Undue influence: grounds of recession

Duress in Contracts

  • Definition of Duress:

    • Occurs when one party is threatened, leading to their acceptance of a contract against their will.

    • Affected party may seek to void the contract.

  • Characteristics of Contracts Under Duress:

    • Voidable vs. Null and Void:

      • Voidable: Contracts can be rescinded by the party under duress.

      • Null and Void: Means there was never a valid contract due to lack of consensus.

  • Requirements to Prove Duress:

    • Existence of a threat that coerces entry into the contract.

    • Five specific requirements must be met for a valid claim of duress.

  • Remedies in Cases of Duress:

    • Options include rescinding the contract or maintaining its validity.

    • Delectual Claim:

      • Involves calculating damages based on the position of parties post-duress compared to a hypothetical position if there was no duress.

Undue Influence in Contracts

  • Definition of Undue Influence:

    • Occurs when one party exerts excessive influence over another due to an existing relationship, leading to an agreement that may not be entered into freely.

  • Historical Case:

    • Originated from an English law case involving Dr. Prella and his patient Jordan.

    • Dr. Prella used his position to convince the ill Jordan to donate a significant asset to him, which he likely would not have done without that influence.

  • Requirements to Prove Undue Influence:

    • Position of Influence:

      • The influencer must hold a position of trust relative to the influenced party.

      • Examples: Doctor-patient, parent-child, attorney-client.

    • Capacity for Manipulation:

      • The influenced party must be in a vulnerable state (e.g., old, weak, scared).

    • Abuse of Relationship:

      • The influencer must exploit their position of power.

    • Detrimental Influence:

      • The undue influence must lead to a contract that causes detriment to the influenced party.

Remedies for Undue Influence

  • Options available if undue influence is proven:

    • Rescind the Contract: Void the contract due to improper influence.

    • Maintain the Contract: Keep the contract as is, if deemed appropriate.

    • Chill Damages: Potential compensation for losses incurred due to the influence.

Conclusion

  • Understanding Contract Validity:

    • Contracts can be rendered voidable due to duress, undue influence, or misrepresentation.

    • Establishing consensus among parties is essential for a valid contract.

Study Recommendations

  • Students should review the definitions and key cases related to duress and undue influence.

  • Engage in exercises to differentiate between void, voidable, and enforceable contracts based on circumstances of influence or coercion.