If Waymaker was induced to enter into a contract for a guarantee by the undue influence of Sea-Fix-It, they may have an action of undue influence and can make the contract voidable. Undue influence is where a sort of pressure is placed upon the victim. The case of BCCI v Aboody separated undue influence into classifications. The area that is relevant to Waymakers situation is actual undue influence which s class 1. This is where the undue influence of one party to another but when there is no specific relationship. Undue influence provides relief from a contract were improper pressure exists which falls short of duress. As duress at common law is where one party induces the other to enter into a contract by violence or threats of violence. So no threats so no duress. Class 1: actual undue influence occurs only when there are no special relationships between the parties so an abuse of a special confidence is not broken. The case of Allcard v Skinner defined actual undue influence. In applying the cases definition we could say on the part of Sea-Fix-It there was some unfair and improper conduct, as they knew there was a deadline for Waymaker to make and if they did not make the deadline then they could lose money. Also we could say the conduct is unfair the two parties had agreed a fixed price and date for the ship to be fixed by. This case also illustrates they must be some coercion from outside. Waymaker was unwilling to pay as they agreed, as they agreed the fixed price with Sea-Fix-It, so we can say his was a threat for them not to complete the job on time. The case of Williams v Bayley establishes the contract was exerted on the claimant. The claimant succeeded in his action in undue influence where the contract was then cancelled. However in this was ‘no way out’ situations were the father felt obligated to hi son. Waymaker did not have the opportunity to find another marine engineering company, so had agreed to the new terms as they are obligated to fulfil the contract with the German company. Though to show there was just an ‘influence’ must be undue.
The case of Dunbar Bank Plc v Nadeem said that where a party feels dominated by the other it is not sufficient and that the dominate party has to gain an unfair advantage over the victim. Sea-Fix-It may have taken and unfair advantage over Waymaker. This may therefore mean Waymaker has an actionable claim of Actual Undue Influence.
Waymaker had the problem of if the ship was not ready in time they wee in jeopardy of breaking a contract between themselves and he German Company, to which the contract maybe void or voidable because of breach. Waymaker were in a situation were there was no other alternatives that may allow them to meet their deadline for departure. The additional costs they paid n order for the ship to be ready of time may have constituted economic duress The court decided in the case of Atlantic Baron that when an illegitimate pressure is put upon one party with a threat to break a contract led to another one even if the consideration is adequate it constitutes economic duress and the contract would be made voidable. Sea-Fix-It did put an illegitimate pressure upon Waymaker as they threatened that the work would not be completed on time unless they paid an additional fee. Lord Diplock stated The Universe Sentinel that economic duress could be relied upon when the victim has consented to it by induced pressure by the other party and the law does not regard the pressure as legitimate. In this case the court believed that although the claimants had not protested at the time, they had the determination to release the ship as quickly and as swiftly as possible. Waymaker’s only thought was the ensure the ‘Flossy’ was ready for departure by the 14th of July. Waymaker had no other alternative unless they suffered severe financial loss and agreed to the ship being ready for the 18th of July, as well as it not being possible to arrange an alternative marine engineering company. However the ship was the carry perishable foods that need to be delivered on time. The case of Pao On v Lau Yiu Long provided a test for economic duress. Even though Waymaker has agreed to the new terms of the contract this does not mean they are bond to it if economic duress has vitiated the new agreement. The case of Atlas Express v Kafco applies this fact. The court ruled that the victims’ consent to the agreement was in fact an inducement of the illegitimate pressure and that the contract was voidable.
Although Sea-Fix-It may have been genuine when guaranteeing the ship would be ready, the two parties had already agreed on fixed terms this does not amount to misrepresentation. Waymaker does have an actionable claim in both economic duress and undue influence class 1 of actual undue influence. They would have a stronger case with economic duress as they were put under illegitimate pressure and they no other alternatives to avoid the new terms of the agreement.
Bibliography
Law of Contract
Chesire, Fifoot and Furmston
English Law
Gary Slapper and David Kelly
Law of Contract
Paul Richards
www.lawteacher.net
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