Duress Or Undue Influence In Commercial Law

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 1

Duress or undue influence in commercial law

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Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 2

Duress is normally a claim that is induced by a person or party that he or she entered into

a contract forcefully. It will happen not only when entering into a contract but also amending the

contract's terms. For instance, it is illegal for one party to enable another party enter or sign an

agreement or a contact forcefully. For a contract to be termed as null and void given duress there

must be actual coercion. (e-resources.co.ke). By definition, therefore, duress is termed as that

measurement of force or coercion and they may not happen only using a weapon but a word of

mouth or writing. Intentions to harm or impose a threat or cause stress on someone so as to make

him perform a duty or act which he or she could not have performed under normal circumstances

will amount to duress and the performance done will be regarded as null and void (Law Guru

Staff, 2014). There should be a free will between parties signing a contract. A party cannot

simply claim that it performed an act of signing a contract under duress and the contract rendered

null and void automatically. The contact's status should be evaluated and proved before and

action is taken. Prove will be depended on witnesses or evidence presented.

Question one

In the case of the case of Tim and Helen, the house had a value of not less than $400,000

therefore, the selling of shares worth $ 100,000 of Helen to Tim did not amount to a half the

value of the house. Helen, because she feared Tim and she had information that Tim has been in

jail because he assaulted someone, she signed the documents and transferred her half of the

house's share to Tim. If she denied, Tim could have assaulted her and this was only her thoughts.

In this case, Helen has only an obligation of showing the court that confidence and trust

existed in their relationship and that there was a presumption that Tim abused the relationship by

making her sign the documents. Helen is not supposed to give evidence that exertion of duress or

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 3

undue influence was actually exercised on her by Tim. Once there is proof that there was an

existence of a confidential relationship, then a shift of the burden of proof will occur to the

defendant who is Tim. The defendant will have to the court that there was no duress or undue

influence at the time of signing the documents by the plaintiff and that the act was of free will by

the plaintiff.

The establishment of this kind of confidential relationship can be done by; first, class 2a

in situations of a matter of law, some relationships can come up with a presumption that there is

an undue influence that is exercised. These relationships include child and parent, solicitor and

client and patient and doctor. But wife and husband relationship does not bring about

presumptions of undue influence given class 2a. Secondly, in class 2b, if the plaintiff provides

proof that there is a relationship where the plaintiff reposed confidence and trust generally in the

defendant, then the relationship's existence brings about undue influence presumptions. Given

class 2b therefore, if the disapproval of evidence of undue influence is absent, there will be a

success on the part of Helen by setting the contract aside. Helen does not need to show that she

reposed confidence and trust on Tim. Helen will not have to provide proof that actual exertion of

undue influence or duress was done by Tim but Tim abused the confidence and trust given that

particular impugned contract or transaction.

In this case, Helen has a chance of winning the case if she proves to the court that a

confidential relationship existed.

Question two

In this case, there was an act of trust but fear that led to the signing of the document. This

was confirmed by Helen in front of a banker. If some duties of a husband – debtor are entrusted

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 4

by a bank, the debtor who is, in this case, acts an intermediary has abilities of influencing his

partner or wife, then the following position stands; first, if; a) that transactions do not have

financial advantages to that party that wants to set those transactions aside. b) If substantial risks

of undue influence exist that will enable a transaction to be executed, then the bank is supposed

to have a constructive notice concerning undue influence that will give a right to of setting the

transaction aside (Law teacher, 2017). Secondly, if the said transaction has the capabilities of

laying benefits to that party that wants the transaction to be set aside, then the bank is not

supposed to possess a constructive notice concerning undue influence or duress which in fact

may exist.

In the case of Natwest versus Morgan in 1985, a family house was purchased using a

mortgage from Abbey National Bank (e-lawresources.co.uk). Secondly, the house acted as

collateral for a loan in the business of the husband. This couple found themselves in arrears

because they were unable to pay the mortgage. The bank obtained an order to possess the house.

Another bank called Natwest gave the couple a package to rescue their home where it pledged to

offset the mortgage and further provide a loan that would expire after five months that was to

boost the business of the husband. The rescue bank's manager arrived at the home of the couple

to get the signatures of both parties. The manager spent about twenty minutes in the house and

about five minutes with the wife and the husband hanged around every time the manager was in

the house. The wife was explained to by the manager that they were to offset the mortgages and

further provide the loan for the business of the husband that would last five months. The

documents, however, did not disclose the time limit and the amount. The wife (Mrs. Morgan)

explained to the banker not to expose her to risks associated with the business of her husband.

She got the assurance from the banker that the risks were only limited to the descriptions and he

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 5

did not give the wife any allowances for legal or financial advice independently. The banker,

therefore, exercised duress or undue influence in getting the documents signed. It was held that

the relationship that existed between the bank and the customer was not the one that would have

led to that relationship of confidence and trust, therefore, the undue influence presumption did

not exist.

The fate of Helen winning this case lies with the way she will prove to the court that

there was the existence of a confidential relationship so that Tim will have the burden of

proofing if his actions amounted to duress or undue influence.

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 6

References

Law teacher, (2017) Undue influence in equity lecture. All Answers Ltd. Nottingham. Retrieved

from; https://www.lawteacher.net/lecture-notes/undue-influence-lecture.php

http://e-lawresources.co.uk/Natwest-Bank-v-Morgan.php

http://e-lawresources.co.uk/Undue-Influence.php

Law Guru Staff, (2014) Signing Under Duress: When Does it Render a Contract Void? Retrieved

from; https://www.lawguru.com/articles/law/business-law/signing-under-duress-when-

does-it-render-a-contract-void

Law Teacher, (2017). Concept of Duress in contract law. All Answers Ltd. Nottingham.

Retrieved from; https://www.lawteacher.net/free-law-essays/contract-law/discuss-the-

concept-of-duress-in-contract-law-contract-law-essay.php

Running head: DURESS OR UNDUE INFLUENCE IN COMMERCIAL LAW 7

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