In everyday life, we routinely enter into contracts – whether buying a car or property, renting accommodation, or accepting a job offer. But what happens when someone is pressured into signing a contract? Can a contract still be valid if one party didn’t genuinely agree?

To be legally binding, a contract must be entered into freely and voluntarily. Where agreement is obtained through threats or the abuse of a position of trust, the law may permit the aggrieved party to challenge the agreement. This article explores two legal doctrines that address such concerns: duress and undue influence.

Duress

Duress happens when a party is compelled to sign a contract by threats or pressure. This pressure may take various forms:

  • Physical duress: Where a party is threatened with violence or unlawful detention.
  • Economic duress: This is more complicated but may arise when financial or commercial pressure is applied in a way that is considered illegitimate. For example, if a supplier refuses to deliver goods unless you pay more than agreed, and you have no real alternative, this may constitute economic duress.
  • Threats to reputation or social standing: Although rarer, threats to expose private information or damage one’s reputation might count as duress. However, courts are cautious about these claims due to evidential difficulties.

Undue Influence

Undue influence arises when one party uses their position of trust to secure the other’s agreement unfairly. It focuses on the abuse of a relationship between the parties.

There are two forms of undue influence:

  • Actual undue influence: This involves clear evidence that one party applied pressure, such as constant badgering or isolating the other party from getting legal advice.
  • Presumed undue influence: This applies when there’s a special relationship (like parent and child, solicitor and client, or carer and elderly person), and the circumstances raise suspicion. The law may presume influence took place unless the stronger party can prove otherwise.

A contract made under duress or undue influence may be voidable. The aggrieved party may choose to rescind it, effectively undoing it and restoring the pre-contractual position if it’s possible, and the court will also look at factors such as whether the contract has been affirmed, the amount of time that has lapsed and if an innocent third party is affected.

Contract law requires that agreements be entered into freely. Where one party applies illegitimate pressure or abuses a position of trust, the law provides mechanisms to challenge such agreements.

For any advice on contracts entered into under duress or undue influence, or any other litigation matter, please contact our Dispute Resolution team on 0116 289 7000 or at paul.davis@bhwsolicitors.com.


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