Duress Remedies
Invalidating Duress
Duress covers a range of types of pressure and influence. It may range ranging from threats or actual direct unlawful violence to the application of other, less direct unlawful pressures.
Duress involving the threat of personal violence clearly negates consent and contracts thereby entered. There may be criminal liability.
There may be duress against goods. It may arise, for example, in the case of money paid to release goods wrongfully detained.
A threat to commit a civil wrong presumptively constitutes duress and may potentially allow recovery of benefits transferred under the apparent contract.
Economic Duress
Economic or circumstantial duress may or may not be enough to invalidate a contract. Economic duress has been recognised as sufficient where it causes the person concerned to act in circumstances where the threatened action could have serious consequences that he or she could not reasonably avoid.
Threats made that are sufficiently coercive, may invalidate a contract and afford a right to restitution. The threat must be illegitimate in order to invalidate the contract.
The most common form of economic duress is a threatened breach of contract. Many of the cases involve a refusal to perform a contract where no alternative is available, unless more monies than the contract provides for, are paid.
Legitimacy of Pressure
There may be commercial pressure without coercion. The renegotiation of a contract, under a threat of non-performance will be legitimate in many circumstances. The court considers the legitimacy of the pressure.
What is or is not coercive has a subjective element. The court looks at whether the party concerned has been coerced. If the threatened action would have serious consequences for the claimant which cannot be otherwise reasonably avoided, this may point to coercion.
Objective factors are looked at. The more serious the consequences and lack of choice, the more likely the threat is characterised as illegitimate. Where a party has unreasonably capitulated to pressure, there will not be economic duress. Where he had reasonable alternatives, these should be taken.
Unlawful Element Required
Generally, there must be some element of unlawfulness which is sufficiently coercive in the circumstances so as to affect the claimant’s freedom of action. There is authority for the proposition that industrial action which is immunised under the Industrial Relations Act, is not unlawful for this purpose.
Threats not to do business in the future do not appear to be sufficient. A person is entitled not to do business with another. Other than in exceptional circumstances where there is an abuse of a dominant position, there will be no unlawful element.
The fact that something in the circumstances is contrary to statute or is in some way unlawful is not of itself sufficient. There must be causation. There must be coercion which causes the claimant to act as he does. It must be reasonable that he so acted. It must cause him to so act.
Lawful Threats
A person is generally entitled to threaten to do anything which he might lawfully do. Usually, he may keep a gain so made.
It appears that a threat of a lawful act may amount to operative duress under some circumstances. It may do so if the threat is tantamount to blackmail, made in bad faith or with the predominant motive of harming the person concerned.
There is case law which supports the position that threats of a lawful act might justify restitution where
- the defendant had no reasonable belief that the duress was reasonable;
- the defendant acted in bad faith for the purpose of harming the claimant;
- the demand is made with menaces akin to those which constitute an unlawful demand / blackmail.
Demanding monies with menaces may be an offence, notwithstanding that what is threatened may be lawfully done. This would constitute an unlawful element.
Causation
Threats to breach a contract do not of themselves constitute economic duress. It must be an illegitimate threat having serious consequences which the person claimant could not reasonably have avoided.
It appears sufficient that duress is a significant contributory cause for the steps taken, even if not the sole cause.
The claimant’s response must be reasonable and proportionate. It will depend on the circumstances as to whether there is operative coercion, which causes the claimant to pay or to do what the threat required, typically the payment of monies.
The claimant will be expected to act reasonably, given the alternatives put to him. This is analogous to the obligation on a person who suffers a wrong or breach of contract, to mitigate his loss.
Threats of Prosecution and Civil Action
Threats to lawfully involve the criminal process may be deemed illegitimate for this purpose, even if the person who so threatens is lawfully entitled to do so. An agreement to compromise a prosecution is unlawful at common law.
Threats of civil proceedings of themselves are usually insufficient to constitute duress. Seeking reasonable compensation for a civil wrong is permissible. However, it appears that it is not permissible to threaten criminal sanction in order to seek more compensation than is lawfully due.
Settlements and payments made under threat of litigation, express or implied, are usually irrecoverable. This is necessary in the interests of the finality of litigation. The litigation must be conducted in good faith. It must not be an abuse of process.
Consequences
Duress negates a contract. A personal claim may also lie for the value transferred, as well as a proprietary claim.
In those cases where economic or circumstantial distress is enough to invalidate a contract, it appears that the contract may be at most voidable rather than void.
A benefit or payment made under duress or undue influence, which would otherwise give rise to a right of restitution, may later be waived and discharged. If when the duress or influence is removed, the payment or benefit is freely affirmed or ratified, it may be deemed waived.
Public Authority
It is arguable that threats by public authorities to do things outside their powers, thereby requiring benefits and payments, are unlawful for this purpose. Public bodies must act in accordance with their constitutive law in accordance with the fundamental principle that they are bound by and must conform with the rule of law.