Duress, Undue Influence, Unconscionable Bargains Flashcards
(18 cards)
What must be present for a contract to be voidable for economic duress?
- There must be a threat or pressure which is illegitimate; and
- that pressure or threat must amount to a “coercion of will that vitiates consent”
Which case should be drawn upon when proving economic duress?
Pao On v Lau Yiu Long
What forms of duress are recognised by the law?
- Duress to the person
- Duress to goods
- Economic duress
What case can be used for duress to the person?
Barton v Armstrong 1976
- Court found threats of physical harm against Barton and his family were used to force the transaction
- If threats are made, and play any role in influencing the party, consent is invalidated and the contract can be set aside, even if other motivations were present
What is duress to goods
- A threat to destroy or detain goods should a contract not be entered into
In which case did Lord Burrows identify three elements to duress? (economic)
Pakistan International Airline Corp. v Times Travel 2021
- Illegitimate pressure
- Causation (the pressure caused claimant to enter contract)
- In economic duress, claimant must have had no reasonable alternative but to give in to the threat
Atlas Express v Kafco (Importers and Distributers ltd.)
- Illustrates economic duress
- Kafco, a small importer, was under obligation to supply certain goods to a major retailer
- Atlas Express demanded higher than agreed transportation charges which kafco reluctantly agreed to
- Court held in favour of Kafco as (1) the pressure applied was illegitimate and (2) the pressured party has no reasonable alternative but to agree
What is the effect of duress?
- The modern approach to duress is that it renders contracts VoidABLE
- This can be seen in Halpern v Halpern 2007
What is established in North Ocean Shipping v Hyundai Contraction?
- North Ocean agreed to pay more for a ship being built for them as the US dollar devalued
- However, instead of making the voidABLE contract VOID on the ship’s delivery, they waited
- The court ruled that if you don’t attempt to set aside the contract as soon as the pressure is removed, it stops being voidable
What’s the difference between duress and undue influence?
- Duress is a legal doctrine and Undue Influence is a equitable doctrine
- Duress examines the illegitimate pressure in commercial arrangements, much less so in undue influence as it concerns trust and confidence between parties
What are the two forms of undue influence identified in Barclays Bank v O’Brien 1993
- Actual undue influence, a type of fraud, involves lying
- Presumption of undue influence
Case of CIBC Mortgages plc v Pitt
- Example of actual undue influence
- Husband persuades wife to sign joint mortgage loan, uses money to invest, loses money, bank comes after wife to demand she pays the money as its her property
- HOL ruled wife could not escape enforceability of the mortgage, claimant must prove coercion or improper pressure was exerted to get their consent
- Third-party rights also asserted: bank or lender’s position isn’t altered by undue influence unless they had knowledge or constructive notice (should have know)
What is Actual Undue Influence
A type of fraud, involves lying
What is a Presumption of Undue Influence
(1) Certain categories of people
(2) De-facto relationship “trust and confidence”
OR
Disadvantageous
What relationships are covered by a presumption of undue influence?
Parent and child, religious adviser and disciple, doctor and patient, soliciter and client, trustee and beneficiary
- Marriage is a DE FACTO relationship, it’s not covered by law explicitly but a “trust and confidence” test is
How can a presumption of undue influence be rebutted?
- Independent legal or financial advice
What is the effect of undue influence on a contract and what case supports this?
- Dunbar Bank plc v Nadeem: The contract is voidable so that both parties (including the victim) are restored to their original positions
Case for duress of goods
- The Siboen and The Sibotre
- Contract entered into due to damage or threatened damage/ illegal siezure of goods or property can be set aside
