Fear/Crainte (CVL)/Duress(CML)
Fear/Crainte (CVL)
1. Physical constraint (persons and goods)
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Physical violence
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Vis absoluta – violence that is absolute (e.g. taking your hand and guiding your hand to form your signature)
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Vis compulsiva – using violence as a means to coerce a decision
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Threats of physical violence – there is no test for measuring violence, so judges exercise a lot of discretion, look at the relationship of the parties
2. Moral constraint: threat of defamation, “chantage”, etc.
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Blackmail, some kind of information will lead to defamation, prosecution
3. Causation: “fear” must have deprived the party of the free choice to enter into the contract
4. Serious injury: “un certain caractère de gravité”
5. Fear must be “reasonable”: subjective standard!
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Both aspects combined are supposed to make sure that “fear” is not a purely subjective sentiment
6. Constraint must be illegitimate
Consequences for Fear/Crainte
Nullité relative, Art. 1419
Contract is deemed to have never existed, Art. 1422
Article 1422
A contract that is null is deemed never to have existed.
In such a case, each party is bound to restore to the other the prestations he has received.
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Unperformed obligations are unenforceable
Already exchanged prestations returned through Restitution Art. 1422, 1699
Article 1699
Restitution of prestations takes place where a person is bound by law to return to another person the property he has received, either unlawfully or by error, or under a juridical act which is subsequently annulled retroactively or under which the obligations become impossible to perform by reason of superior force.
The court may, exceptionally, refuse restitution where it would have the effect of according an undue advantage to one party, whether the debtor or the creditor, unless it deems it sufficient, in that case, to modify the scope or mode of the restitution instead.
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CVL - J.J. Joubert Ltd. v Lapierre - Fear
“Violence économique”
Relation between “means” and “ends,” in particular when exercising a right
Threat of economic violence equated to physical violence
Does the violence have to result in a financially disadvantageous transaction? NO it is an issue of autonomy.
Restitution: Unwinding the transaction
1.1.4CVL – J.J. Joubert c. Lapierre et Lapierre, [1972] CS Que. CB2 : 41 |
Jurisdiction
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Quebec
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Facts
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Joubert, the employer, decided to change all employees’ status to independent contractor in order to thwart the union whose collective agreement was expiring. He threatened not to renew Lapierre’s contract unless he agreed to sign on to the new arrangement, which included the purchase of equipment.
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Issues
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Is the contract invalid due to duress?
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Holding
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Yes Lapierre – contract annulled – restitution ordered
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Reasoning
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This is a question of autonomy – Lapierre did not give free and enlightened consent – threat of economic violence viewed as on par with physical violence – reasonable fear of a serious injury resulting in vitiation of consent
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In order for use of constraint to be legitimate, both the means and the ends must be legitimate. In this case, the means (threatening to let contract of employment expire) was legitimate, but the ends (union busting) were not – only violence used to enforce a right to which the party is entitled is legitimate
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It does not matter if the contract would have left Lapierre better off – a unilateral decision on the part of one party to change the arrangements and the other party’s acquiescence due to fear cannot be condoned even if it was a good deal (in this case, it was not a better deal anyway) – it is up to each party to decide whether the contract is advantageous or not
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Ratio
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Economic violence is on par with physical violence. Violence is only permissible when both the means and the ends are legitimate.
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5. Lesion (1405)
Article 1405
Except in the cases expressly provided by law, lesion vitiates consent only in respect of minors and persons of full age under protective supervision.
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Vitiated Consent: Remedies CVL
1407, 1408: Application for Annulment (in case of lesion also reduction)
Difference between public policy voids and vitiation consent – in public policy, parties have no choice – the contract is void, in vitiation consent, the party whose consent was vitiated has a choice of voiding it or not by applying for annulment
Article 1407
A person whose consent is vitiated has the right to apply for annulment of the contract; in the case of error occasioned by fraud, of fear or of lesion, he may, in addition to annulment, also claim damages or, where he prefers that the contract be maintained, apply for a reduction of his obligation equivalent to the damages he would be justified in claiming.
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Article 1408
In the case of a demand for the annulment of a contract on the ground of lesion, the court may maintain the contract where the defendant offers a reduction of his claim or an equitable pecuniary supplement.
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1419: Relative Nullity, only to be invoked by the party whose consent was vitiated
1420 (2): possibility of confirmation
Article 1419
A contract is relatively null where the condition of formation sanctioned by its nullity is necessary for the protection of an individual interest, such as where the consent of the parties or of one of them is vitiated.
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Article 1420
The relative nullity of a contract may be invoked only by the person in whose interest it is established or by the other contracting party, provided he is acting in good faith and sustains serious injury therefrom; it may not be invoked by the court of its own motion.
A contract that is relatively null may be confirmed.
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General Introduction to Vitiated Consent in CML – Flawed Formation
Contract as the voluntary creation of obligations by consent (“Private autonomy, freedom of will”)
In what situations is entering into a contract not a “voluntary act”?
1. Duress: Paradigm of coercion that “vitiates consent”
2. Undue Influence:
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“Unconscientious use by one person of power possessed by him over another” – typically, vitiation of consent by the abuse of a relationship of trust and confidence
3. Unconscionability:
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One person taking undue advantage of another, by reason of considerable inequality of bargaining power
Note how particularly in the last category, public policy considerations play a crucial role!
In Germany, cases of unconscionability have been dealt with as “contra bonos mores”, 138 BGB
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