Contract Law
To what extent can a contract be set aside on the basis that it was entered into due to improper pressure?
This paper will to focus on the laws of contract that are applicable under a variety of situations. To begin with, the paper will seek more on the extents into the bases of entering into the contract due to undue pressure from one of the parties involved. The first part will focus on bit of duress under which the contract law falls in (Stone, 2005).
Duress
If one of the parties which is entering into the contract say party 1 is due to being coerced by the other party which in this paper will be referred to as party 2, this particular contract can be set aside by the former party to be as a result of duress. This coercion is usually in form of some threats or due to some unlawful acts being subjected to the party.
On the other hand, there have been some recent cases which have been going on where a party suffers another case of duress which can be termed as economic when the one party avoids a contract. The major case here emancipates when there is a justification of the stronger party tries to exploit the weaker party. The law has it that there is no case3 of economic duress if the parties that signed the contract do not have the same bargaining power. This is because there is an inherent law in such a case governed by the commercial pressure in the contract which was signed. Inequality in the power of bargaining for a particular transaction is well accepted in every transaction and can as well be deemed as necessary in the commercial world for there to be a profit margin in businesses. In such a case, economic duress will only arise if the party that is involved in the latter part (party 2) used the powers for their own illegitimate gains (Born, 2010).
The above explanation puts it across that the line between legitimate or commercial and illegitimate pressure is clear cut and fine. This will however fall within the facts of a particular case. In the law terms, it then means the terms of conduct of the respective parties remain to be of much importance. In some instances, if a party threatens to breach a certain contract with some other party if the other party in the contract does not respond positively to an increment inn the payment is considered to be legitimate if the only other party has the condition within there reach due financial difficulties. If on the other hand the party with the biggest stake in the contract does make the same bargain with intent to exploit the previous party, then this case will be viewed in favour of the oppressed party (Brunswig et al, 2005).
Undue Influence
The doctrine of undue influence is equitable which means that it is only available at the discretion of the court. This situation helps in cases where the contracts which were entered into by various parties and were due to some improper pressure do or did not amount to duress. In such a circumstance the courts come in when they have to intervene on whether there is an exploited relationship in one of the said parties which has been abused for the purpose of selfish gains by the other part in order to acquire some undue advantage. The preciseness of the mode or the basis in which the court will bargain is a matter which is bargain issue (Pawloski, 20020.
The cases of undue influence being subjected to one of the parties are usually a case which is due to a relationship which has been misused. If such a case is found, the contract can be rendered voidable which results to the needy person applying again to the court for the decision on the contract or the whole contract to be receded (Margolick, 1993). This doctrine guards people over victimization by individuals who have or might be having some powers or some dominance over them. The demands exerted usually are not generally direct and are usually overly acute as compared to the cases which do involve duress
In other terms, this kind of a contract is a remedy which is equitable. The situations which have been covered are where one of the parties has unfairly gained over the other party by application of some improper kind of pressure which in the common law is not duress. There are two classes of undue influence which were put across one case which are actual undue influence and presumed undue influence. Presumed undue influence is then subdivided into cases where the parties had a special relationship and where the parties did not have any special relationship. It is however well to acknowledge that the cases discussed by the paper in the following paragraphs as stated earlier are traditional cases of classification (Geisst, 2005).
Actual undue influence
In this category of undue influence, it is possible to put aside the contract if the first party utilized their powers over the second party in order to be able to sign the contract. In such a circumstance, it is upon the oppressed person to be able to convince the court that the other person has some powers over him which he used to subject him to dependence on the oppressor in securing the contract to him. It is however not important to declare that such kinds of dominating power arose from a special relationship amongst the two parties or even that the transaction which was made is in a way or another unfair to that victim(Borgenicht, 1990).
Presumed undue influence
In this category of undue influence, the court presumes that one of the arties acted under undue influence when there is no proof that such influence was there. In this case, the case tries the best to make sure that the defendant gets the burden of the case in a bid to show that the influence was not there. There are two viable situations in which the presumption can arise (Ron, 1999). The first case is from the rules of law where there is some proof that a certain relationship existed between the two parties and that the relationship was characterized by very strong virtues of confidence between the parties and thus might have caused the influence (Beale, 2007). Some of the most constant cases of this kind are between a parent and a child, a guardian and a ward, a lawyer client relationship, a trustee beneficiary case, a doctor patient case, director and the company, and a religious advisor and a disciple kind of a relationship. in the event that the relationship between the parties is not among the above mentioned groups, there might be a presumption if the claimant has the capability and enough supporting evidence that the other involved party was able to impose some undue influence to him/her and that the transaction which went ahead was in a way of some disadvantage to him.
Disproval of the transaction
This kind of a transaction may be disapproved by confirming that the involved party which is dominant or has more powers did not take advantage of their position and also that the seemingly oppressed party had prior knowledge of what was going on an thus could have been able to have made a substantial judgment which was based on enough information on the transaction (Brookner, 2000).
Involvement of third parties
If in this kind of a situation party 1 was the one which influenced party 2 so as to come into a contract with party 3 so that party 1 can benefit from this transaction, then party 2 has the ground to put that contract aside due to some undue influence on two grounds. The first one is if it can be shown that party 1 was an agent acting on behalf of party 3 or if party 3 was aware or had a clue of what party 1 was doing in the contract (Yastrow, 1991). In other circumstances, if the transaction which occurred was of some disadvantage to party 2 though the party would have entrusted confidence in 1 due to some close relationship like a marital case, then party 3 is liable for constructive notice of such kind of undue influence. This can only be rebuked if party 3 had taken some enough steps to safeguard the consent signed by party 1. In such a case, it would have been if party 3 met confidentially with party 2 to explain to him to come to some legal knowledge of the upcoming contract.
Unconscionable bargains
These kinds of bargains arise when the involved parties exploit some weaknesses of the other parties. In this case, the equality of their bargaining power is not likely to be sufficient. The requirements which are exactly required for the jurisdiction to take place are not clear though there is a traditional or ancient application to the cases which in some circumstance involve transactions which are improvident or some of the expectant heirs.
Effects of undue influence and duress
Contracts that are held under cases of duress, undue influence or even some unconscionable conduct can be voided. If this is to happen, the undue conduct which enhances the disadvantageous transaction must be a sensible cause for the first party to contend to it. There however some matters which might deny the victim the rights for him to annul the transaction (Martini, 1996).
Reflective journal
In this assignment I garnered enough knowledge on the validity and effects of many signed contracts. On myself, I am now able to understand the implications of involving myself in some transactions and also the rights that I have if some of the issues tackled happened to me. The resources provided were enough and thus no problem was encountered in the essay writing. If some of the work done was to be made better in another issue of this kind, the best thing to do is to have enough research materials and more on coursework. On completion of this job the best thing encountered was dealing with the laws in a very easy way. This made the question so simple to deal with. In so doing, I believe that this is the best that I could have done in this assignment.
Words written: 1710
References
Beale, H. (2007) Contract: Cases and Materials. Oxford: Oxford University press.
Borgenicht, M. (1990), Undue Influence. New York: Worldwide
Born, G. (2010) Law + Legal Information = Justice. Retrieved 10/08/2010 from http://www.duhaime.org/LegalResources/Contracts/LawArticle-87/Part-2-Privity- Consent-and-the-Reasonable-Man.aspx
Brookner, A. (2000), Undue Influence. London: G.K Hall.
Brunswig et al (2005) Undue influence: the creation of false confessions and false witness statements in undergraduates. Nevada: University of Nevada.
Geisst, C. (2005) Undue influence: how the Wall Street elite put the financial system at risk. New York: John Wiley and Sons
Margolick, D. (1993), Undue influence: the epic battle for the Johnson & Johnson fortune. Ohio: W. Morrow
Martini, S. (1996), Undue Influence. California: Jove books
Pawlowski, M. & Brown, J. (2002). Undue Influence and the Family Home. London: Routledge.
Ron, A. (1999), Undue influence: wealthy foundations, grant-driven environmental groups, and zealous bureaucrats that control your future. New Jersey: Free Enterprise Press
Stone, R. (2005). The modern law of contract. London: Routledge.
Yastrow, S. (1991), Undue Influence. Moscow: Thorndike Press.
