VITIATING FACTORS: WHEN CAN A CONTRACT BE SET ASIDE. PART 2

Last week, I published a blog post discussing two key vitiating factors in contract law, that is, misrepresentation and mistake, see VITIATING FACTORS IN CONTRACT LAW. These factors can render a contract void or voidable. This week, I will delve into the remaining two: duress and undue influence, and illegality. These doctrines also play a crucial role in determining the validity of agreements, particularly in cases where one party’s consent was obtained unfairly or where the contract itself violates legal principles. Let’s break them down.

        3. DURESS AND UNDUE INFLUENCE 

No force or coercion should be used to secure an agreement. If a party does enter a contract because he/she was coerced by the other party, then the law recognizes that the contract should be set aside and the party coerced should be relieved of their own obligations under the contract. If various elements of the contract are proved, then the contract would be void rather than voidable.

DURESS- Duress in contract law was originally understood as a situation where one party was forced into an agreement due to threats or intimidation that felt real and serious enough to take away their ability to make a free choice. In the early development of the law, the courts took a strict approach, requiring that the threat be directly linked to physical harm or even the risk of death. This meant that only extreme cases, where a person was coerced under the fear of violence, were considered enough to invalidate a contract.

UNDUE INFLUENCE- Undue influence was traditionally developed under equity, meaning that any remedy is left to the court’s discretion rather than being automatically granted. Over time, the law expanded to cover situations where any form of improper pressure or manipulation prevented a person from making a truly independent decision when entering a contract. Since equity is more flexible than common law, courts have been able to apply this doctrine in a wider range of cases, especially where one party has exploited the other’s trust, dependence, or vulnerability to gain an unfair advantage.

The doctrine developed along two distinct lines and a comparison was drawn between those situations where undue influence could be presumed. These are: 

        1. Where no special relationship existed between the parties( actual undue influence) - The party alleging undue influence would be required to prove the undue influence. To do this, they would need to show that the other party was in a position of dominant influence over them at the time the contract was formed so that they were unable to exercise free will or choice or to behave independently in entering into the contract. 

        2(a). Where a special relationship existed between the parties (presumed undue influence)- A special relationship could include many different relationships some obvious and some less so. The list was neither defined nor non-exhaustive. It automatically included fiduciaries of whatever kind but also any relationship where the court could perceive that there was a natural dominance over one party by the other. For example: parent and child. 

In these relationships, the court would presume undue influence and it would be for the party who was alleged to have exercised their influence unfairly to disprove it evidentially. In order for the dominant party to disprove any indue influence on his part, it would be necessary to show two things: 

• That the other party entered the agreement with full knowledge of its character and potential effects
• That the other party took independent and impartial advice before entering the contract

        2(b). Relationships of trust and confidence- Where there is no automatic presumption of undue influence but it is accepted that the relationship of the parties is one in which undue influence could arise e.g husband and wife 

        4. ILLEGALITY 

Illegality is much more to do with the actual agreements itself rather than the parties. It is of a type that for some reason the law frowns upon and for public policy or other reasons is not prepared to accept as legitimate. The basic principle: the law will not accept a contract that is tainted with illegality. Since contracts can be illegal both because of statutory provisions or because judges have made them so through common law, it is possible to break the area down and to classify illegally into 2 groups: 

        a) Contracts void by statute- Under the Employment Act, wages or salaries are payable in money or moneys worth. A contract to pay wages or salary in kind is illegal and void. Such a contract, is said to be illegal as formed and is unenforceable. 

        b) Contracts declared illegal at common law/ courts of law- these are contracts declared illegal by courts of law for bring contrary to public policy e.g

• A contract to oust the jurisdiction of the court- This is a contract which purpots to deny the parties the right to seek judicial redress. 
• Contracts prejudicial to status of marriage- a contract which interferes with the marriage institution e.g marriage breakdown contracts
• Contracts in restraint of trade- this is a contract by which a persons future liberty to engage in a profession or trade in a particular manner or with a particular persons is voluntarily or involuntarily restricted e.g an employee covenant not to work for a business rival or set up a similar business after leaving employment. However such a contract can be enforced if it is proved that: the restraint was reasonably necessary to protect the interests of the restraint party, the restraint was reasonable to the party being restrained, the restraint was not injurious to the public. 

 In conclusion, vitiating factors play a crucial role in contract law by ensuring that agreements are based on genuine consent and legal principles. Understanding misrepresentation, mistake, duress, undue influence, and illegality helps in identifying when a contract may be void or unenforceable.

Stay tuned for my next blog post, where I'll dive into another exciting legal topic!

 

Disclaimer- The information provided is for general informational purposes only and should not be considered as professional advice. Please consult a qualified professional for specific guidance. 

 REFERENCES 

Chris Turner, Unlocking Contract Law, Routledge, 2014

University of Nairobi. The law of contract notes. Studocu.