Business Law Contract Law

Questions: 1. Differentiation between the different legal terms? 2. Clear understanding of contract law? 3. Clear understanding of the effects of duress and undue influence on contracts? 4. A natural formation of conclusions ? Answers: 1.Difference between undue influence and duress As per the Contract Act 1872, duress and undue influence are two separate legal terms that makes a contract voidable. Duxbury, (2009) stated that duress is the situation when one party has forced using threat of violence, the other party to enter into contract. In certain circumstances, the party may not willingly enter into a contract; however, if the other party creates wrongful pressure on the unwilling party, then the situation may be termed as duress. On the contrary, undue influence is the situation where one party takes advantage of the power and position and exerts influence over the other party to make decisions regarding the contract. In cases of legal applications of both the situations in respect to contracts, duress is taken similar to undue influence. However, for undue influence to occur there should be a relationship between the contracting parties. Duress on the other hand involves direct threat from the parties. Stone, (2009) stated that in cases of physical threats, situations of duress have been seen. A contract may be termed voidable on the grounds of duress if the following situations prevail namely: Physical threats concerning harm to the life or property of the party Threat of disgracing the party and the family members of the party Threat of inflicting criminal prosecution of some related person of the party. Threat of inflicting economic loss to the party and the family members Chen-Wishart, (2012) pointed that contrary to the above stated situations undue influence does not involve direct threats rather it involves creation of excessive mental pressure on the unwilling party, which would change the decision, and freedom of choice of the party. As per the norms of Contract act 1872, undue influence makes a contract voidable on the part of the party whose consent is obtained unwillingly. 2. Contracts and unconscionable contracts A contract is an agreement between two or more parties including an offer and acceptance by the parties with intention to create a legal obligation along with consideration. Section 2(302) of the contract act sets out the terms for unconscionable contract. These type of contracts are one sided and thus unfair to either of the parties making the contract unenforceable under law. MacMillan, (2010) stated that some of the major factors that are making a contract unenforceable are undue influence, duress, unequal bargaining power, unfair surprise and limited liability of the contracting parties. Butler, (2012) thus stated that the concepts of undue influence and duress are responsible for making a contract unenforceable. However apart from these factors, a normal contract also becomes void under the circumstances of false representation of information by either of the contracting parties (Stone and Stone, 2011). For instance in case of Schawel v Reade [1913] 2 IR 8, the claimant purchase d a horse for the purpose of making the horse a stud. The defendant that is the horse seller assured the claimant that the horse was sound no medical examination is required. However, the claimant later found the horse has a hereditary eye disease and was not able to use the horse for the purpose for which he had purchased it. Thus, the claimant was able to file suit against the defendant on the ground of false representation. Some other instance of breach of contract on the grounds of false reporesentation of information can also be seen in the case of Bannerman v White (1861) 10 CBNS 844. However, in case of Ecay v Godfrey [1947] 80 Lloyds Rep 286, the defendant sold a boat and suggested that claimant to supervise and check the boat for any faults. However, the claimant did not check and purchased the boat. Later the boat turned out to be defective. However, in this case the defendants suggestion of checking represented that there were no false representation on the part of the defendant and hence the defendant was cleared of all charges (Butler, 2009). 3. Relevant case laws and their application In the past legislation history, various cases have been produced making a contract voidable imposing the use of duress and undue influence at the time of making the contracts. In Latter v Bradell (1880) 50 L.J.C.P 166, the house cleaner was forced by the mistress to undergo medical examination against her will. However, when the house cleaner pleaded for justice on the grounds of duress, the court dismissed the plea stating that there was no infliction of any physical pressure or torture on the maid and hence it was not considered as duress. However, the same was considered as undue influence by the court as the decision of the maid was influenced by the mistress (Young, 2010). Thus, from the above case it is certain that both duress and undue influence cannot exist in case of making a contract unconscionable. Either of the two factors should be present to make the contract unenforceable. In certain cases although the claimants plead for duress, however the court finds there are no such situations of making the contract unenforceable. For instance, in case of Skeate v Beale (1840), the claimant had pleaded for duress on the ground of threat that had been made by the defendant regarding the property of the claimant. However, the court dismissed the situation because threat directed towards property was not considered under undue influence or duress (Neyers, Bronaugh and Pitel, 2009). As per the legislations of the Contract act 1872, an act of duress if proved by the party in the court of law, would give the party the opportunity to cancel the contract. Similarly, for the party to cancel the contract based on undue influence, the party must prove that situation of unreasonable the other party for potentially changing the decision of the party has exerted influence. Ayres and Ayres, (2012) stated that in case of making a difference between duress and undue influence, the party suffering the situations should show that physical threat has been inflicted and in case of undue influence, a relationship exists between the contracting parties that will show that the influence has been exerted. 4. Conclusion The overall analysis of the difference between the contractual terms like duress, undue influence and false representation of information show that, these are some of the independent situations under which the parties can plead for cancellation of contract. The difference between undue influence and duress is clear from the application of the same within the case laws. Thus, it may be relevantly concluded that both undue influence and duress can make contract unconscionable. However, the situations cannot exist together rather if the party is physically threatened then to situation is duress and if the party is influenced and pressurized by the other party then the situation is undue influence. References Ayres, I. and Ayres, I. (2012). Studies in contract law. New York: Foundation Press. Butler, D. (2009). Contract law. Chatswood, N.S.W.: LexisNexis Butterworths. Butler, D. (2012). Contract law. Chatswood, N.S.W.: LexisNexis Butterworths. Chen-Wishart, M. (2012). Contract law. Oxford: Oxford University Press. Duxbury, R. (2009). Contract law. London: Sweet Maxwell. MacMillan, C. (2010). Mistakes in contract law. Oxford: Hart Pub. Neyers, J., Bronaugh, R. and Pitel, S. (2009). Exploring contract law. Oxford: Hart Pub. Stone, R. (2009). Contract law. Abingdon, Oxon: Routledge-Cavendish. Stone, R. and Stone, R. (2011). Contract law. Abingdon, Oxon: Routledge. Young, M. (2010). Understanding contract law. Milton Park, Abingdon, Oxon: Routledge-Cavendish.