Duress and Undue Influence

Duress

one party coercing another party into a contract

duress to the person

vitiate a contract when amounts to actual or threatened violence

Barton v Armstrong - once established physical threats contribute to the decision

burden of proof on the party who exerted the pressure to show that the threats had nothing to do with the victims decision

duress to goods

voidable where there is a threat to see the owners property or damage it - Occidental Worldwide Investments v Skibs A/S Avanti

have to show that the agreement would not have been entered into if there had to be duress

duress to property

seizure or damage to owner’s property (or threat of)

Economic duress

DSND Subsea Dyson J - lack of practical choice, illegitimate pressure and that being a significant cause in entering into the contract

significant cause

the agreement would not have been entered into if there had not been the duress

lack of practical choice

no other choice for the victim

Carillion construction Ltd v Felix - impossible to find an alternative contractor in time

atlas express v kafco Ltd - Held that where a party has no alternative but to accept the revised terms that were detrimental to its interests this is economic duress

illegitimate pressure

threatened breach of contract

is pressure in good or bad faith?

did the victim protest or affirm

Effect of duress

contract voidable (Pao On v Lau Yiu Long)

Remedy for voidable contract

recission - attempt to return the parties to the situation each was in prior to the contract being entered into

may be lost when contract is affirmed

when lawful threat is illegitimate pressure

when threat is to get money they honestly believed was owed to them but made in bad faith

affirming the contract

North Ocean Shipping Co Ltd - did not protest breach and waited too long to bring legal proceedings

economic duress and consideration

silk v myrick - if a party does not more than bound to do there is no consideration for the variation

hartley v ponsonby - going above and beyond is good consdieration

practical benefit/obviation of disbenefit

when promisor has gained a benefit by paying the extra payment e.g. completion, avoidance of fines, not having to find alternative contractor

undue influence

if consent to a transaction was produced in a way such that the consent ought not fairly be treated as the expression of a person’s free will, then the transaction will not be allowed to stand

rare type of undue influence

instances of overt acts of improper pressure or coercion such as unlawful threats

more common type of undue influence

where one party has influence of ascendancy over the other and the first party takes advantage of that influence

burden of proof on the defendant

relationship with irrebuttable presumption of influence

parent and child

guardian and ward

solicitor and client

doctor and patient

NOT husband and wife or adult child and parent

third party and undue influence

post O’brien - RBS v Etridge - in transactions between spouses a bank is put on inquiry whenever a spouse offers to stand as surety for the other’s debts unless the transaction is clearly to the spouse’s benefit

• indirect benefit will usually not be sufficient to prevent the bank from being put on inquiry