Duress

Question 1

What is duress?

Answer 1

Duress is where one party coerces another party into a contract or revised terms of a contract.

This means they threaten that party to get what they want.

It violates the principle that parties must enter contracts voluntarily.

Question 2

What is the effect of duress?

Answer 2

If duress is found in either, the contract is voidable. This means the innocent party can choose to rescind the contract (make it end) provided there are no bars to rescission.

Question 3

What are the three types of duress?

Answer 3

There are three types of duress:
1. To person
2. To property
3. To economic/business interests

Question 4

Duress to the person

Answer 4

PHYSICAL threats to bicitm. Must be ONE of reasons for entering/varying contract.

(The burden of proof is on the party which exerted the pressure to show that their pressure did not contribute to the reasons why the person entered into the contract.)

Question 5

Duress to goods/property

Answer 5

Threats directed at someone’s property (e.g., to damage it)

Must be a DECISIVE reason for entering/varying contract.

Question 6

Duress to economic and business interests

Answer 6

Most common form of duress.

The threat is directed towards one’s financial standing: if you don’t enter the contract, or vary the terms of the original contract, I will not do business with you.

3 elements required:

1. The victim has no practical choice (if able to seek independent legal advice, less likely)
2. Pressure must be illegitimate
   a.) unlawful threat (to commit a crime or tort); or
   b.) threatened breach of contract
   c.) applied in bad faith (e.g., to get more money)
3. The pressure must be a significant cause of the victim’s entry into the contract / revised terms (but for test).

Note:
* only the variation will be rescinded

• has the other side given consideration to make this valid? yes, practical benefit