therefore void. (1904)

Question 9

what occurred in the case of Barton v Armstrong and when was it? (3)

Answer 9

contract was made under threats that included death, phone calls that included heavy breathing and physical harm. he would have entered the contract anyway but due to the threats the contract was made under duress. (1976)

Question 10

where is duress found? (3)

Answer 10

-threats to property
-economic duress
-undue influence/pressure

Question 11

what is meant by undue influence/pressure? (1)

Answer 11

when there is an unfair balance of power, the courts attempt to prevent a relationship of trust being exploited for financial gain (this is how courts balance conflicting interests)

Question 12

what case originally did the courts classify as no duress in terms of threats to property? (1)

Answer 12

Skeate v Beale (1840)

Question 13

what occurred in the case of Skeate v Beale and when was it? (3)

Answer 13

a promise given in return for recovery of goods that has been unlawfully obtained was not classed as duress because the threat against property rather than a person did not amount to a threat of violence. (1840)

Question 14

what did the threat of property lead to? (1)

Answer 14

courts have become more flexible in their approach which resulted in the development of economic duress.

Question 15

when does economic duress occur? (1)

Answer 15

occurs where one party was forced into the contract because of economic pressure provided they are substantial and illegitimate.

Question 16

what cases show economic duress? (1)

Answer 16

D and C builders v Rees (1965)

Question 17

what occurred in the case of D and C builders v Rees and when was it? (3)

Answer 17

the family forced a small firm of builders to accept a cheque that was substantially lower than owed otherwise they would get nothing. (1965)

Question 18

what is required for economic duress to apply? (5)

Answer 18

-pressure was exerted on the contracting party
-the pressure exerted was illegitimate
-the pressure induced the claimant to enter the contract
-the claimant had no real choice but to enter the contract
-the claimant protested at the time or shortly after the contract was made

Question 19

what is meant by pressure exerted? (1)

Answer 19

must have been exerted on the innocent party which amounted to a compulsion of the will - the economic pressure must go a great deal further than ordinary pressure.

Question 20

what cases cover pressure exerted in terms of economic duress? (1)

Answer 20

North ocean shipping v tirundai construction (1979)
Pav on v Lav you long

Question 21

what occurred in the case of North ocean shipping v tirundai construction and when was it? (3)

Answer 21

D entered contract to build a ship, they made threats demanding more money otherwise they would breach the contract they agreed to as to not loose business. The threat to pay more was economic duress, D failed as they waited too long to bring the case forward (affirmation) (1979)

Question 22

what occurred in the case of Pav on v Lav you long? (2)

Answer 22

Cs threatened to break the contract to buy shared company unless the D who were shareholders guaranteed them against losses which would arise from fluctuation. This was duress that resulted from ordinary pressure (there was no compulsion of will)

Question 23

what is meant by legitimate pressure? (1)

Answer 23

legitimate pressure would most likely be considered pressure which fell within normal standards of business.

Question 24

what is meant by illegitimate pressure? (1)

Answer 24

a threat to do an unlawful act is illegitimate as long as the threat is unreasonable.

Question 25

what cases cover illegitimate? (3)

Answer 25

Atlas express v KAFCO (1989)
CTN cash and carry v Fallagher
progress bulk cariers v tube city

Question 26

what cases cover no real choice? (1)

Answer 26

the universe sentinel (1982)

Question 27

what occurred in the case of the universe sentinel and when was it? (3)

Answer 27

trade unions prevented a ship from being loaded unless certain payments were made to the trade union welfare fund. Contract was made under economic duress as it was the only way to not loose money. (1982)

Question 28

what is meant by protest? (1)

Answer 28

claimant protested at the time or shortly after the contract was made.

Question 29

what cases cover protest? (1)

Answer 29

the Atlantic baron