Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
70 Cards in this Set
- Front
- Back
|
Intro to Essay |
Underlying policy: autonomous individuals we are in best position to decide for ourselves what bargains we enter into. -Held to good ones so should be held to bad bargains also. -Certainty= important to CL and therefore we should be held to our word -However in some cirs. justified for Court to step in. |
|
|
Duress |
-Consent is the basis of contract law. If someone enters into a contract under duress, they are not consenting. If they are held to that contract anyway, people will have less incentive to engage in the contracting process at all -Contracting is a social good (making efficient bargains/maximize happiness/wealth), maintaining faith in the institution is critical. |
|
|
McIntyre v Nemesis DBK Ltd |
-“Contractual duress is the imposition of improper pressure by threats that coerce a party to enter a contract.” -Started with requirement of violence – now extended to include no practical choice, illegitimate threats and economic duress. |
|
|
Illegitimate Pressure Exerted |
1. Unlawful demand or threat 1. Lawful act duress |
|
|
Unlawful demand or threat |
-A-G for England and Wales v R -McIntyre v Nemesis -Atlas Express v Kafo |
|
|
A-G for England and Wales v R |
If a threat has been made:
-In good faith -Justified by a change in circs. -Trying to bring about commercially reasonable outcomes -> then there can be cases where threat to breach a contract can be legitimate -“Generally speaking, the threat of any form of unlawful action will be regarded as illegitimate." HOL said: degree of vulnerability will often influence whether or not a threat is illegitimate. |
|
|
McIntyre v Nemesis (referred to AG for Eng &Wales) |
Held: Conduct did not amount to a threat to breach contractual obligation therefore no illegitimate pressure.
|
|
|
Atlas Express v Kafco |
-Atlas demanded extra payment from Kafco after realising size of baskets that needed to be transported. Held: DURESS-> Illegitimate pressure (Unlawful threat of breaching contract) + coercion (No alternative). -No consideration for the new agreement at all – economic duress. |
|
|
Economic duress |
Pao On: -Recognises that economic duress does make a contract voidable. Williams v Roffey: -Arguably a difference between illegitimate threats and legitimate warnings. Universe Tankships: If the outcome comes out to be a fairly sensible bargain the courts are less likely to presume that the pressure executed was illegitimate. |
|
|
Lawful act duress |
-Mutual Finance -CNT Cash n Carry |
|
|
Mutual Finance |
-Lawful acts can be rendered illegitimate in some circs. - If the nature of the threat is not telling eg. blackmail. |
|
|
CTN Cash n Carry |
Facts: Supplier sent cigarettes to wrong address and they were stolen – still wanted payment. -Defendants were legally allowed to refuse supply of cigarettes and demand payment of the invoice. Held: “Legitimacy of lawful pressure depends on whether the conduct at issue is morally or socially unacceptable against standard commercial behaviour.” -However lawful act duress would be a radical extension with ‘far-reaching implications.’ -Doesn’t rule out possibility of lawful act duress but says it will be rare. |
|
|
Note: |
-Good faith/public interest relevant -Lawful acts in commercial context will usually be at arms' length and will generally be legitimate. |
|
|
Coercion |
The illegitimate pressure must have had the effect of reducing the victim's variety of options to the point where she had "no reasonable alternative" but to submit, quite intentionally, to the pressure, by complying with the other party's demand. |
|
|
Universe Tankships |
Must be a question of both: 1. Nature of the pressure2. Nature of the the demand No other practical/reasonable alternative will depend on: -Circumstances of the victim -Relation of the parties -Availability of professional advice to the victim. |
|
|
Pao On |
HELD: NO coercion. Litigation to enfore legal rights will usually be available.
Reasoning: Defendants considered the matter thoroughly, chose to avoid litigation and had decided that the risk in giving the guarantee was not very real. |
|
|
Affirmation (need to ensure there is no subsequent affirmation of the contract) |
McIntyre v Nemesis Occidental |
|
|
McIntyre v Nemesis |
Steps taken by the victim while still under the influence of another party do not amount to affirmation. |
|
|
Occidental |
-Party arguing duress had affirmed the contract modification verbally and sought to have it upheld in subsequent arbitration. -You cannot benefit from a situation of duress then claim hardship. |
|
|
Comparison Duress and UI |
-Designed to prevent situations of coercion -Developed from common law -Duress is more active than misrep -If we accept UI as worthy of protection we should accept this |
|
|
Undue Influence |
Reasoning behind undue influence is similar to duress; if a party was unduly influenced they did not properly consent and that goes against foundations of contract law. |
|
|
Etridge (HoL) (background) |
Facts: Involved many appeals. Wives guaranteeing loans for their husband from the bank. Held: Lord Nichols set up the law of UI -All about "trust and confidence" being reposed in someone to such an extent tat you do not make wise decisions |
|
|
Actual UI: |
Snee -Some unfair/improper advantage, cheating etc -Power by a stronger party against a weaker party Hewitt: "I love you" |
|
|
What class of UI are we dealing with? |
Class 2A: Fiduciary relationship: trustee/beneficiary Class 2B: Relationship of trust and confidence: husband/wife |
|
|
Relationship of influence |
-Etridge
-ASB Bank LTD v Harlick |
|
|
Etridge
|
-Husband and wife relationships are not of presumed trust and confidence as a matter of law but as a matter of fact.
- Includes factual relationships of vulnerability, dependence, reliance, domination and controlling. |
|
|
ASB Bank Ltd |
Facts: Husband and wife guarantee loan for daughter and son-in law. Venture fails so bank recalls their loan. Parents argued undue influence. Held: Court held this was just a normal family relationship and there was nothing unusual about it. Both sets of parties made their own independent decisions about life – no suggestion of dependency. |
|
|
Transaction calling for an explanation |
-Allcard v Skinner -Public Trust v Ottow (NZHC) -UDC Finance Ltd v Down (NZCA) |
|
|
Allcard v Skinner |
Transaction very large
|
|
|
Public Trust v Ottow (NZHC) |
-Not a transaction that called for an explanation as wife was directly benefiting from the transaction by improving her house. Nothing ‘odd’ about it. |
|
|
UDC Finance Ltd v Down (NZCA) |
Facts: Wife guaranteed loan for husband’s company when she was director/sole shareholder of it. Held: Not a transaction calling for an explanation. Asa shareholder she has motivation to enable a guarantee for a loan therefore there was nothing odd about it. No presumed or actual undue influence. |
|
|
Rebutting the Presumption of UI: |
May be enough to prove UI against one person eg. the husband, but usually we want to prove against the bank.
|
|
|
When a bank is put on enquiry |
Etridge: Bank is on constructive notice whenever there is a non-commercial relationship between parties. High threshold. But not that controversial because then at least we have certainty.
|
|
|
Can Bank rebut presumption? Steps a bank should take... |
-Provide evidence of legal advice.
Etridge thought stricter requirement than Wilkinson. -need to provide solicitor with relevant info and communicate directly with the person guaranteeing it to check who the solicitor is. -Check with wife name of solicitor, inform her why they need the certificate. -Allowed to use same solicitor as husband -Once have certificate then have rebutted presumption= rely on cert. to say wife has given informed consent |
|
|
Steps solicitor must take... |
-Inform wife of nature of documents and consequences of signing -Point out seriousness of risks involved, amount of liability -State clearly she has a choice, not husband's -Husband shall not be present, explanations must be non technical, cover all issues. |
|
|
Conclusion for UI |
-Law can step in here to protect the wife whose husband essentially misled her to protect someone in a weaker position who has unwittingly signed their life away because they trust the person. |
|
|
Unconscionable Bargains |
1. 'Special disability' or 'special disadvantage' 2. Knowledge 3. "Taking advantage of" (or 'victimization') |
|
|
1. "Special disadvantage" |
-Condition which significantly diminishes a party’s ability to assess his or her best interests. -Must put one party at a serious disadvantage to the other. -Bromley v Ryan -Bridgewater v leahy -Nichols v Jessup -Gustav v Macfield |
|
|
Bridgewater v Leay |
-Old age and strong emotional tie accepted as a special disadvantage ->Nephew Neil gave the initiative for the transaction of the farm to go to him. -‘The disabling condition or circumstance renders the weaker party without the ability “to make an informed judgment as to his or her interests.” “Is unable to judge for himself.” |
|
|
Nichols v Jessup |
-Plaintiff was ‘unintelligent and muddle-headed’ – this was accepted as a special disadvantage. -Nurse aged 60 years old –agreed to let her neighbour use part of her property for his driveway but it came within inches of her house – increased the value of his property and decreased the value of hers. |
|
|
Gustav v Macfield |
Terminal illness not accepted as a special disadvantage. |
|
|
2. Knowledge |
-Stronger party must know of the weaker party’s disadvantage/disability and take advantage of it. -Requisite knowledge may be that of a principal or agent. -An agent’s knowledge is attributed to its principal. -Must have actual knowledge or constructive knowledge. -Stronger party may be put on inquiry to investigate. -In the absence of an inquiry the stronger party may be deemed to have known of the other party’s disadvantage. |
|
|
O’Connor v Hart |
Innocent party had no knowledge of the farmer’s disability. Acted with integrity. |
|
|
Nichols v Jessup |
-Mr Nichols must have known of Mrs Jessup’s characteristics/weaknesses as he was her neighbour and he was areal estate agent. |
|
|
Gustav v Macfield |
-When the stronger party knows or ought to beaware that the weaker party is unable to adequately look after his owninterests and it acting to his detriment.” |
|
|
3. Taking advantage of... |
-Taking advantage can be activeor passive. -Look at the actions of thestronger party – must not be consistent with equity or good conscience. -Stronger party must takeadvantage of the disability. |
|
|
Important Factors |
1. Contractual imbalance 2. Procedural unfairness |
|
|
Contractual imbalance |
-The contract is unequal. Turns more favourable to one party than the other. However contractual imbalance alone will never upset a contract. -Imbalance must be so great that it suggests procedural unfairness also. |
|
|
Gustav v Macfield |
-"If there is no significant imbalance in consideration or if the weaker party received full independent advice it is unlikely that any issue of unconscionability will arise.’ |
|
|
Nichols v Jessup |
-It was an improvident, one-sided bargain conferring a benefit to Mr Nichols (Increase in value of his house) and none to Mrs Jessup (Decrease in value of her house). |
|
|
“Procedural unfairness” |
Gustav: -Manner in which the transaction was entered into. -Was the weaker party rushed etc. |
|
|
Damages |
-3 Different ways of measuring loss, which accords to how damages will be will be awarded
-2 measures of damages most commonly awarded in contract law are assessed with respect to reliance interest and expectation measure. -Also restitutionary measure |
|
|
Assess what has been lost |
Expectation Measures vs. Reliance Measures |
|
|
Expectation- most commonly used |
Goal: put the innocent party into the position he expected to be in had the contract been performed and not breached
Examples: cost to cure/complete contract, loss of profits, diminution in value of what was promised as opposed to what was supplied. |
|
|
Reliance Measure |
Goal: Putting innocent party into position would have been in, had the contract never been entered
Examples: Expenditure incurred, difference in value between contract and real market value, lost opportunities. Capped by expectation measure anyway in terms of bad bargain limit- no expectation to get money back if made a bad deal. |
|
|
Restitutionary |
-Requiring breach party to give up any gains made from breaching the contract AG v Blake: -Account of profits is only appropriate in exceptional circs. -British Government had a legitimate interest in preventing Blake’s profit making, as they feared it would be an incentive fo rother spies. . |
|
|
Prevalence of EM ATM |
Basic principle: Expectation measure is what is favoured generally. -Where a party sustains a loss by means of breach of contract, he is, so far as money can do so, to be placed in the same situation with respect to damages, as if contract had been performed. |
|
|
Barry v Davies |
-If you can assess what was lost ($14K machine sold for $200) you may get the expectation measure. |
|
|
Limitations on expectation measure |
Ruxley Electronics: -Expectation measure is subject to the limitations of reasonableness and proportionality. -Damages are designed to compensate for an established loss and not to provide a gratuitous benefit to the aggrieved party. -No guarantee pool would be rebuilt at all in this case. |
|
|
Criticism |
-policy case for this= least compelling as object is to confer upon claimant something which he or she never had, and merely hoped to gain.
-Surely damages should just be what you lost? -But CL is all about giving effect to parties intentions- your expectations. -CL would look shaky if people were not following through on their promises. -Nevertheless, few would deny the justice of awarding compensation for a lost bargain. |
|
|
Justification for EM= performance interest |
-Must force in the analysis that the party who contracted for the works to be done has suffered loss because he did not receive the performance that he had bargained for. |
|
|
McAlpine |
House of Lords: True that there is an interest in performance and the fact that you have not suffered loss does not matter, it is enough that you have had your performance interest damaged. |
|
|
Tabacorp |
-Diminuation in value of foyer was $35,000 but to cover costs for rent and to re-fix was $1.5mill. -There was clause in the lease shows that she has a 'legitimate interest in preserving the physical character of the building.' -Only way to get this back was to reinstate her- give costs to cure |
|
|
Limits on damages |
1. Double Recover 2. Betterment 3. Mental Distress Damages |
|
|
Betterment |
Caldwell: -Plaintiff cannot end up in a better position than if the breach never occurred. -Second hand good was lost and it's impossible to find a second hand one, may be compensated for new one. |
|
|
Mental Distress Damages |
Jarvis: -Holiday not enjoyed by P. P argued breach of contract. Awarded mental distress damages – ½ of howmuch trip cost. -Argument that contract law should not allow claims for loss of enjoyment or mental distress. |
|
|
is damage too remote? |
-Hadley v Baxendale -Achilleas |
|
|
Hadley v Baxendale |
-Limits to damage that fairly and reasonably arose from the breach, or what was reasonably within the contemplation of the parties at the time of the contract's formation in respect of a breach -No communication by flourmill owners= loss was not in contemplation |
|
|
Achellieas |
-Limits damages to those which the defendant has reasonably induced the plaintiff to believe he is accepting a legal obligation to fulfill. -Ideas of standard/trade custom relevant to what plaintiff believed the extent of the secondary obligation was. |
|
|
Supershield |
In light of "Achellias" a loss may now be considered too remote even if it was of the type or kind that would have been within the reasonable contemplation of the parties as a not unlikely result of the breach. -Although satisfying Hadley requirement will usually be sufficient - if it cannot reasonably be inferred that they accepted responsibility for it, they will not be liable for the loss. (much greater loss than price of contact= no responsibility for it) -Even if loss wasn't foreseeable, sometimes they will have accepted responsibility for the loss. |
