- A threat to breach contract must be more than commercial pressure and
the sum will normally be substantial, e.g. loss of livelihood – Pao On v
Lau Yiu Long.
Four possible factors identified:
- Did the person protest?
- Was there an alternative?
- Was independent advice taken?
- Were steps taken to avoid the contract after entering into it?
The value of the contract is considered in relation to the scale of operation
of the parties – Atlas Express v Kafco. Contrast this with legitimate
commercial pressure – Williams v Roffey Effect: the court sets the contract
aside (makes it voidable).
Undue influence
Definition
Unfair pressure on a party when forming a contract, which does not
amount to common law duress. An equitable doctrine, developed to provide
relief in cases of injustice.
Effect: the contract is voidable, therefore the bars to rescission apply –
lapse of time, third-party rights, restitution impossible, affirmation.
Where there is no special relationship between the parties
Undue influence must simply be proved by the injured party (as with
duress) – Williams v Bayley
Where a fiduciary relationship exists
This may be:
- where a relationship is one of a recognised group – Allcard v Skinner
- where a particular relationship on this occasion was a special one –
BCCI v Aboody.
In either situation, the stronger party is presumed to have exercised undue
influence, unless it can be rebutted according to the suggestions in Re
Brocklehurst:
- Was independent advice sought?
- Was full disclosure made?
- Was the consideration adequate?
- Was any gift spontaneous?
Duress and undue influence 163