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Contract Law - Unequal Bargaining Power Summary
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Comprehensive summary/exam notes on unequal bargaining power in Contract Law. This document covers duress (duress to the person, duress to goods and economic duress), and undue influence (actual and presumed undue influence following the case of Royal Bank of Scotland v Etridge).

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  • October 6, 2024
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  • 2022/2023
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Unequal Bargaining Power
Includes:
1. Duress
2. Undue Influence
3. “Unconscionable bargains”/ “Inequality of Bargaining Power”

Common Law Duress:
1. What is Duress?
Post Williams v Roffey, the doctrine of duress assumes greater significance.
The approach in this case suggests that the modern courts will be more
willing to find the presence of consideration in the renegotiation of a contract
and leave it to duress to regulate fairness of the renegotiation.
It is not easy to identify its limits and it is not obvious that it is ready to play
the role which has been allocated to it.
There are three types of duress at common law:
(1) Duress to the Person
(2) Duress to Goods
(3) Economic Duress
2. Duress to the Person:
General rule = to constitute duress to the person, the threat must be one that relates
to physical wellbeing and not economic wellbeing.
A threat to inflict financial ruin on a party will therefore not be regarded as
duress to the person (economic duress).
May consist of actual violence to C or to members of his family or threats
of such violence.
Barton v Armstrong –
Lord Cross –
Drew an analogy to fraudulent misrepresentation – the threats need
not be the ‘but for’ or sole reason for entry into the contract, it is
sufficient that the threats were a factor influencing the victim to enter
into the contract.
The burden of proof is on D to prove that the threats he made had
contributed nothing to C’s decision.
It does not matter that the claimant had other reasons or
motives which might have led him to make the same
decision.
3. Duress to Goods:
A threat to damage to the victim’s goods rather than to the person.
Initially, it was held that the unlawful detention of another’s goods did not constitute
duress.
Skeate v Beale –
BUT – there is authority for the proposition that money paid to release goods which
have been unlawfully detained could be recovered back in an action for money had
and received.
Astley v Reynolds –
Given the development of the doctrine of economic duress, it can be predicted with
some confidence that Skeate v Beale will not be followed today.
SO – duress to goods can, in an appropriate case, form the basis of a claim
for relief.
4. Economic Duress:
Economic Duress = arises where one party uses his superior economic power in an
“illegitimate” way so as to coerce the other contracting party to agree to a particular
set of terms.

, Traditional formula = there must have been a “coercion of the will so as to vitiate
consent” of the victim.
Pao On v Lau Yiu Long –
BUT – Atiyah – there are some difficulties with this proposition.
The principal difficulty = duress does not deprive a person of all
choice but merely presents him with a choice between evils.
Indeed, the more real the pressure, the more real the
willingness to enter into the contract, even if it is only to
extricate from predicament.
What is wrong with the contract is not the absence of consent, but the
wrongful nature of the threats which have been used to bring about
consent.
BUT – can we really say this is a choice?
Doesn’t consent have a necessary voluntary aspect?
Courts seem to have distanced themselves from the language of ‘coercion of the will’.
The Evia Luck –
Lord Goff – did not think it was helpful in this context to speak of the
plaintiff’s will being coerced.
The weight of the modern authority supports the application of the traditional ‘but
for’ test:
Huyton v Cremer –
“The minimum basic test of subjective causation in economic duress
ought, it appears to me, to be a “but for” test.
Outlined certain relevant factors:
“…relief may not be appropriate, if an innocent party
decides, as a matter of choice, not to pursue an alternative
remedy which any and possible some other reasonable
persons in his circumstances would have pursued.”
“Relief may also be refused, if he has made no protest and
conducted himself in a way which showed that, for better or
for worse, he was prepared to accept and live with the
consequences, however unwelcome.”
“…the extent to which the party applying illegitimate
pressure intended or could reasonably foresee that pressure
which he applied would lead to the agreement or payment
made.”
“…the extent to which factors extraneous to [the party
exerting pressure] played any important role.’
Unlike in duress to the person, the burden of proof in economic
duress is on the person seeking relief.
Distinguished on the basis that physical threats only seldom
do not achieve their intended effect and are by definition
male fida, whereas economic pressure can be imposed bona
fide.
The gradual move away from the ‘coercion of the will’ test suggests that greater
emphasis should be placed in future cases upon the nature of the pressure.
Principal task = ascertain what constitutes ‘illegitimate’ pressure.
PC in R v AG for England and Wales appeared to envisage a 2-stage
approach to illegitimacy.
(1) Where the threat is unlawful.
(2) Where the threat is lawful but used to support unlawful demand.
a. Unlawful Threat:
General rule = unlawful threats, such as a threat to commit a crime, a tort or a
breach of contract will generally amount to the application of illegitimate
pressure.

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