Duress & undue influence

CON.08 — Duress & Undue Influence

Both are vitiating factors making a contract voidable (not void). The innocent party may rescind; bars to rescission apply (affirmation, lapse of time, third-party rights, impossibility of restitutio in integrum).

Duress (common law)

Illegitimate pressure that overbears consent. Three categories:

• Duress to the person — threats of violence. Need only be a reason for entering the contract (Barton v Armstrong).
• Duress to goods — wrongful threats to seize/damage property.
• Economic duress — the SQE workhorse. Requires:
  1. Illegitimate pressure (usually a threatened breach of contract or unlawful act);
  2. that was a significant cause inducing the contract (DSND Subsea v Petroleum Geo-Services); and
  3. the victim had no realistic practical alternative (e.g. no time to find another supplier, Atlas Express v Kafco; The Atlantic Baron).

Lawful act duress is exceptional and very narrow: a threat to do a lawful act is rarely illegitimate — Pakistan International Airlines v Times Travel (2021) confirms it requires bad-faith exploitation/morally reprehensible conduct.

Undue influence (equity)

Renders a transaction voidable where consent is produced by unacceptable influence (Royal Bank of Scotland v Etridge (No 2)).

• Actual UI — proven overt pressure/coercion.
• Presumed UI — arises where (a) a relationship of trust and confidence exists (irrebuttably for some, e.g. solicitor–client, doctor–patient, parent–child, trustee–beneficiary; NOT automatically husband–wife or banker–customer) and (b) the transaction calls for explanation / is not readily explicable by the relationship. This raises an evidential presumption, shifting the burden to the dominant party to rebut (usually by showing independent legal advice).

Third-party / surety cases (Etridge protocol)

Where one party (often a spouse) charges the home to secure another's debt, the bank is put on inquiry. To avoid constructive notice it must insist the surety take independent legal advice and obtain solicitor confirmation; otherwise the charge is unenforceable against the surety.

Common traps

• Voidable, not void — rescission can be lost.
• Economic duress needs no practical alternative, not just hard bargaining or commercial pressure.
• Manifest disadvantage was rejected as a label in Etridge; the test is whether the transaction calls for explanation.
• Independent advice rebuts the presumption / discharges the bank's duty — it doesn't prove UI.
• H–W is not an automatic trust relationship; trust/confidence must be shown on the facts.