Text 4 Duress, Undue Influence and the Effect of Mistake

An agreement is said to be made under duress if one person compels another to enter into it through coercion (threat of force or an act of violence) or by illegal imprisonment (unlawful arrest or detention). The victim in such cases has been denied the exercise of free will. Therefore he or she may disaffirm the resulting contract.

The threatened or actual violence may be to the life, liberty, or property of (1) the victim, (2) the victim’s immediate family, or (3) the victim’s near relatives.

A person usually is not guilty of duress when the act or threat is to do something the person has a legal right to do. Thus, to persuade another to contract under threat of a justifiable civil lawsuit is permissible. To threaten to have another arrested if the contract is not signed would be duress and possibly criminal coercion.

Undue influence occurs when one party overpowers the free will of the other, taking unfair advantage to get the other to make a contract that is unfavourable.

It is more likely to be present when a relationship of trust, confidence, or authority exists between two parties. Thus, undue influence is presumed to exist in unfavourable contracts between attorney and client, husband and wife, parent and child, guardian and ward, physician and patient. When a contract is made as a result of undue influence, the contract is voidable by the victim.

A charge of undue influence can be overcome by proving that the contract is fair and benefits both parties. To forestall a claim on undue influence, the stronger party should act with honesty, fully disclose all important facts, and insist that the other party talk to independent counsel before contracting.

Normally the relations between a landlord and a tenant would not involve undue influence.

When there is a unilateral mistake, one of the parties has an incorrect idea about the facts of a contract. Such a mistake generally does not affect the validity and enforceability of the contract.

Frequently a party to a contract has erroneous expectations of high profits. For example, suppose a building contractor bids to do a job for $10,000. Actual cost runs up to $12,000. The mistaken contractor suffers the loss. This is the unilateral mistake.

Failure to read a contract before signing, or a hurried or careless reading of it, may also result in assuming obligations that a person had no intention to do. In making contracts, persons are ordinarily bound by what they outwardly do and say, regardless of what they may inwardly think, understand, or intend. The resulting unilateral mistakes generally do not affect the contract. However, if the mistake was recognized but not disclosed by one party alone, who apparently hoped to gain an advantage by remaining silent, courts may grant relief by declaring the agreement void.

When there is a mutual mistake (also called a bilateral mistake) of material fact, both parties are wrong about some important facts. In such a case, either party may disaffirm.

Vocabulary

violence насилие

coercion [kəυ’з:∫n] принуждение, насилие, применение силы

to be denied the exercise of free will быть лишенным свободы выбора

undue influence чрезмерное влияние

guardian опекун

ward опекаемый; подопечный

to forestall предотвращать

counsel адвокат

unilateral/ multilateral mistake одностороннее/ обоюдное заблуждение

bilateral mistake одинаковая ошибка, допущенная обеими сторонами, не сговариваясь, касающаяся содержания контракта. В этом случае контракт может либо признаваться недействительным, либо его условия переформулируются.

to assume obligations принимать обязательства

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