LAWS105 Lecture Notes - Lecture 7: Fiduciary, Lexisnexis, Rescission
LAWS105 – CONTRACT LAW
Wk. 7 – Duress
The four topics (i. duress, ii. undue influence, iii. unconscionable conduct, and iv.
unfair terms) involve parties having unequal bargaining power.
Recent illustrating of unequal bargaining power is supermarkets exerting pressure on
suppliers.
e.g.
ACCC v Coles [2014] FCA 1405:
–Gordon J [1]: “Coles engaged in unconscionable conduct in its
dealings with a number of suppliers of products that it sold. Coles’
misconduct was serious, deliberate and repeated. Coles misused its
bargaining power. Its conduct was “not done in good conscience”. It
was contrary to conscience. Coles treated its suppliers in a manner not
consistent with acceptable business and social standards which apply
to commercial dealings. Coles demanded payments from suppliers to
which it was not entitled by threatening harm to the suppliers that did
not comply with the demand. Coles withheld money from suppliers it
had no right to withhold. ”
Elements of Duress
What is duress?
Illegitimate pressure applied by the dominant party (D) to a weaker party (W).
Onus on party seeking to avoid the contract (W) to show they were
subjected to illegitimate pressure from D.
Crescendo Management Pty Ltd v Westpac Banking Corp (1989) 19
NSWLR 40 at 45. Duress traditionally required that ‘free will was
overborne’ now seems sufficient that the pressure ‘went beyond what the
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law was prepared to countenance as legitimate;. Range of conduct that
may be illegitimate is not closed.
If W succeeds in establishing illegitimate pressure, the burden shifts to
D to prove that this pressure was no ‘a cause; of W entering into the
contract.
Pressure induces a contract
What types of duress’ are there?
Duress of the person
Barton v Armstrong (1976) AC 104, Privy Council, on appeal from the
NSWSC.
Textbook page 400
Business agreement between Barton and Armstrong
Barton alleged duress saying Armstrong threatened to have him killed
Barton failed in the NSWSC: although Barton was in real fear for his
safety – he actually entered into the contract out of necessity. Commercial
necessity. Commercial necessity was the real and possibly sole motivating
factor underlying the agreement
Barton successfully appealed to the Privy Council.
Duress of goods
A withholding of goods was duress in Hawker Pacific Pty Ltd v
Helicopter Charter Pty Ltd (1991) 22 NSWLR 29
HC engaged HP to paint its helicopter
The paint job was poor and returned the chopper to HP for further
work
HC sought to collect the helicopter (needed that day) and HP required
HC to first signing a document releasing them from liability and requiring
payments
HC signed because it needed the helicopter that day
HC claimed the contract was void due to duress.
Economic duress
Illegitimate economic pressure can be duress:
Threat to the economic well-being of a person
Usually parties are already in a contractual relationship. Context of
economic duress is the renegotiation of a contract (typically a demand W
pays more than under original contract)
Line between commercial pressure and economic duress may be fine
(e.g. seller may argue the contract is frustrated, or that there’s an implied
term allowing a price increase) (Carter, LexisNexis p394-5)
E.g. threatening not to perform a contract (North Ocean Shipping Co
Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705
Threatening to institute legal proceedings (Beerens v BlueScope
Distribution Pty Ltd [2012] VSCA 209)
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Document Summary
The four topics (i. duress, ii. undue influence, iii. unconscionable conduct, and iv. unfair terms) involve parties having unequal bargaining power. Recent illustrating of unequal bargaining power is supermarkets exerting pressure on suppliers. e. g. accc v coles [2014] fca 1405: Gordon j [1]: coles engaged in unconscionable conduct in its dealings with a number of suppliers of products that it sold. Its conduct was not done in good conscience . Coles treated its suppliers in a manner not consistent with acceptable business and social standards which apply to commercial dealings. Coles demanded payments from suppliers to which it was not entitled by threatening harm to the suppliers that did not comply with the demand. Coles withheld money from suppliers it had no right to withhold. Illegitimate pressure applied by the dominant party (d) to a weaker party (w). Onus on party seeking to avoid the contract (w) to show they were subjected to illegitimate pressure from d.
