Economic duress

• • Occurs where c enters into a contract as a result of a threat to their person's financial situation
  • A contract agreed under economic duress cannot be recognised as a true or real agreement between the parties
  • Has been described as 'such a degree of coercion the other party was deprived of his free consent and agreement' - (Sibeon and the Sibotre)
• Elements of Economic duress:

  1. There was evident economic pressure on the injured party which results in a lack of practical choice (coercion of the will)
  2. The pressure was illegitimate
  3. The illegitimate pressure is a significant cause of making the contract
• There was evident economic pressure on the injured party which results in a lack of practical choice (coercion of the will): - (Universe Tankships)

  • Pressure exerted on innocent contracting party
  • compulsion or lack of practical choice much further than the pressure of the market
• There was evident economic pressure on the injured party which results in a lack of practical choice (coercion of the will)

  Factors that the court will consider

  Any other course of action that was reasonable - (Paoon)
• The pressure was illegitimate

  Lawful pressure will only be illegitimate if the threat is unreasonable (D not entitled to make the threat) - (Progress bulk carriers)

  • Where the threat to refuse to supply a substitute ship unless claims for breach of contract were waived, amounted to economic duress
• The illegitimate pressure is a significant cause of making the contract (Baron v Armstrong)

  Duress must be one of the reasons for entering the contract but does not have to be only or even the main reason
• The illegitimate pressure is a significant cause of making the contract

  Court will consider if C protested at the time of the contract or shortly after - (Baron v Armstrong)

  • Despite death threats C brought shares because he thought it was a good business deal
• Rescission = This mean rescission is the likely remedy to be used through this remains the choice of the claimant
• Voidable (Atlas Express v Katfco)

  Since duress operates to deflect the will of the party rather than vitidate consent, the effect of finding duress