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Duress Undue Influence And Unconscionable Dealing Notes

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This is an extract of our Duress Undue Influence And Unconscionable Dealing document, which we sell as part of our Contracts 2 Notes collection written by the top tier of University Of New South Wales students.

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Duress, Undue Influence and Unconscionable Dealing

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The substance of such cause of actions is that the defendant enjoys an anscedant position vis-a-vis the plaintiff and abused that position by subjecting the plaintiff to threats (duress) or undue pressure (undue influence) or by taking advantage of the plaintiff's position of special disadvantage (unconscionable dealing).

* The courts are generally concerned with procedural unfairness (relating to how the contract was brought about) rather than substantive unfairness (in the contracts terms) but "contractual imbalance may be so extreme as to raise a presumption of procedural unfairness, such as undue influence or some other form of victimisation" (Hart v Connor) Basic Elements of Duress

* Duress is generally seen as a factor vitiating, not negating consent (if the latter was true the contract would be void ab initio rather than voidable)

* The accused mustn't be deprived of choice but rather have to choose between two evils unwillingly. Two conclusions may be drawn from this: o The contract is voidable and not void (except in extreme cases) o It is material how/why the deflection of freedom occurred - this depends on the distinction between legitimate and illegitimate pressure Universal Tankships of Manrovia v International Transport Workers Federation [1983] 1 AC 366 Relevant Facts: The ITF (trade union) 'blacked' UTMs ship, ensuring that it doesn't get serviced. In order to secure the lifting of the blacking and avoid disastrous financial consequences from being stranded in port they acceded to various demands by ITF - including the payment of $6480 to ITF's welfare fund. They later claimed the return of the money having paid it under 'economic duress. At the House of Lords ITF conceded it was guilty of economic duress but claimed immunity through the Trade Unions Act that provide protection in respect of 'trade disputes. The majority said the Act didn't provide immunity in the circumstances of the case - allowing the appeal Ratio (Lord Scarman):

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The two elements of duress are pressure amounting to compulsion of the victim's will and the illegitimacy of the pressure exerted. The class case is generally not the lack of will but the lack of practical choices open.

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The absence of choice can be proven by protest, the absence of independent advice, or a declaration of intention to go to law to recover money paid or property transferred - but none are determinative

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In this case the trial judge's verdict on this matter was uncontested - it was a matter of "urgent commercial necessity" that they be able to use their ships and they were advised that the chance of obtaining an injunction was slim

The real issue is therefore the second limb (legitimacy). Two matters may be considered

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The nature of the pressure - this need not be unlawful, in most cases it will be lawful pressure (e.g. threat to report to the authorities for blackmail)

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The pressure of the demand which the pressure is applied to supportIn this case the nature of the demand determines whether the pressure threatened (blacking) was lawful or unlawful - its conceded that if it was unlawful that the owner can recover but not if it was lawful

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The lawfulness depends on whether the act done was in contemplation of a trade dispute - if it was it wouldn't be actionable in tort and therefore it is unlikely that, being protected by statute from suit, it could amount to distress. This would be inconsistent with legislative policy

Duress and coercion of the person

* At common law,, wrongful coercion (duress) was narrow in scope and meant that one who used subtle/indirect methods of coercion would be exempt

* "Where an agreement harsh and inequitable in itself has been executed under the circumstances of pressure on the part of the person who executes it, the court will set it aside" (Ormes v Beadel)

* This meant the context of violence wasn't necessary - e.g. threat of lawful prosecution

Barton v Armstrong [1976] AC 104 Relevant Facts: The plaintiff alleged that the defendant coerced him into executing a deed relating to the sale of companies by threatening to have him murdered. Street J found that the many death threats justified Barton taking them seriously but also that there were compelling business reasons for executing the deeds and thus the threats didn't coerce him. The Court of Appeal adopted this chiefly but held the plaintiff couldn't succeed unless he established that but for the threats he wouldn't have executed the deed and he failed to do so. Barton appealed to the Privy Council. Ratio (Majority, Lord Cross of Chelsea):

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Saw an analogy between duress and undue influence and setting aside contracts for fraud where the court doesn't allow examination of the relative importance of contributory clauses

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Thought that the onus was on Armstrong to establish that "the threats which he was making and the unlawful pressure which he was exerting for the purpose of inducing Barton to sign the agreement and which Barton knew were being made and exerted for the purpose in fact contributed nothing to Barton's decision to sign"

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The trial judge found there was threats to kill, Barton's situation was one of 'very real mental torment' and there was a belief it would end if the documents executed

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Though Barton would have executed the documents if the threats weren't made, the threats did contribute to his decision to sign and to recommend their execution by other partiesHence the appeal should be allowed and the deceleration made that the deeds were executed under duress and void so far as concerns him

Ratio (Lord Wilberforce and Lord Simon of Glaisdale):

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Of the various means that consent can be obtained - advice/persuasion/influence/inducement/representation/commercial pressure - the law has come to select some that it will not accept as voluntary action (duress/undue influence/coercion)

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Thought that the relevant test were:

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