economic duress

• elements

  1. illegitimate pressure
  2. ^ caused C to enter the contract
  3. C protested at the time of or shortly after contract was made
• illegitimate pressure must go beyond ordinary commercial pressure (like tough bargaining and letting a company go bankrupt) threat to renew a contract is not illegitimate pressure
• illegitimate pressure (cases): Williams V Roffey (there was no duress since there was no evidence of any pressure or threat from the subcontractor (the initiative for the promised extra payment came from the main contractor)
• illegitimate pressure (cases): Atlas V Kafco- C signed a contract with D to deliver goods. After contract was made D threatened to stop deliveries unless extra payment was made. was duress as they had no realistic choice other than to agree at such short notice (illegitimate pressure includes threat or actual breach of contract)
• illegitimate pressure (cases): -includes threat to breach contract or commit a tort- Universe tankships V ITWF (trade union prevented ship from leaving a port, unless extra payments were made. ship owner agreed to make sure the ship would leave the port, the promise of extra payment was due to duress the only way out for C was to pay)
• illegitimate pressure (cases): times travel V Pakistan international airline- no illegitimate pressure, airline engaged in hard commercial negotiation but threat was to not enter into any future contracts
• inducement: the pressure must be a significant cause in inducing C to enter the contract (carillion construction V felix: C only paid due to threats of delaying construction work, factual causation, but for the threats C would not have paid
• unable to claim duress if you seek legal advice as its seen as a business decision: Pao On V Lau Yiu Long
• protest: C must protest at the time of or directly after contract is made, or it will be treated as an acceptance of terms (The Atlantic Baron- increased price of ship mid-construction, buyers didn't complain until 8 months later- too long)
• effects: makes a contract voidable, courts aim for a recession (putting parties in their original places before the contract took place)
• definition: economic duress is illegitimate pressure which induces one party to enter the contract because they have no real practical choice other than to agree
• Economic duress in contract law:

  • Involves unfair pressure or illegitimate actions that make one feel they have no choice but to agree
  • To prove economic duress, it must be shown that the pressure was illegitimate, forced you to enter the contract, and you protested at the time of the contract
  • Illegitimate pressure must go beyond ordinary pressure, like threatening to break an existing contract or let you go bankrupt
• Williams v Roffey case:

  • No pressure was present as they stated they couldn't continue with the contract
• Atlas v Kafco case:

  • Duress was present as there was a threat to stop deliveries unless C paid more due to the difficulty of finding another supplier for Christmas goods in an existing contract
• Times Travel v Pakistan International Airline 2021 case:

  • No duress if it was hard commercial negotiation, different from breaking an existing contract
• In cases of economic duress, it's crucial to determine if the pressure was about breaking an existing contract or entering a new one
• Inducement in economic duress:

  • Pressure must be the reason why you entered the new contract
• Carillon Construction v Felix case:

  • Example: "We won't finish unless you pay us more"
• Protest in economic duress:

  • It's important to note if the party complained at the time of the contract, as complaining after is considered too late
• The Atlantic Baron case:

  • Waiting 8 months before complaining was deemed too long, indicating a lack of timely protest
• Duress can make a contract voidable if desired, unlike frustration, and parties can seek recision to go back to the earlier contract