Duress and Undue Influence

Duress and Undue Influence

            Under the Contract Law, Unconscionable contract refers to anagreement, which is one-sided and unfair that a court deems unenforceable, either in whole or a part of it. Either of the parties involved cannot enforce discriminatory terms, which are identified in a contract by the court of law. A court determines unconscionability through the examination of either bargaining power, or unfair terms evident in a contract between parties. In particular, a court of law that identifies unfair terms,such as undue influence and duress, evident in an agreement document between parties can deem part or the entire contract void, or the defendant is directed to modify specific terms. Undue influence occurs when one party is induced through mental pressure to sign a contract without their free will, afterpersuasion or false promises from the superior memberin the agreement. Duress occurs when one party threatens the other so that they can sign a contract. The threat may be verbal or physical aimed to injure the person, their family, or friends. Duress and undue influence constitute illegal actions regarding the unconscionable contract under the following circumstances; where there were threats and deeds to end the parties’ relationship, when unlawful restraint is evident, when the threat or intended damage is property-related, and where economic undue influence or duress is involved.

First, a contract can be rendered invalid by the court when an existing relationship between the parties was threatened or ended at the time of signing the agreement. If one party provides evidence that a relationship existed,which was later ended unceremoniously, then the contractsigned by the claimant becomes void. The presence of direct influence of one party over the other, which led to the signing of the contract, is termed as an actual undue influence (Chew, 2017).In this case, undue influence renders a contract voidable, where the innocent parties prove influence by the other member, which made them enter the contract.  The decision by the court to render the agreement voidable is done by establishing actual or presumed undue influence, which may extend to duress if threats are made to either party. In presumed undue influence, pre-existing relationships involve trust and confidence, where one party relies on the other regarding the management of their affairs.Such relationships, which involve evidence of a breach of trust and confidence, include parent/child, trustee/beneficiary, lawyer/client, and doctor/patient. If any of these relationships existed before signing the contract, the court automatically considers them of undue influence.Threats to end the association of the parties constitute duress, where the court deems such contracts unenforceable. For instance, in Bank of Credit and Commerce International v Aboody [1990] 1 QB 923 case, a husband imposed undue influence over his spouse in an attempt to make her sign a contract, which listed the family’s home as collateral for the debts owed by the company (Cook, 2019). The wife sought to hold the mortgage based on that it was acquired by the actual undue influence of her husband..

Secondly, undue influence and duress leadto violation of unconscionable contract, where threats or deeds of unlawful restraint is evident. If one party provides evidence that their associate deprived them of their physical freedom before signing the contract, then the court deems the agreement unenforceable (Maher, 2018).Besides, where the innocent party was threatened or restricted to move freely without their consent and legal justification, then both actions constitute a violation of the unconscionable contract. Unlawful restraint can involve detention, where victims are restrained from inducing them to sign an agreement, and if they provide proof, then the court will render the contract void.For instance, in Cummings v Ince (1847), an older woman was told to sign over all her property or face not ever having a committal order to a mental asylum lifted (Thompson, 2018).The particular contract was found to be void.In this case, the lady was exposed to the unlawful restraint by the other party to compel her to sign the contract to allow handing over all her possessions.

Furthermore, under the circumstance that property is involved in undue influence and duress, the contract involved is deemed unenforceable. Where the innocent party avails proof that threats were issued on their property by the superior member, which led to the forceful signing of the contract, the agreement is considered voidable (Cook, 2019).Mental pressure experienced by the inferior party imparted by the other party to induce the signing of a contract is stated as undue influence. Also, where threats are involved between two parties, the act is categorized as duress. However, when threats are made to the property and the owner, the action is not considered as duress.

On the other hand, threats to destroy such property with the motive of making the other party sign the contract will result in voidance of the agreement due to distress.In the Skeate v Beale (1840) case, a tenant owed money to his landlord. The landlord grabbed some goods that the tenant owned and threatened to sell them unless the occupant agreed to sign a contract for repayment of the due funds (Beale et al., 2019). The tenant came into agreement with the landlord to sign the contract, however, the occupant sought to hold the contract for duress. Additionally, in TheSiboen and the Sibotre (1976), the threats involved by one of the parties constituted burning a house or destruction of expensive paintings were considered as duress (Taylor, 2019). Severe threats to the property are also considered as duress in various circumstances, where such contracts are rendered voidable.

Moreover, a court of law can categorize undue influence and duress as illegal actions regarding the unconscionable contract, where the economic value of one party is involved. Breach of the contract through making threats to a business, enterprise owner constitutes duress where the party is forced to sign any contract relating to both members (Maher, 2018).In court, the victims must prove by showing that a continuous agreement existed between them and the defendant, then the superior party threatened to terminate the agreement and accepted the terms under the situation and entered the contract.If the victim proves the three requirements of economic duress, then the contract is rendered unenforceable. Any influence or direct threats that subject the innocent party to financial risk, if they fail to agree to inscribe their signatures to legitimize contracts, is categorized as undue influence and duress, respectively.Also, threats to a party involved in an agreement that can cause significant economic loss areconsidered as duress in a court. In some cases, the plaintiff rescinds the contracts and claim for equivalent economic damages caused by the defendant.

Additionally, superior parties in a pre-existing contract may threaten their accompliceby forcing the latter to sign a contract, which, if they do not, the superior may obtain their property forcefully.Often, one party is more disadvantaged in an agreement and isat riskof facing a financial loss if the contract is not completed. Case examples of economic duress include Rich &Whillock, Inc. (1984) 157, Cal. App. 3d 1154 and Universe Tankships of Monravia v ITWF (1982). In Rich &Whillock, Inc.’s (1984) case, an excavating company filed a case against a general contractor for refusing to pay an amount owed under the contract (Feldman, 2019). The Appellate court established economic duress existed from the evidence as the general contractors were aware that the excavating company faced impending insolvency if it failed topay its final billing. The excavating company had objected to the general contractors’ forceful tactics, where the victim organization submitted to the settlement offer to avoid economic risks.Besides, in Universe Tankships of Monravia v ITWF (1982),the ITWF attacked The Universe Sentinel ship and restricted it from leaving the airport (Mitchell, 2017). The attackers made demands that the shipowners pay a large sum of money to the Seafarers International Welfare Fund. After failing to have another alternative, the ship owners agreed to pay the ransom to have the ship leave the port. Consequently, the victims sought to be reinstated the sum, as the money was extracted under economic duress.

In conclusion, undue influence and duress constitute criminal activities, where unfair terms by a superior party are present in a contract. Unconscionable contracts are not enforced as ruled out by the court unless the violating party modifies the section in question or the entire document. Undue influence occurs when one party persuades the other to sign the contract without their free will. Duress involves issuing threats to one party to force them to sign the contract. Both actions constitute law against unconscionable contracts under various circumstances. Besides, a contract is considered invalid when an existing relationship was threatened at the time of signing the agreement when one party restrains another person without legal justification, and where the property is involved and economic duress or undue influence.

References

Beale, H., Fauvarque-Cosson, B., Rutgers, J., &Vogenauer, S. (2019). Cases, materials, and text   on contract law. Bloomsbury Publishing.

Chew, C. Y. (2017). The doctrine of duress in the context of contracts with financial institutions:             parameters, limitations, and international perspectives.

Cook, D. J. (2019). Walking the Divide: A Critical Examination of the Nature of Undue   Influence and Unconscionable Dealing. Available at SSRN 3486817.

Feldman, S. W. (2019). Actual Agreement, Shared Meaning Analysis, and the Invalidation of      Boilerplate: A Response to Professors Kar and Radin. Mo. L. Rev., 84, 711.

Maher, F. (2018). Clarity or confusion? Duress, undue influence and unconscionable conduct in   the High Court. Journal of Equity, 12(1), 91-118.

Mitchell, P. (2017). Shifting paradigms in duress. Restitution Law Review, 25, 197-207.

Taylor, R., & Taylor, D. (2019). Contract Law Directions. Directions.

Thompson, S. (2018). Thorne v Kennedy: why Australia’s decision on prenups is important for     English law. Family Law, 48, 415-419.