Vititating factors

Vitiating factors – effect

Duress, undue influence, unconscionable bargain → voidable (set aside/adjusted, restitution). Non est factum → void.

Non est factum – Bradley West elements

(1) Signed believing particular character/effect (2) radically different (3) mistake from someone else's erroneous explanation (4) took all reasonable care (5) not available if relied on own adviser (e.g. solicitor) instead of reading.

Bradley West v Keeman (1994 HC, Tipping J)

Share buyers signed as personal "Guarantors" of whole mortgage without reading; own solicitor's explanation insufficient (not misleading). NEF failed – no reasonable care; remedy against adviser. UB also failed.

Radius Residential Care v Krishna (2013 HC)

Mother signed "admission" form (signature page only, rushed, catching plane) for terminally ill son – actually personal liability for fees (>$70k/yr). NEF succeeded – radically different; receptionist's description; reasonable care in circumstances.

CF Asset Finance v Okonji (2014 EWCA)

Solicitor signed blank hire forms told they were for a credit check; salesman used them for real hire. NEF failed – knew it was a hire agreement (mistake about use, not nature); negligent signing blank forms.

Duress – test (McIntyre v Nemesis)

(1) Pressure (2) illegitimate (3) caused entry into contract (4) no affirmation.

Duress of person/goods vs economic

Person/goods threats always illegitimate and need only be a cause; economic duress must be the main/significant cause (lecture).

Illegitimate economic pressure

Threat to breach contract; threat without legal right; demand known not to be owed. Legitimate: hard bargaining, refusing to deal/renew, exercising legal rights, genuine warning.

McIntyre v Nemesis DBK (2009 NZCA)

Long-term development; manager sought more pay to continue; trust agreed. No duress – relational contract, warning not threat, trust affirmed (no protest, advice, years of performance).

Times Travel v PIA (UKSC 2021)

Dependent travel agent made to waive commissions as condition of new contract. No duress – lawful act duress only where party deliberately created vulnerability AND made bad-faith demand; PIA believed nothing owed.

Dold v Murphy (2020 NZCA)

Shareholder refused consent to company sale unless paid more than entitlement; others paid then sued. No duress – legally entitled to withhold consent; bargaining legitimate; no general good faith.

Duress – third party pressure

Pressure from a third party can count if the counterparty knows and takes advantage (lecture).

Duress – affirmation

Carrying on/no protest/delay after pressure ends = affirmation; right to avoid lost.

(E) Undue influence – actual (Contractors Bonding v Snee)

(1) Capacity to influence (2) exercised (3) undue (4) brought about the transaction.

(E) Undue influence – presumed

Relationship of trust and confidence (recognised category or proved on facts) + transaction calling for explanation → stronger party must show free and independent will (independent advice).

(E) L.E.A.D. Training Trust v Evans (2011 HC)

Ms Evans, student and counselling client of Mr & Mrs Wood ("disciple"), guaranteed one-sided Coachouse licence ($25k/yr). UI – trust proved on facts; cursory legal advice insufficient; commercial setting no bar; no affirmation until influence ended.

(E) Hogan v Commercial Factors (2006 NZCA)

Father with wide business experience guaranteed son's company debts – commercial context, lender not put on inquiry; NZ broadly follows Etridge, steps not rigid.

(E) Gardiner v Westpac (2014 NZCA)

UI over guarantor likely presumed where limited commercial ability, minimal financial stake and emotional dependence on debtor – puts bank on notice.

(E) Barclays v O'Brien

Wife guaranteed husband's business debts on family home; bank on notice, took no steps → set aside. Banks must ensure independent advice (Etridge steps).

Unconscionable bargain – Gustav principles

(1) Special disadvantage significantly impairing ability to assess own interests (2) other party knew or ought to have known (3) took advantage – active or passive (4) burden shifts to show fair and reasonable. Not for mere hard bargains or unequal power.

Gustav v Macfield (2007 NZCA)

Terminally ill developer (Parkinson) paid $12m (valuations $7–9m) for Union Centre. Special disadvantage found, but no actual/constructive knowledge – seen as sharp and rational, initiated the deal → claim failed.

Thorne v Kennedy (HCA 2017)

Young overseas fiancée, dependent on wealthy older man, signed pre-nup days before wedding ("no wedding otherwise"), advised not to → set aside: emotional/financial dependence + pressure; advice didn't cure as she wasn't free to act on it.

Constructive knowledge – UB

Marked imbalance in value or lack of independent advice can put stronger party on inquiry (Gustav); agent's knowledge imputed (Gutch v Homan).

Amadio / Blomley / Kakavas / Yedin (lecture)

Amadio – elderly parents, poor English, guarantee → set aside; Blomley – drunk elderly seller; Kakavas – problem gambler failed (no disadvantage exploited); Yedin – disadvantage must impair judgement.