LAWS104 Lecture Notes - Lecture 8: Westpac, Undue Influence, Nsw Law Reports
12 Jun 2018
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LECTURE - Duress, Undue Influene,
Unonsionaility
DURESS
-Contract has been formed but not freely, no true consent.
-Concerned with pressure or coercion by one party over the other.
-How much coercion or pressure will be required before we can say the contract is vitiated?
-Duress does not require that a person's will must be totally overborne by the other party.
-Duress need not be the sole factor that induced the 'victim' to enter into the contract.
-The pressure must be 'illegitimate'.
Illegitimate Pressure
-Did any pressure induce the victim to enter into the contract?
-If so, did that pressure go beyond what the law is prepared to consider as legitimate?
-Illegitimate pressure may include unlawful threats, unlawful coercion of the absence of a
lawful basis for the pressure.
• Once illegitimate pressure is established, the onus of proof shifts to the defendant who
must then show that any duress that did take place had no impact on the plaintiff's
decision to enter into the contract.
Several Types of Duress:
-Unlawful detention
-Death threats, not just to yourself but others.
Duress to Person
-Barton v Armstrong [1973] 2 NSWLR 598.
• Involved in commercial property deal.
• Barton bought shares from Armstrong, and wanted to get out of it on the basis of duress
- basis that Armstrong's people had threatening him.
• Armstrong denied:
Duress to Goods
Economic Duress
-Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40.
• Husband and wife are directors of a company (Crescendo). At law the company is a
separate person from law.
• Westpac gave them money for security.
• The husband and wife then wanted to sell their home, and buy a new one. They tie up a
mortgage with Westpac for a new home. They sought the funds to be released from
their account.
• Westpac refused to release money for the purchase of the home until the husband and
wife as directors of management, would give extra security for the company's loan.
• Husband and wife then signed the documents so they could buy their home.
• They went to court to have the extra security set aside.
• Court of Appeal - the pressure put on the husband and wife was illegitimate, no lawful
basis for them to insist signing as individuals for their private home for something to do
with their company.
-North Ocean Shipping Company Ltd v Hyundai Construction Company Ltd [1979] 1 QB
705.
find more resources at oneclass.com
find more resources at oneclass.com
• Hyundai agreed to build a ship, contract provided for progressive payments, price fixed
in American dollars (UK case).
• After one payment from the shipping company the American dollar was devalued by
10%. Hyundai in effect would be losing 10%, contract did not cover such a contingency
or adjustments to prices.
• Hyundai then insisted the price would have to be increased another 10% or they would
abandon the project. North Ocean wanted to negotiate, Hyundai said, no 10% or
nothing, so North Ocean sued for duress - basis it was extracted for duress.
• A threat to breach of contract could amount to breach of economic duress. No lawful
basis to have the extra 10%, nothing in the contract and nothing in statute. Just
commercial want. So Hyundai had made economic duress.
• North Ocean Shipping lost the right to rescind despite it being economic duress because
the contract was fully executed.
UNDUE INFLUENCE
-If the nature between the parties had impacted the quality of the consent - one party
dominating the other party to unfairness or inequality, abuse of trust.
-Abuse of power.
-Narrow applicability.
-Two ways to establish, 'actual undue influence' or 'presumed undue influence'
Actual:
• In effect no relationship to the party, but facts show that some kind of domination or
manipulation exists.
Presumed Undue Influence:
Special Relationships at Law (Class 2A)
Parent/child, solicitor/client, doctor/patient etc.
-Quality of the consent will be impaired. Not truly free, if presumption is not rebutted,
contract is rendered voidable.
-Possible for a child to be dominant and to unduly influence the parents.
-Lamotte v Lamotte (1942) 42 sr(NSW) 99
• Courts shed doubt on usefulness of presumption when say the child is 40 years old.
-Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040
• Court held it will depend on the nature and fact of the case, what is the relationship
between child and parent? Will have to be rebutted by parents to prove that the child is
emancipated - not always when they are even 40.
Trustee and beneficiary - no automatic presumption in this, because it is already governed by
the law of trust.
Engaged couples
-Leeder v Stevens [2005] EWCA Civ 50
• Woman signed a deed in his favour.
• Court of Appeal applied the presumption that because they were engaged, unduly
influence on her. Controversial case. Should be considered class 2b (where it's proved
on the facts of the case).
-Law used to believe that there was no presumption in married couples, but only for a male
fiancé to have influence over the female fiancé.
Class 2B Influence
-Presumption on the facts of the case.
-Janson v Janson [2007] NSWSC 1344
-Johnson v Buttress (1936) 56 CLR 113
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Contract has been formed but not freely, no true consent. Concerned with pressure or coercion by one party over the other. Duress does not require that a person"s will must be totally overborne by the other party. Duress need not be the sole factor that induced the "victim" to enter into the contract. Death threats, not just to yourself but others. Involved in commercial property deal: barton bought shares from armstrong, and wanted to get out of it on the basis of duress. Basis that armstrong"s people had threatening him: armstrong denied: Crescendo management pty ltd v westpac banking corporation (1988) 19 nswlr 40: husband and wife are directors of a company (crescendo). At law the company is a separate person from law: westpac gave them money for security, the husband and wife then wanted to sell their home, and buy a new one. They tie up a mortgage with westpac for a new home.
