Economic Duress

• Economic duress makes a contract voidable
• There are 3 elements of economic duress:

  1. nature of the threat
  2. the consequences of the threat
  3. additional criteria to help identify economic duress
• (1) Economic Duress - pressure which goes 'beyond ordinary commercial pressure' (The Siboen and Sibotre)
• (1) There must be an unlawful threat e.g. to breach a contract (Kafco.)
• (1) A legitimate threat could be unlawful if made in bad faith (Times Travel)
• (2) For economic duress, there must be pressure that:

  • takes away the V's choice (feel like they have no other option)
  • is illegitimate
  • is a significant cause for inducing the V to enter the contract
• (2) Tests for illegitimacy

  • does D know about a breach of contract/threat
  • were their actions done in bad faith
  • did they know the bad position this would put the C in
• (3) Additional criteria (Pao On)

  The following factors were used to help decide whether the economic duress was present:

  • did the C protest about the pressure
  • was there other reasonable courses of action
  • was the C independently advised
  • after entering the contract, did C take measures to void the contract
• CTN Cash and Carry - Duress is not available when the action threatened was lawful
• Tube City - pressure can be illegitimate even when lawful
• The Atlantic Baron - the right to end a contract for duress may be lost through lapse of time
• Remedies:

  • order for restitution (restoring the C to the position they would have been in without the other parties actions)
  • declaring the contract void/voidable
• Damages are not available, but may be a separate claim under tort.