Economic duress

• What does economic duress mean?

  A party has been forced into entering a contract due to a threat to damage a business or a person financially.
• What happens with the contract?

  The contract is voidable which means is valid until the innocent party sets it aside
• what is the nature of the threat?

  The threat must be serious and unlawfull
• How do you decide if there is economic duress?

  Was there such a degree of coercion that the other party was deprived of his free consent and agreement?
• In what case during a recession, demands were made to negotiate contracts?

  The Sibeon & Sibotre
• In what case Atlas doubled delivery costs for Kafco knowing they had no alternative was economic duress?

  Atlas express v Kafco
• In what case trade unions demanded payments or the ship would be blacked and could not get other contracts?

  The Universe Sentinel
• In what case the same pressure from trade unions was classed as unlawful coercion and the agreement was set aside?

  The Evia Luck
• What did Pao On state economic duress does?

  Economic duress renders a contract voidable providing it amounts to a coercion of will which vitiates consent
• How do you establish economic duress?

  Did the person protest?

  Was there an alternative?

  Was independent advice sought?

  Were steps taken to avoid the contract once entered?
• How was economic duress classified in Pao On?

  He could have protested but did not

  The contract could have been enforced through specific performance

  He had sought legal advice
• What is commercial pressure?

  not economic duress
• What are case eaxamples of comercial pressure?

  Williams v Roffey; The Atlantic Baron
• What can the innocent party not do?

  claim damages
• What will the court order?

  restitution of property or money handed over due to the duress

  the contract to be void
• What happened in The Evia Luck?

  same pressure from trade unions was classed aas unlawful coercion and the agreement was set aside for economic duress
• What happened in Williams v Roffey?

  the pressure to avoid a financial penalty for latness was simply comercial pressure
• What happened in The Atlantic Baron?

  The contract was of £30 million. There was a threat to pay 10% more. This was economic duress as P would have lost valuable contracts if the ship would not have been built. Because P waited too long to claim it failed.