Duress 1.
Duressoccurswhenthestrongerpartyexertsillegitimatepressureonthe otherparty(thevictims)soastoprocureacontract.
Dure Duress ss is ille illegit gitim imat ate e pres pressu sure re exer exerte ted d by a domi domina nant nt part party y to coer coerce ce a wakerpartytoconsenttoacontractagainstthatparty’swill.Inotherwords the weaker weaker party partydo does esnot not have haverea real l freedo freedom m tochoose tochoose wheth whetheror eror not to enterintothecontract. 1.1) Need todistinguish todistinguishbetw betweenaccepta eenacceptablehardbargainin blehardbargaining gandillegiti andillegitimate mate pressure.Toestablishduress,victimbearstheounceofproveandshoe there therewa was s a) illegitima illegitimatepr tepressur essure e b) whichimpairedthevictim’sconsent 1.1)1. Univ Univer erse se Tank Tanksh shio ios s Inc Inc of Monr Monrov ovia ia v Inte Intern rnat atio iona nal l Tran Transp spor ort t work works s Federa Federatio tion n 1.1)1.1. Pressureisillegitimateifitconsistsofunlawfulthreatsoramountsto unconscionableconduct 1.1)1.2. Impairedconsentarisesfromabsenceofchoice. 1.1)2. Commercia Commercialpressure lpressure isnotdure isnot duress[Smithv ss[Smithv WilliamCharlickLtd]where WilliamCharlickLtd]where thedefendantdemandedadditionalpaymentwithathreattowithholdor endanger endanger futurewheatsales. futurewheatsales. Thecourtheld that thepaymentwas thepaymentwasmade made unwillingly...itwasnevertheless,paidvoluntarily,inthelegalsense…and withoutanyunlawf withoutanyunlawfulcompul ulcompulsion, sion, extortion, extortion, undueinfluenc undueinfluenceor eorabuse abuse of anydu anyduty. ty. 2. Duresstotheperson 2.1) Duresstothepersoninvolvesactualorthreatenedviolenceto,oractual or thre threat aten ened ed conf confin inem emen ent t (fal (false se impr impris ison onme ment nt in tort tort sens sense) e) of the the inno innoce cent nt part party y corc corced ed,, or a clos close e rela relati tive ve or asso associ ciat ate e of the the inno innoce cent nt party arty.. In othe ther word words, s, the the act or thr threat eat must must be both both unlaw nlawfu ful l and directedtowardsobtainingtheinnocentp directedtowardsobtainingtheinnocentparty’sassenttoacontra arty’sassenttoacontract. ct. 2.2) Duress Duress must contributetovictim’sdecisiontosign,and neednot bethe bethe solereason.[BartonvArmstrong].Theonusfallsuponthepartyaccused todemonstratethatduresswasnotacontributingfactorintheinnocent part party’ y’s s asse assent nt.. The The cont contra ract ct was was ther theref efor ore e void voidab able le as thre threat at was was one one reasonforexecutionofdeed. reasonforexecutionofdeed. 3. Duressofgoods 3.1) Duressofgoodsinvolvesasituationwhereonepartyunlawfullyseizes, detains,damagesordestroysthegoodsoftheweakerparty,orthreatens to do so. so. Cont Contra ract ct ente entere red d into into may may be resc rescin inde ded. d. [The [The Sibe Sibeon on v The The
3.2)
Sibotre] stated that if a weaker party…should be compelled to sign a..contract for a nominal but legally sufficient consideration under an imminent threat of having his house burnt down or a valuable picture slashed,thoughwithoutanythreatofphysicalviolencetoanyone,thelaw shouldnotupholdthatagreement …ifthecontractisvoidtheconsideration wouldberecoverable.Ifitisvoidable,equitycouldrescindthecontract andorderthereturnoftheconsideration. The modern approach is illustrated by [Hawker Pacific Pty Ltd v HelicopterCharterPtyLtd]–Thedefendantknewthegoodwasneeded urgentlyfortheplaintiffbutthedefendantwithheldthegoodandinduce theplaintiff tosigna documentin whichtheplaintiffagreedtopayand release the defendant from any further liability. The contract therefore voidablebecausenoreasonablealternativebuttosign.
4. Economicduress 4.1) Economicduress isa recent invention ofthelaw.It involvesa situation whereathreatwasmadebythedominantpartytoprejudicetheinnocent party’seconomicinterests,andthatdominantparty’sthreatwasmadeto procureacontractwiththeinnocentparty.Ifproved,thisformofduress will render the contract voidable at the option of the innocent party, providetheparty’sfreewilltoresistthethreatwasimpaired. 4.2) To establish economic duress, thefollowing testoutlinedin [Crescendo ManagementvWestpac]McHighJAstated a) Whetheranyappliedpressureactually inducedtheinnocentpartyto enterintothecontract;ifso b) Whetherthepressuregobeyondwhatwaslegitimate.Presurewillbe illegitimate if it consists of unlawful threats to amounts to unconscionableconduct. In other words, Commercial pressure is not duress [Smith v William CharlickLtd],withoutamountingtounconscionableorunlawfulconduct, wouldnotconstituteeconomicduress. 4.3) Issueoftiming 4.3)1. In[NorthOceanShippingCoLtdvHundai]case,thecourtfoundthatthe contractwasvoidable;theexcesscouldberecoveredforeconomicduress, because there was a case to answer on the issue of economic duress. However,theplaintiffhadwaitedninemonthsbeforemakinganyclaims, giventhedelayonthepartoftheplaintiff,thecourtrefusedtorescindthe contract and found that the delay in action had actually affirmed the variedcontract. 5. UndueInfluence 5.1) Undue influence may be defined as where the dominant party uses influencethatshe/hehasovertheweakerpartytoobtainsomebenefit
underacontract.Thedoctrineisderivedfromequity,andtheprinciple thatthestrongerpartshouldnotbeallowedtoenjoytheprofitsofafraud orotherwrongfulact.UnlikeDuress,it neednotinvolveanunlawful act. Whereasduressconcernsillegitimatepressurebywayofthreatsundue influencerelatestotheexploitationofarelationshipofinfluence. 5.2) Aries where ascendant party takes improper advantage of position of dominance over the dependent party. Two classes ofundueinfluence – presumedundueinfluenceandactualundueinfluence. 5.2)1. Presumedundueinfluence 5.2)1.1. wheretherelationshipbetweenthepartiesissuchastogiverisetoa person of undue influence called ‘presumptive relationships.’ In certain situation involving a contract between parties in a fiduciary relationship, undue influence will be presumed. The consequence is that the stronger party bears the burden of proving the absence of pressure. In other words, in certain special relationships there is a rebuttable presumption of influencein favour of the stronger party. Recognisedspecialrelationshipsinclude: a) b) c) d) e)
5.2)1.2.
5.2)1.3.
parentandchild;(archervHudson)1844 trusteeandbeneficiary;HyltonvHylton(1754) solicitorandclient;Dowsettvreid doctorandpatient;WheelervSargeant religiousadviseranddisciple.AllcardvSkinner
In other relationships, no such presumption: account and client, fiduciaryrelationships,husbandandwife.Theserelationshipsdonot giverisetothepresumption. Inother words, where thereis nosuchrelationship, itispossibleto pleadundueinfluencebyvirtueofthefactthatarelationshipinvolved ahighdegreeoftrustandconfidence.[JohnsonvButtress]&[Barclays Bank plc v O’Brien] where history of friendship gave rise to a relationshipofdependenceso that undueinfluencewaspresumed.If thiscanbeestablished,thenthepresumptionofinfluenceappliesand theonusofdisprovingabuseoftheinfluencepassestothedominant party.[westmeltonvArcherandSchulmen]. Thelackofindependentadvicetotheweakerparty,beforesigningthe contract, is highly relevant. In [Lloyds Bank v Bundy] case, the relationship of bankers and customers may be found to be a relationship of influence, the court held that, there existed a special relationshipthatimposedupontheplaintiffafiduciarydutytoensure that thedefendant formedanindependent andinformedjudgement, beforecommittingtotheproposedcontract.Onotherwords,thebank should have advised the customer to obtain independent advice beforesigningtheloandocuments.Thestrongerpartymayrebutthe
presumptionofinfluencebyshowingthat: a) fulldisclosureofallmaterialfactswasmade; b) theconsiderationwasadequate; c) theweakerpartyreceivedindependentadvice. 5.2)2. Actualundueinfluence/Undueinfluenceonthefacts 5.2)2.1. To be successful in such a plea, it must be able to establish an underminingof theweakerparty’sindependence ofdecision making. Inotherword,itmustestablishanactualinfluenceonthemindofthe weakerpartyatthetimeofcontract.[GarciavNAB] 5.2)2.2. Wherenospecialrelationshipexists,theburdenrestsontheweaker partytoestablishthat(seeaboveJohnsonvButtress) a) therewasanappropriatelyinfluentialrelationship; b) that the stronger party exercised undue influence motivated the weakerpartytoenterintothecontract c) thattheundueinfluencemotivatedtheweakerpartytoentreintothe contract d) theweakerpartyactpromptlyinpurposingtoavoidthecontract. 5.2)2.3.
5.2)2.4.
[Farmers’Co-opexecutors&trusteevPerks],awifetransferredher interestinfarm,usedtobejointlyownedbyherselfandherhusband, tothehusband.Therehadbeenalonghistoryoffamilyviolencebythe husbandagainstthewife.Itwasheldthatarelationshipofinfluence existedandthepresumptionthatthewifetransferredthepropertyas resultofherhusband’sundueinfluencewasnotrebutted.Moreover,it was held there was evidence that established that the transfer resultedfromactualundueinfluence. Againissueoftiming–AllcardvSkinner–thecourtheldthatthere wasaright ofrescissionbecause ofactual undueinfluence.However, rescissionwasnotgrantedbecausetheplaintiffhadnotactedwithina reasonabletime,despitereceivingsomelegaladvicenotlongaftershe hadlefttheconvent.
6. Misleadingordeceptiveconduct–statutoryapproach 6.1) Se 18 (1) ACL provides – “ a person must not, in trade, or commerce, engageinconductthatismisleadingordeceptiveorislikelytomisleador deceive. 6.2) Remediesforbreachofs18includedamagesocompensateforloss(sec 236) and court orders to void or vary contract or to refund money or returnproperty(sec237) 6.3) Typesofconductcaught 6.3)1. misleading or deceptiveconduct means to lead intoerror. Erroe occurs
6.3)2.
6.3)3. 6.3)4. 6.3)5. 6.3)6.
whenapersonisledtobelievethingsthatarenottrueorcorrect Puffs may be misleading if reasonably specific [Campomar sociedad limitada v Nike international limited]. In [Demagogue v Ramensky], BlackCJsetouttheapproachtobeadoptedwhendeterminingwhether conductismisleadingordeceptive; itshouldbedeterminedinthelight of all the relevant circumstances constituted by acts, omissions, statementsorsilence.GibbsCJalsonotedin[ParkdaleCustomvPuxuPty Ltd]–theconductofadefendantmustbeviewedasawhole.Itwouldbe wrongtoselectsomewordsoractwhichalonewouldlikelytomislead. misstatementsoflaw Opinions,predictionsandpromises failuretoqualifystatement Silence can be a misrepresentation where there is an obligation to disclosefacts[HenjoInvestmnetsvCollinsMarrickville]
6.4) Featuresofsec18 6.4)1. falutisnotrequiredforconducttobemisleadingordeceptive 6.4)2. innocent misrepresentation may contravene s 18 enabling a claim for damages 6.4)3. Requirementofcasualconnectionbetweenconductanddeception 6.4)4. Post–contractualmisrepresentationcanbemisleading 6.4)5. norequirementtoshowinducement
