Question

Duress and Undue Influence seem to be something from a whodunit story but they occur all the time. Please identify the tests for duress and Undue Influence and explain how to apply it.

Answer 1

Firstly we look at the difference between them. Undue influence always involves a relationship between the two parties, with one party in a superior position over the other. Undue influence doesn't involve a direct threat, like duress does. Instead, it involves excessive pressure by the party in the dominant position on the party in the inferior position. It is the improper use of trust or power to deprive a person of free will and substitute instead another’s objective.  Falling within this rule are situations where, for example, a child takes advantage of an infirm parent, a doctor takes advantage of an ill patient, or a lawyer takes advantage of an unknowledgeable client.

Duress is a defense to a contract. Duress is wrongful pressure exerted upon a person in order to coerce that person into a contract that he or she ordinarily wouldn't enter. Duress involves an intentional use of force or threat of force in order to induce the contract. It can be either physical or mental coercion, but the coercion must be to the extent that it deprives the other person of free will or freedom of choice. This means that the person is left with no reasonable alternative other than to enter the contract.

To prove economic duress, a party must show that (1) a continuous contract exists between the plaintiff and the defendant; (2) the defendant threatens to terminate the preexisting contract; and (3) the plaintiff under this duress accepts the defendant's terms and enters the contract.

In the first subgroup, the relationship falls in a class of relationships that as a matter of law will raise a presumption of undue influence. They include:

• Government/citizen (note this is not confirmed)
• Parent/child
• Guardian/ward
• Solicitor (attorney)/client
• Doctor/patient.

In such cases, the burden of proof lies on the first of said parties (e.g. the government, parent, or doctor) to disprove undue influence on the second party. This requires the dominant party to establish that the second party "knew and understood what he or she was doing, and that he or she was acting independently of the influence of the dominant party". One influential factor in deciding whether the second party was acting independently is whether he or she was given an independent advice, while such an advice is not indispensable for rebutting the presumption.

The second subgroup covers relationships that do not fall into the first subgroup, but on the facts of the case, there was an antecedent relationship between the parties that led to undue influence. The test is one of whether "one-party occupies or assumes towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his part". If the plaintiff satisfies this a presumption of undue influence will arise, to which the onus of proof transfers to the defendant, who thereon, must rebut that "in all the circumstances", the relationship between the parties involved "dealings were at arm's length and that the other’s will was in no way overborne by the relationship of confidence" that existed.