ISLAMIC UNIVERSITY IN UGANDA

MAIN CAMPUS

NAME: LUKWAGO BASHIR

REG. NO: 120-053011-22985

FACULTY: LAWS

COURSE: LLB

COUSRSE UNIT: LAW OF CONTRACT II

SEMISTER: TWO

LECTURER: Csl. NAGADYA HAMIDA

DATE: 30-JULY -2021

Section 10 of the contract act 2010 stress out the fact that there must be an agreement between
the parties to the contract and in this case the agreement comes after a consensus ad idem of the
parties to the contract hence consenting to contract. Consent is defined in Section 2 of the
contracts act to mean an agreement of two or more persons obtained freely upon the same thing
in the same sense. Therefore free consent of both parties to a contract is paramount and it is
deemed free where there is no duress and undue influence as provided for under Section 13 of
the contracts act 2010. Both Duress and Undue Influence are vitiating factors of a contract that
come as a result of absence of consent.
Duress
Broadly, a threat of harm made to compel a person to do something against his or her will or
judgment.1
Duress refers to wrongful or unlawful compulsion (as threats of physical violence) that induces a
person to act against their will.2
Section 13 of the contracts act Duress is implied as coercion which in turn is defined under
Section 2 of the contracts act as the commission or threatening to commit any act forbidden
under any law or the unlawful detaining or threatening to detain any property, to the
prejudice of any person with the intention of causing any person to enter into an agreement.
The yardsticks upon which an aggrieved party can raise duress where established in Occidental
Worldwide Investment v Skibs3 as;
i) The pressure must be illegitimate
ii) The pressure or threat must be significant in the nature and must influence the victim to
enter into a particular contract
Duress is divided into two categories i.e. Duress that comes as result of threats of force or
violence and Economic Duress;
1) Duress that comes as result of threats of force or violence.
This arises where either party to the contract coerces another to contract through threatened
violence or force. The threat in this case is must be through an illegal act that is criminal in
nature and not a tortuous one as it was held in Barton vs Armstrong 4 where murder was a
threat sufficient enough to amount to duress.

1
Bryan A. Garner Black’s Law Dictionary 9th edition

2
https://law.en-academic.com/1184/duress. extracted on 15/09/2021

3
[1976] 1 Lloyds Rep 293

4
[1976] AC 104
 The thereat can be over damaging property as it was in Dimskal Shipping Co SA vs
International Transport Workers’ Federation 5 where An agent of I.T.F informed the
plaintiff that unless their workers enter into employment contracts with their crew and the
I.T.F, the vessel would be blacked.

2) Economic duress
Economic duress refers to a threat to an individual’s financial interests. This was not
suggested as a potential ground of duress until the case of Occidental Worldwide
Investment Corporation vs Skibs [1976] 1 in the case of Pao On vs Lau Yiu Long6 it was
established that there are two requirements that where to be meant for one to raise economic
duress i.e.
I. Coercion of the will that vitiates consent
II. The pressure or threat must be illegitimate

A question arose where vitiating consent could not materialize where one was aware of what
they are doing or consent intentionally and Dyson J in DSND Subsea Ltd v Petroleum Geo
Services ASA7 altered the element;

I. Pressure
II. The practical effect of the pressure is that there is compulsion, or lack of practical
choice for the victim
III. The pressure is illegitimate
IV. The pressure is a significant cause in inducing the claimant to enter the contract.
It should be however noted that where there is an option other than contracting one cannot claim
duress as it was held in Northern Ireland v Lynch8
The courts will not come to the aid of a party that has simply entered into a bad bargain in what
might be challenging economic conditions but, where economic duress is proved, the primary
remedy is rescission of the contract and/or damages. The contract is voidable9

Undue Influence

Undue influence is a vitiating factor to a contract where one party to the contract enjoys a
dominant position to the other party to the contract uses the position to obtain unfair advantage

5
[1991] 4 All ER 871

6
[1980] AC 614

7
[2000] BLR 530

8
[1975] AC 653

9
https://gowlingwlg.com/en/insights-resources/articles/2018/the-basics-economic-duress extracted on
15/09/2021
over the other party as provided for in Section 14(1) of the contracts act 2010 and in
Contractors bonding vs Snee10

For one to raise claim of undue influence the elements that where established in Royal Bank of
Scotland Plc v Etridge11 i.e.

I. The influenced must prove that he or she placed confidence in the influencer because of
the relationship between them.
II. The contract must be one that calls for explanation
III. Where the influencer fails to assert that the influenced received independent advice and
was free from the influencer’s influence
IV. Presence of overt acts of improper pressure or coercion
V. A relationship exists where one party is dominate over other in terms of influence or
ascendancy and takes unfair advantage because of his or her dominance. Such
relationships include lawyer-client, parent-child, lecturer-student among others;

Undue influence has two categories that where stated in Barclays bank plc vs O’Brien12 actual
and undue influence as actual and presumed influence

Where there is actual undue influence established there is no requirement to demonstrate a

manifestation of disadvantage done by the other party as it was held in CIBC Mortgages plc vs
Pitt13

The key test for presumed undue influence was stated in Turkey vs Awadh14 as;

i) Do the facts give rise to either the existence of a protected relationship, or a relationship
in which evidence could prove that one party exerted influence on the other?
ii) If so, could the transaction be shown to be one that could not be explained by ordinary
motives, therefore suggesting some kind of undue influence resulted in the transaction.
iii) Can the defendant rebut this presumption by establishing there was no abuse of trust?

In conclusion therefore the effect of both Duress and Undue Influence to the contract is that the
contract becomes voidable as stated in the quote from Ansons law of contracts (page 240 and
244)

10
[1992] 2 NZLR 157

11
[2002] UKHL 44

12
[1994] 1 AC 180

13
[1994] 1 AC 200

14
[2005] EWCA Civ 382