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Duress

Where duress is established the common law permits the victim to escape their contractual obligations by rendering the contract voidable. To be established one of the contracting parties must exert 'illegitimate' pressure on the weaker party which induces the weaker party to enter into the contract. Duress might relate to the person involved (eg, threatening to kill them if they do not enter into the contract), to the property of the other person (eg, threatening to burn down their house if they do not enter the contract) or may take the form of 'economic' duress. Economic duress might exist, for example, where the dominant party threatens not to perform a contract - although not all such threats will constitute duress - in particular, if other options were available to the weaker party (purchasing the product elsewhere, seeking legal remedies) duress will not be established.

Statute now provides remedies for duress in limited cases. In relation to consumer contracts s 50 of the Australian Consumer Law (contained in schedule 2 of the Competition and Consumer Act 2010) (previously this was section 60 of the Trade Practices Act ) prohibits corporations using 'physical force or undue harassment or coercion' in connection with the supply (or possible supply) of goods or services - or payment of goods or services.

50 Harassment and coercion
(1) A person must not use physical force, or undue harassment or coercion, in connection with:
(a) the supply or possible supply of goods or services; or
(b) the payment for goods or services; or
(c) the sale or grant, or the possible sale or grant, of an interest in land; or
(d) the payment for an interest in land.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.

This provision is very similar to the previous s 60, so existing case law is likely to provide relevant guidance to its application.

 

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