Duress, Undue Influence

Duress, Undue Influence - Duress, Undue Influence &...

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1. Introduction Duress Common Law Doctrine Undue Influence Equity Doctrine Contracts are based on free and voluntary agreement, ie. there is mutual consent between the parties involved. Quare : What if a party alleges he did not freely/voluntarily contract? Quare : Will every form of pressure vitiate a contract? Only pressure regarded as improper in the eyes of the law will vitiate a contract, eg. Physical violence, abuse of trust, etc. A. Effects of Improper Pressure A void contract is one that has no legal effect from the very beginning, eg. Mistake at Common Law and Illegality. A voidable contract is one that has no legal effect only if set aside at the innocent party’s election, ie. innocent party can choose to rescind or affirm the contract. Limits on Voidability : o (i) 3 rd Party Rights o (ii) Affirmation o (iii) Impossibility of restoring parties to Original Position o (iv) Lapse of Time Void contracts are not affected by 3 rd party rights, while voidable contracts lose the option of rescission when 3 rd party rights come into play. Consequence of Duress still in dispute. In most cases, Duress makes a contract voidable (eg. Pao On v Lau Yiu Long [1980] ). However, in some older cases such as Barton v Armstrong [1976] , Duress is taken to render a contract void. Undue influence renders a contract voidable . o O’Sullivan v Management Agency Ltd [1984] 3 WLR 448 Barton v Armstrong [1976] AC 104 ( Significance : Duress must be a reason for entering the contract, but need not be the only or even main reason.) Held : Court held that the unlawful pressure must be a reason for entering into the contract, but it need not be the only or even main reason for contracting. Once it had been proved that unlawful threats were made, it is for the threatener to show that they were not a reason for entering into the contract. NB : Duress to person! Issue of relief : Cheese v Thomas [1994] 1 WLR 129 (CA, England) ( Significance : Concept of Restitution contrasted with Damages. Court under a duty to restore parties only as closely as possible to their original positions. Therefore, relief would be granted even if parties could not be restored to their precise original positions, the duty of the court (rather) to achieve “practical justice” as between the parties.) Facts : 85-year-old Plaintiff entered into agreement with Defendant great-nephew where he contributed his whole capital towards buying a house with the Defendant in which he would live for the rest of his life after which the house would pass unencumbered to the Defendant. Defendant paid rest of purchase price by taking building loan secured by mortgage over property. Plaintiff moved in and discovered Defendant had failed to pay installments for some months. Brought action seeking to set aside transaction for undue influence and claimed repayment of his entire capital. Court set aside 1
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transaction and ordered sale of property. Price had fallen substantially and Court ordered the parties
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This note was uploaded on 02/07/2012 for the course LGST 101 taught by Professor Hsu during the Spring '11 term at Singapore Management.

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Duress, Undue Influence - Duress, Undue Influence &...

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