Lawyers South London

Duress and Undue Influence FAQs

What is the basic meaning of duress and undue influence in contract law?

Duress and undue influence covers situations where a party to a contract has effectively been forced into signing the contract.  Under the law, these contracts are invalid as agreements which change one’s legal position should be entered into and ended freely.

How is duress defined?

Duress occurs where someone is forced to enter into a contract as a result of violence or unlawful constraint.  The actions must be of such that the person had no choice but to enter into the contract.  If, for example, I was told to sign a contract whilst having a gun pointed at me head, clearly I would have no choice but to sign the contract.  A definition of duress is given in DSND Subsea Ltd v Petroleum Geo-Services ASA:

“The ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant case inducing the claimant to enter into the contract.”

Do threats against property count as duress?

Ordinarily, threats against property are not counted as duress.  However, in Sibhoen v Sibotre, threatening to burn a house down or destroy expensive artworks were considered to count as duress, suggesting that the severity of the threat, type of property involved and potential consequences (setting a house on fire, for example may lead to death of the occupants) are relevant factors in determining whether threats against property can be considered as duress.

What is economic duress?

The basic requirements of duress still apply, that is a person must be forced into a contract.  Economic duress involves threats to one’s commercial interests.  In DSND Subsea Ltd v Petroleum Geo-Services ASA, threatening to breach an existing contract could be an example of duress. The “rough and tumble of the pressures of normal commercial bargaining” gives an idea of what will not be considered duress.

What is undue influence?

Undue influence deals with cases where the threshold for duress has not been reached.  However, there must be some sort of pressure and certain characteristics of the relationship which explain why someone entered into a contract not entirely of their own free will.  In relationships where one party is dominant by virtue of their knowledge or economic power, if the weaker party gives a substantial gift or enters into the contract with the dominant party, the courts will ‘presume’ that the undue influence of the dominant party guided the weaker party’s decision.  This is known as ‘presumed undue influence’ .To argue against undue influence, the dominant party may, for example, show that the weaker party sought independent advice before making the decision.  A good example of this type of relationship is between a bank and its customers.