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Duress Notes

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TABLE OF CONTENTS
I - Duress and aggressive commercial practices................................................................................3
I.A - Duress..................................................................................................................................... 3
A/ Duress to the person............................................................................................................... 3 1/ Pressure......................................................................................................................... 4 2/ Causation....................................................................................................................... 4
*Barton v Armstrong [1976] AC 104................................................................................4
B/ Duress to property................................................................................................................... 4
Dimskal Shipping Co SA v International Transport Workers' Federation, The Evia Luck
[1991] 3 WLR 875, 883.................................................................................................... 4
C/ Economic duress (threat to breach a contract)........................................................................4 1/ Causative requirement................................................................................................... 5
Huyton v Peter Cremer [1999] 1 Lloyd's Rep 620, 635-639............................................5
*Pao On v Lau Yiu [1980] AC 614....................................................................................5 2/ Examples........................................................................................................................ 5
*Atlas Express Ltd v Kafco [1989] QB 833.......................................................................5
*Pao On v Lau Yiu [1980] AC 614....................................................................................5
D/ Lawful act duress.................................................................................................................... 5
*CTN Cash and Carry v Gallaher [1994] 4 All ER 714......................................................5
Akai Holdings Ltd (Liquidators) v Ting [2010] UKPC 21...................................................5
*The Universe Sentinel [1983] 1 AC 366.........................................................................6
I.B - Aggressive commercial practices (consumers)........................................................................6
*Consumer Protection from Unfair Trading Regulations 2008 reg. 7 (aggressive commercial practices)..................................................................................................... 6
Part 4A (Consumer Protection (Amendment) Regulations 2014 reg.3) (right to redress in aggressive commercial practices)...................................................................................6
II - Undue Influence and non-commercial guarantees........................................................................6
II.A - Undue influence..................................................................................................................... 6
Allcard v Skinner (1887) 36 Ch 145.................................................................................6
A - Burden of proof...................................................................................................................... 6 1/ Traditional categories..................................................................................................... 6 2/ Restatement in Etridge................................................................................................... 6
B - Actual undue influence........................................................................................................... 6
CIBC Mortgages plc v Pitt [1994] AC 200.........................................................................6
C - Presumed undue influence..................................................................................................... 7
C.1/ Relaltionship of influence............................................................................................... 7 1/ Automatic presumption of Relationship of influence (Class II.A).....................................7 2/ Proved relationship of influence (Class II.B)....................................................................7
Credit Lyonnais v Burch [1997] 1 All ER 144...................................................................7
C.2/ Transaction needing explanation...................................................................................7
C.3/ Rebutting the presumption............................................................................................. 7
D/ Consequences of undue influence........................................................................................... 7 1/ Change of position defence............................................................................................ 8
Cheese v Thomas [1994] 1 All ER 35...............................................................................8 2/ No partial rescission....................................................................................................... 8
II.B - Non-commercial guarantees................................................................................................... 8
III - Unconscionable bargain (Advantage of Mental or Financial Weakness).......................................9

Page 1
CONTRACT: DURESS, UNDUE INFLUENCE, UNCONSCIONABILITY I - DURESS AND AGGRESSIVE COMMERCIAL PRACTICES
I.A - DURESS

Requirements (The Universe Sentinel):-

Illegitimate pressure by D
o Threats of illegal conduct is usually illegitimate

Threats of lawful conduct are generally legitimate unless immoral or unconscionable when coupled with an illegitimate demand (the more unfair the demand, the more likely illegitimate)
That induced C to enter the contract (degree of causation required varies with type of duress)
C had no practicable alternative but to submit to the demand (economic duress only)

A/ DURESS TO THE PERSON

1/ PRESSURE

Threat to do violence or to detain the other party or someone in a close relationship, to induce their consent ? illegitimate pressure (Barton v Armstrong).
Chitty suggests that even threatening to do it to a strange would be enough if C genuinely believed that submission was the only way to prevent the stranger from being injured.
2/ CAUSATION

Needs only to be a cause of decision to contract, not necessarily the predominant or overwhelming or but-for cause - to enforce the contract, D must show that it had no effect whatsoever on C.
*Barton v Armstrong [1976] AC 104-

Facts: C claimed that he was induced to buy out D's interest in a company on generous terms by D's threat to murder C's family. Trial judge denied relief because C's main reason to buy out
D was to ensure survival of the company.
Held (PC): allowing the appeal, that C could succeed if D's threat were merely a reason for the decision, even if he might have done so without the threat.

B/ DURESS TO PROPERTY
C must show that the threat was a significant cause (Dimskal Shipping).
Dimskal Shipping Co SA v International Transport Workers' Federation, The Evia Luck
[1991] 3 WLR 875, 883

C/ ECONOMIC DURESS (THREAT TO BREACH A CONTRACT)
Most significant application = contract modification (threat to break existing contract unless the other party agreed to pay more or accept less for original performance). Originally, consideration meant that this agreement was never enforceable, but Williams v Roffey Brothers... ? economic duress is left to control the limits of renegotiations.
1/ CAUSATIVE REQUIREMENT

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CONTRACT: DURESS, UNDUE INFLUENCE, UNCONSCIONABILITY Courts take a causation-led approach because pressure will almost by default be illegitimate in that breaching a contract is otherwise unlawful, so that if any such renegotiations are to be upheld, the causation requirement must be more stringent:
Huyton v Peter Cremer [1999] 1 Lloyd's Rep 620, 635-639Lord Mance: economic duress is less serious than duress to the person or property, justifying a higher causative requirement.
o The basic test is but-for causation (either without the threat the contract would not have been made at all or on different terms).
o C must also show that he had no practicable alternative but to submit, though this is
"not an inflexible third essential ingredient"

*Pao On v Lau Yiu [1980] AC 614Lord Scarman: in deciding causation court asks whether the victim (i) protested, (ii) had a practicable alternative like an adequate legal remedy, (iii) was independently advised, and (iv)
acted promptly to avoid the renegotiation.

2/ EXAMPLES

*Atlas Express Ltd v Kafco [1989] QB 833Facts: a carrier company mistakenly under-quoted by half the price, and refused to make the delivery unless D agreed to double payment. D agreed because it was unlikely to be able to find alternative carriers at such short notice and if no delivery was made D would have lost its lucrative contract on which the viability of his business depended ? economic duress succeeded.

*Pao On v Lau Yiu [1980] AC 614-

Facts: C refused to proceed with a contract unless D replaced by buy-back agreement with a guarantee by way of indemnity. D agreed in order to avoid delay and loss of public confidence that legal action would attract at a critical time in restructuring, and believed that the risk entailed in the modification was more apparent than real. When the share prices fell, D refused to (i) buy back the shares (alleging that the agreement was ended by the modification) nor (ii)
indemnify C (alleging that the modification was voidable for duress).
Held: no duress, only legitimate commercial pressure (thus upholding agreement to indemnify)

D/ LAWFUL ACT DURESS
A lawful act may be illegitimate though it must be at least immoral or unconscionable (Alf Vaughan).
Are legitimate:Threats not to contract
Refusal to waive existing contractual obligations
A party's exercise of a right for legitimate purposes
Threats to sue to enforce an honest, even if mistaken, claim, particularly in a commercial context:

*CTN Cash and Carry v Gallaher [1994] 4 All ER 714Facts: D delivered C's orders to the wrong warehouse, and the goods were subsequently stolen before the mistake was rectified. D demanded payment from C, honestly but mistakenly believing they were entitled to do so, and threatened to withdraw C's future credit facility if C
didn't pay.

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CONTRACT: DURESS, UNDUE INFLUENCE, UNCONSCIONABILITY

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