What standard of proof is duress assessed?
Balance of probabilities, but it is different depending on whether economic duress or duress to persons/goods
what is duress?
the vitiating doctrine - “I was pressured to enter into a contract”
What does Scott v Sebright say about pressure via duress?
pressure does not have to come from counterparty, they just have to know that it exists and materially took advantage of it
what does Huyton SA say about duress to persons/goods?
it was a direct, immediate threat, was a “significant cause” of why the party entered into the contract
what is economic duress?
threats to interfere w/ a party’s economic interests/expectations. sometimes, it is difficult to determine when pressure became unlawful; because in ordinary commercial bargains, parties are allowed to exert pressure. must be the most causal + significant factor - “but for” that pressure you would not have entered into contract
what are the 7 legal propositions set out in Pharmacy Care?
(1) threat or pressure that (2) is illegitimate and (3) led to the victim’s will being overborne by the improper pressure that the free will + judgement is displaced. (4) this threat/inducement must actually induce V’s manifestation of assent and (5) is sufficient grace to be unjust which (6) renders contract voidable at V’s instance unless (7) they affirm
Who has the onus in duress?
the party seeking duress
What are the three duress elements
- was there pressure
- was pressure illegitimate
- is the pressure the reason why the party entered into the contract (causal nexus)
what does North Ocean Shipping Co say about duress?
Includes threats to person, property and threats to economic interests
What are the two main types of economic duress?
- unlawful act duress
- lawful act duress
examples of what is unlawful act duress?
Woolwhich - invalid citation of laws
Yoram - claiming a legal right they are not entitled to
Adam - consist of a threat to breach a contract
what are the two forms of lawful act duress?
- threat to expose criminal liability if they do not enter contract (Williams v Bayley)
- pressure manipulates party into a vulnerable position (usually fraud/misrep) which enables them to secure party’s consent (Times Travel)
what is NOT lawful act duress?
McIntyre v Nemisis - giving a warning that they are unable to perform due to a change in circumstances
CTN Cash - parties are allowed to make a threat they are entitled to do
Times Travel - threatening not to renew contractual relations
Driving a hard bargain
DSND - illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining
What happens in Dold v Murphy
M is a lawyer who was involved in setting up a company. Structured so two main business man (D and J) own majority of shares, with a small amount for M. Initial offer of $110 million, and M increases to $112 million. M says he won’t go ahead with the sale unless he gets an extra $5 million (negotiated down to $4 million)
All have to agree to the sale.
Importance -
Difficulty between legal rights and obligations, and moral rights and obligations
Lawful act duress - someone says they will do/not do something they are legally allowed to do, but still may be considered illegitimate pressure
Recognizes there are some circumstances where actions which are normally okay would not be allowed in that situation
I
n tikaka: difference of approach and starting point
In second law, M is allowed to not sell property he has a share in, and onus shifts to D to state this doesn’t apply. In all these enquiries, their relationship is relevant, but a background consideration - not about the relationship and obligations that may flow from it (as would be in te ao Māori)
There is a relationship between law and morals in second law, but complex
in Times Travel UK, when will lawful act duress be found
a demand motivated by commercial self-interest is usually justified, lawful act economic duress is generally rare. a demand may be unjustified if a threatening party has deliberately increased threatened party’s vulerability to the demand, and bad faith requirement is satisfied. the demand is made in bad faith when threatening party does not genuinley believe that it has any defence (and there is no defence) to claim being waivered.
McIntyre relevant factors for considering causation
- did innocent party protect threat?
- did they seek legal advice (may provide awareness of their rights)
- did they take steps afterwards to avoid contract?
Kolmar - causation will also be satisfied when threatened/pressured party had no reasonable alternative option open to them other than to enter the contract/if the reason the counterparty conceded was because they were unsure of their rights
what is the fourth element?
if there was duress, did the party affirm the contract? This is a negative element - innocent party to prove absence. Pharmacy care says if innocent party does not swiftly seek to undue, they may have willingly probated
things to consider about affirmation
active performance - is party stil performing contract?
North Ocean v Hyundi - time delay in bringing claim
whether innocent party protested (4 years + no protest during it)
“this requirement may be satisfied when innocent party demonstrates that soon after the pressure ceased they sought to undo or contest the making of the contract”
what is the effect of duress?
voidable. think about what the client wants.
CTN Cash
Facts: A tobacco wholesaler (Gallaher) demanded payment from a retailer (CTN) for stolen cigarettes, genuinely but mistakenly believing the risk had passed to CTN, and threatened to withdraw CTN’s credit facilities if payment was not made.
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Judgement: The Court of Appeal ruled that CTN’s payment was not made under duress, as Gallaher’s demand was made in good faith, and the lawful threat to withdraw credit in a commercial context did not constitute illegitimate pressure.
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Applicable Law: This case is a key authority on lawful act duress, establishing that such duress is rarely found in commercial contexts, especially when the demanding party acts in good faith, focusing on the “bad faith demand” requirement
Dold v Muprhy (better explained)
Murphy + 2 other shareholders of a company procured an unexpectedly high sale of their shares. M negotiated an even higher sale price, on the condition that him and other shareholders would sign in the next 5 days. then, M threatened the other two shareholders that he would not sign unless they paid him additional money. they agred but later sued him for duress. no duress because it was within his legal entitlements
nature of pressure - he had ample time to reflect on his rights and consider his options
nature of demand - parties actually had negotiations, had time to talk about something, “negotiation over the terms of the agt is the opposite to the concept of duress”
When will this causal requirement will be satisfied
where the threatened or pressured party had no reasonable or practicable alternative open to them other than to enter the contract (See, Kolmar Group )
