Contracts Notes

Topics: Contract, Contract law, Common law Pages: 103 (31034 words) Published: December 13, 2010

1. Generally

If one party pressures the contractual consent of another by duress the contract is voidable by that other party (See Also s 52A TPA and s 39 FTA).

The common law has long recognised that duress, in the form of coercion of the plaintiff’s will through illegitimate pressure or threats to the plaintiff’s interests, render a contract voidable (Barton v Armstrong). Traditionally, the common law concept of duress was limited to actual or threatened violence to the person of the contracting party or their family or near relatives constitutes duress (Seear v Cohen; Barton v Armstrong).

It appears that today, the emphasis appears to have shifted away from the notion of coercion of the will of the plaintiff to the lack of legitimacy in the pressure or compulsion (Crescendo Management Pty Ltd v Westpac Bank Corporation).

2. Types of Duress

There are three types of duress – threats to the person, threats to personal property and economic duress.

a) Threats to person: The traditional common law concept of duress was limited to actual or threatened violence to the person of the plaintiff of their family (Farmers’ Cooperative Executors & Trustees Ltd v Perks).

Where a threat is made against a party’s life and was one of the reasons for that party entering into a contract, relief should be granted for duress. It is immaterial that there may have been other reasons (including good business sense) if the threat contributed to that decision (Barton v Armstrong).

This notion extends to actual or threatened imprisonment or confinement (Barton v Armstrong). In contrast, a contract resulting from a threat of criminal prosecution for which there is sufficient ground will not amount to duress, provided that the person being threatened is provided valuable consideration for entering the contract and there is no agreement to prevent the plaintiff from informing the police (ie. to stifle prosecution) (Scolio Pty Ltd v Cote). For example, if A says to B that he must repay stolen monies or the police will intervene, this will not amount to duress as there is consideration, that is, A giving B time to repay the debt.

b) Threats to personal property: Where money is paid in order to avoid the wrongful seizure of goods or in order to obtain the release of goods wrongfully seized may be classified as duress to personal property. These goods may be recovered in what is known as restitution as ‘money had and received’ (Astley v Reynolds).

Where conduct amounting to duress to personal property is a reason for the plaintiff entering into a contract, that conduct will enable the plaintiff to avoid the contract (Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd). No express threat to the goods needs to be made if the defendant’s conduct makes the plaintiff reasonably believe that their goods are in danger (Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd).

Note: Also, there is no distinction between recovery of money paid under compulsion in order to get possession of goods wrongfully detained and money paid under a contract made under duress to goods (Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd).

c) Economic duress: A contract entered into under pressure to a party’s economic interests is voidable on the grounds of duress (Universe Tankships Inc v International Transport Workers’ Federation).

Economic duress may therefore be defined as actual or threatened conduct harmful to the plaintiff’s economic interests. The proper approach to determine whether there has been an economic duress, is to ask: (Crescendo Management v Westpac Banking Corp)

1. Was any pressure applied to induce the victim to enter into the contract?; and 2. Did the pressure go beyond what the law was prepared to tolerate as being legitimate?

Pressure may be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. Although these categories are not...
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