CONTRACT LAW

Tutorial 8

Duress and undue influence

Research points

1. What is the scope of duress?

2. Distinguish between duress and undue influence.
3. When will the presumption of undue influence arise?

Problems

1. Bodger agrees to build, at a fixed price, a pleasure boat for Funtours Ltd and
deliver it in six months time. Funtours Ltd are to use it for hire on the River
Trant.
After three months there is a steep escalation in the cost of the materials
required to build the boat and Bodger says that he will only deliver on the
agreed date if the price is increased by ten per cent and paid in advance.
Funtours Ltd protest at this threatened breach of contract as they have already
obtained a number of bookings for the boat.
At a meeting between Bodger and Funtours Ltd, Funtours eventually agree,
under protest, that the price will be raised by ten per cent and they pay the full
contract price. Two months after the boat is delivered Funtours regret this and
sue to recover the additional ten per cent paid.

Advise Funtours.

Consider how far, if at all, your answer would differ if, at the meeting
between Bodger and Funtours to renegotiate the contract, Bodger placed a
pistol on the table and said, this city is not as safe as you think between
the hours of sunset and sunrise.
2.
Mr. Russel and his wife are joint owners of the matrimonial home, valued at $
275,000. Mr. Russel runs his own catering business called Sandwiches R
Us, and wishes to open a new outlet on the industrial estate. However to do
so he needs to apply for a loan, which will be secured by way of a charge on
the matrimonial home. Mrs. Russel is skeptical of her husbands acumen, but
has always left the family financial affairs completely up to him.
She is persuaded by her husband, to attend an interview at their bank, where
she is told by the manager to first seek legal advice, before signing to secure
the charge for a $175,000 loan over the matrimonial home.
Mrs. Russel the goes to see Mr. Connelly, the family solicitor, who also acts
for Sandwiches R Us. They chat for a while, and the solicitor states that he
thinks the new business venture is sure to be a success. Mrs. Russel says she
is happy to sign the document, since he is sure there will be no risks.
On the next day she signs the document.
One year later, the new business venture fails miserably, and the bank seeks to
call in the loan for $175,000.
Advise Mrs. Russel on any possible actions she may have in the law of
Contract.