Tutorial Notes – Bring statute book to next tutorial! Read the OFT v. Abbey National Bank plc.

case

Duress – common law, narrower scope, undue influence – equity, wider scope.

Cases:

Barton v Armstrong [1976] AC 104

Duress to the person case. Armstrong and Barton are shareholders in a company. Involved in a
power struggle. Barton agrees to pay off loan of $400k and pay other large sums for shares. He then
alleges that Armstrong pressured him into doing so with threats to murder him. Court decides that
as duress to the person is A REASON even if it is not the MAIN REASON then this is enough and it
constitutes duress to the person. Contract therefore void. Burden of proof is with the defendant.

Royal bank of Scotland v. Etridge.

Wife signs over the interest of a house as a security interest for her husband’s debts. The bank try
and enforce the charge, the wife claims undue influence from her husband. Judges decide that scope
is wide and that this constitutes undue influence. Once a bank is on enquiry it is necessary for them
to do something about the situation or the contract may be deemed voidable. Get the wife to meet
the bank – go through transactions. Or can be advised by lawyer. The court says that a solicitor
needs to: Explain the nature of documents, what will happen if they are signed, discuss the
implications in laymen’s terms, state that the wife has a choice, then transfer the letter to the bank.
The bank cannot proceed until they have reached the letter. If the bank has suspicion of undue
influence, they must act on this. If one step of this process is missed, then the contract is voidable
because the bank has not discharged its notice.

There was a following case that adhered to these guidelines. This is now good law. Whenever there
is an odd turn of events the bank must follow these guidelines.

Economic duress is usually applied by the party with superior economic power. Lord Hoffman: look
at the demand and the nature of the demand. The courts are not keen to implement economic
duress, because economic pressure is part of the bargaining process and this could just be used as
an excuse for any party to get out of bargains that they do not like.

R v Attorney General for England and Wales – Look at the nature of the pressure and [another factor,
did not hear].

It is legal to threaten breach of contract. You may leave a contract so long as expectation loss is
satisfied. Courts find it difficult to classify whether or not threatened breach of contract counts as
duress. In an obiter statement a judge stated that threatened breach of contract must be coupled
with bad faith for it to count as duress.

Stilk v. Myrick – There were other viable options for the captain so it may not be considered as
duress. However, if the crew refused to work unless they were paid more money then this could be
considered as duress as there is no viable alternative if they are on high seas.
Undue influence is a creature of equity and takes many forms. The distinction must be formed
between actual and presumed undue influence. Undue influence is similar to duress, however it has
a wider scope. Includes overreaching and cheating.

Presumed undue influence must have taken place where there is a relationship of trust and where it
cannot be said that ordinary motives are to blame for the actions of the claimant. The courts are
reluctant to define undue influence, but it is where one party not only has an influence, but misuses
it to their advantage.

There are two subgroups of undue influence: Group A is the group in which there are set groups in
which there is automatically a relationship of trust. In group B it must be proved on the facts of the
case that there was a relationship of trust.