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A contract must be entered into freely and voluntarily. If a party's consent is obtained through duress (coercion or threats) or undue influence (exploitation of a relationship of trust), the contract is voidable — the victim can choose to set it aside. This lesson examines the three categories of duress (to the person, to goods, and economic duress) and the two types of undue influence (actual and presumed), together with the leading cases and available remedies.
Duress involves illegitimate pressure that coerces a party into entering a contract. The effect is that the party's apparent consent is not genuine. Traditionally, duress was limited to actual or threatened physical violence, but the modern law has expanded to include economic duress.
Duress to the person involves actual or threatened physical violence to the contracting party (or their close family). This makes the contract voidable at the victim's option.
In Barton v Armstrong [1976], Armstrong, the chairman of a company, threatened to have Barton (a fellow director) killed if Barton did not agree to buy Armstrong's shares at a favourable price. The Privy Council held that the contract was voidable for duress. Where duress to the person is proved, the burden shifts to the party exercising the pressure to prove the threats did not contribute to the other party's decision to contract. Even if Barton had other commercial reasons for the agreement, the threats were sufficient to vitiate consent.
Key Principle from Barton: Where there is duress to the person, the threats need only be a reason for entering the contract — they do not need to be the sole or predominant reason.
Threats to damage, seize, or withhold goods can also amount to duress, making the contract voidable.
In Maskell v Horner [1915], the claimant was forced to pay illegal tolls under threat of seizure of his market goods. The court held this was duress to goods and the payments were recoverable.
Economic duress is the most important modern development. It involves the use of illegitimate economic or commercial pressure to force a party into a contract or a variation of a contract.
Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989]:
Kafco had a contract to supply basketware to Woolworths. Atlas Express agreed to deliver the goods at a fixed price per carton. After starting performance, Atlas demanded a much higher price, threatening not to deliver if Kafco did not agree. Kafco agreed under protest because they could not find an alternative carrier in time and risked losing the Woolworths contract. The court held that Kafco's agreement to the higher price was obtained by economic duress and was voidable.
The Test for Economic Duress:
In DSND Subsea Ltd v Petroleum Geo-Services ASA [2000], Dyson J set out the key elements:
| Element | Explanation |
|---|---|
| Illegitimate pressure | The pressure must be illegitimate — not merely tough commercial bargaining |
| Coercion of the victim's will | The pressure must have coerced the victim's will so that they had no practical alternative |
| No practical alternative | The victim must have had no reasonable alternative but to submit |
| Protest | The victim may have protested or acted under protest |
| No independent legal advice | The victim may not have had access to legal advice |
| Steps to avoid | Did the victim take steps to avoid the contract after the pressure was removed? |
Distinguishing Duress from Tough Bargaining:
Not all commercial pressure amounts to duress. In Pao On v Lau Yiu Long [1980], the Privy Council held that mere commercial pressure is not sufficient — the party must have been coerced to the point where they had no practical choice but to agree. Factors include:
graph TD
A["Was there<br/>ILLEGITIMATE PRESSURE?"] -->|"Physical threats<br/>(Barton v Armstrong [1976])"| B["DURESS TO PERSON<br/>Contract voidable"]
A -->|"Threats to goods<br/>(Maskell v Horner [1915])"| C["DURESS TO GOODS<br/>Contract voidable"]
A -->|"Economic/commercial<br/>threats"| D{"Was the victim's will<br/>COERCED with NO<br/>PRACTICAL ALTERNATIVE?<br/>(DSND Subsea [2000])"}
D -->|"Yes"| E["ECONOMIC DURESS<br/>Contract voidable<br/>(Atlas Express v Kafco [1989])"]
D -->|"No — merely tough<br/>commercial bargaining"| F["NO DURESS<br/>Contract valid<br/>(Pao On v Lau Yiu Long [1980])"]
style B fill:#e74c3c,color:#fff
style C fill:#e74c3c,color:#fff
style E fill:#e74c3c,color:#fff
style F fill:#27ae60,color:#fff
Undue influence is an equitable doctrine that allows a contract (or gift) to be set aside where one party has exploited a relationship of trust and confidence to obtain an unfair advantage.
There are two types of undue influence:
The claimant must prove on the evidence that the defendant actually exerted undue influence over them. There is no presumption — the claimant must provide direct evidence of the influence.
In Williams v Bayley (1866), a father agreed to mortgage his property to a bank after the bank threatened to prosecute his son for forging bills of exchange. The House of Lords held that the agreement was procured by actual undue influence — the bank had exploited the father's natural desire to protect his son.
In certain relationships, the law presumes that one party exercised undue influence over the other. This shifts the burden of proof to the dominant party to show that the transaction was entered into freely.
Presumed undue influence is divided into two sub-classes:
In certain relationships, undue influence is automatically presumed as a matter of law. The claimant does not need to prove that the relationship involved trust and confidence — the law assumes it.
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