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Countering Power Abuse in Contractual Agreements: Understanding Your Legal Rights and Protections

Recognising Power Abuse in Contracts


Abuse of power, especially when manifested in contract negotiations, can be challenging to detect for the aggrieved party. Utilising tactics such as threats, manipulation, and leveraging power relationships is regulated under both common law and statutory provisions, indicating that such methods of inducement render the contract voidable.


Duress: A Key Issue


When one party threatens another to enter a contract, either physically or in relation to property, the victimised party may be eligible to claim duress during contract formation and seek rescission to nullify the contract. The claimant must establish that pressure was applied, which induced them into the contract and went beyond legitimate tactics, leaving no reasonable alternative. The offender might even threaten to breach the contract unless a concession is made, which in itself is a form of duress to maintain or modify a contract.


Undue Influence: Breaching Trust


Undue influence is a scenario where a party manipulates another into entering or altering a contract, resulting in the victimised party suffering impaired judgment due to misplaced trust. The contract may be rescinded if undue influence can be established, either presumed or actual, in the context of a relationship where one party wields undue influence over the other, impairing the latter's ability to protect their interests.


Unconscionable Conduct: Exploiting Vulnerability


Unconscionable conduct involves a party attempting to enforce or retain the benefits of a deal with another party who is at a distinct disadvantage. Rescission might be a viable remedy in such cases. The exploitative party must have knowledge of the other party's special disadvantage and must have knowingly and unscrupulously taken advantage of them to enter into the contract.


The Australian Consumer Law, as laid out in Schedule 2 of the Competition and Consumer Act 2010 (Cth), offers specific protections against such tactics. It prohibits any person, in trade or commerce, from engaging in unconscionable conduct. The Court can also examine potential power abuses, such as undue influence exerted by the business over the consumer or the bargaining positions between the parties.


Arida Lawyers: Upholding Your Contractual Rights


If you suspect that a contract you have entered into is tainted by any of these forms of power abuse, our expert team at Arida Lawyers is ready to assist. We specialise in contract law and can help you assert your right to rescind the contract if these unlawful tactics are identified. Our goal is to protect your interests and your autonomy to enter into contracts without illegitimate pressure.


If you're seeking legal advice or help with asserting your rights as a contracting party, please don't hesitate to contact us at 1300 146 390 for your initial consultation or email us your inquiry at info@aridalawyers.com.


This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.


Liability limited by a scheme approved under Professional Standards Legislation.

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