DEFINICIÓN CONCEPTUAL INTELIGENCIA EMOCIONAL

Duress and undue influence

Duress is actual or threatened violence to, or restraint of the person of, a con- tracting party. If a contract is made under duress it is at once suspect, because consent has not been freely given to the bargain supposedly made. The con- tract is voidable at the option of the party concerned. Duress is a common law doctrine which relates entirely to the person and has no relation to that person’s goods. As such it is a very limited doctrine and is one where cases are rare.

The dictionary defines duress as, restraint of liberty or illegal compulsion. Whilst the concept of economic duress is easily understood, it is often difficult to prove in practice. The difficulty for those making judgments is to make a distinction between commercial practices that may be both legal and tough and those prac- tices that occur because of coercion. Two recent cases where economic duress was raised are, DSND Subsea v. Petroleum Geo-Services (2000) and Carillion Construction Limited v. Felix (UK) Limited (2001).

Economic duress might, for example, be applied in the first place to the sign- ing of a contract or then subsequently in dealing with variations or change orders. The pressure applied by one party must be both illegal and significant in indu- cing the other party to agree to a course of action that otherwise would not be followed. The victim’s conduct must be affected in a significant way by the duress, and a reasonable alternative must not be available at the time to the victim of the duress. The Privy Council has identified four factors to consider in assess- ing whether economic duress is present:

• Did the person claiming to be coerced protest?

• Did that person have any other available course of action? • Were they independently advised?

• After entering into the contract, did they take steps to avoid it?

Unenforceable contracts

Contracts may be described as void, or voidable or unenforceable. A void con- tract creates no legal rights and cannot therefore be sued upon. It may occur because of a mistake as to the nature of the contract, or because it involves the performance of something illegal that is prohibited by a statute. A void con- tract will also result because of the incapacity of the parties, as in the case of infants. Corporations cannot make contracts beyond their stated powers which are said to be ultra vires ‘beyond one’s powers’.

A contract is said to be voidable when only one of the parties may take advan- tage. In cases involving misrepresentation, only the party who has been misled has the right to a void in one of the ways previously described.

Unenforceable contracts are those that are valid, but owing to the neglect of the formalities involved, a party seeking to enforce it will be denied a remedy.

Mistake

The law recognises that, in some circumstances, although a contract has been formed, one or both of the parties are unable to enforce the agreement. The parties are at variance with one another and this precludes the possibility of any agreement. Mistake may be classified as follows:

• Identity of subject matter: this occurs where one party intends to contract with regard to one thing and the other party with regard to another; the par- ties in this situation cannot be of the same mind and no contract is formed. • Identity of party: if the identity of either party enters into consideration, this

will negate the contract.

• Basis of contract: if two parties enter into a contract on the basis that cer- tain facts exist, and they do not, then the contract is void.

• Expressing the contract: if a written contract fails to express the agreed inten- tions of the two parties, then it is not enforceable; courts may, however, express the true intention of the parties and enforce it as amended.

Misrepresentation

Misrepresentation consists in the making of an untrue statement which induces the other party to enter into a contract. The statement must relate to fact rather than opinion. Furthermore, the injured party must have relied on the statement and it must have been a material cause of their entering into the contract. Where such a contract is voidable it may be renounced by the injured party, but until such time it is valid. Misrepresentation may be classified as:

• Innocent misrepresentation: an untrue statement is made in the belief that it is true.

• Fraudulent misrepresentation: an untrue statement is made with the know- ledge that it is untrue or made recklessly without attempting to assess its validity.

• Negligent misrepresentation: a statement is made honestly but without reasonable grounds for belief that it is true. It is really a special case of innocent misrepresentation, for although the statement is made in the belief that it is true, insufficient care has been taken to check it.

Where misrepresentation occurs the injured party has several options:

• The injured party can affirm the contract, when it will then continue for both parties.

• The injured party can repudiate the contract and set up misrepresentation as a defence.

Express and implied terms 27

• An action can be brought for rescission and restitution:

– Rescission involves cancelling the contract and the restoration of the parties to the state that they were in before the contract was made. – Restitution is the return of any money paid or transferred under the

terms of the contract.

• The injured party can bring an action for damages. The claim for damages is only possible in circumstances of fraudulent misrepresentation.