In English law, both undue influence and economic duress involve situations where someone is compelled to enter into a contract against their will.
But they differ in key ways.
Undue influence typically occurs when one party takes advantage of a position of power or trust to pressure the other party into agreeing to a contract.
This can happen in relationships like doctor-patient, guardian-ward, or solicitor-client, where one person has significant influence over the other. The influence can be subtle or overt, but the crucial point is that the influenced party's free will is compromised due to the influence exerted by the other party.
On the other hand, economic duress arises when one party induces another to enter into a contract by threatening to do something wrongful that would cause financial harm.
This could include threats to withhold payment, threats of physical harm, or other coercive tactics aimed at exploiting the vulnerable position of the other party.
Unlike undue influence, economic duress doesn't necessarily involve a pre-existing relationship of trust or influence; instead, it focuses on the wrongful pressure exerted to secure agreement to the contract.
In essence, undue influence revolves around the abuse of a special relationship or power dynamic, while economic duress centers on the use of coercive tactics to force someone into a contract due to financial desperation or fear of harm.
Both concepts aim to protect individuals from being unfairly taken advantage of in contractual agreements.
In English law, the result of proving undue influence or economic duress can vary depending on the circumstances.
If a court finds that undue influence has occurred, the contract affected by it may be deemed voidable. This means that the influenced party has the option to either continue with the contract or alternatively treat it as if it never existed and seek damages for any loss suffered.
Similarly, if economic duress is established, the affected party may either continue with the contract or escape the unfair terms imposed under duress. Additionally, the coerced party may be entitled to damages or other remedies to compensate for any losses suffered.
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