vitiating factors (economic duress)

• Economic Duress


  This is where someone enters into a contract as a result of financial threats. These threats must be 'improperly coercive'.
• Economic Duress

  • If someone is forced into a contract, then this could be the result of undue influence, duress or economic duress.
• Economic duress

  • The courts will be tasked with determining whether there has been economic duress or just legitimate commercial pressure (Atlas Express v Kafco)
• Tests for Economic Duress - 'Compulsion'


  • Pressure, such a through several large and harsh demands, may amount to compulsion. (Universe Tankships v International Transport)
• Tests for Economic Duress - 'Illegitimate'


  • When assessing whether the pressure was 'illegitimate', we need to check whether:
  • Did the person claiming to be coerced protest about the pressure?
  • Did the person have any other available course of action?
  • Were they independently advised before taking action?
  • After entering the contract, did they take steps to make it void?
  • (Pao on v Lau yiu Long)
• Tests for Economic Duress - 'Illegitimate' 


  • Economic duress is not available when the action threatened was lawful (CTN Cash and Carry v Gallagher)
  • However, pressure could be illegitimate when lawful when assessing the full contract. (Progress Bulk Carriers v Tube City)
• Tests for Economic Duress - 'Significant Cause'


  • The Courts will check that this economic duress placed pressure of great magnitude on the claimant. (Atlas Express v Kafco)
• Undue influence


  This is where one party entered a contract as a result of pressure, which deprived that party of independent judgement. This typically happens in relationships of trust (Allcard v Skinner)
• Tests for economic duress

  The key requirements for economic duress are:

  • Pressure where the practical effect of which is that there is compulsion on, or lack of practical choice for, the victim.
  • Pressure which is illegitimate.
  • Pressure which is a significant cause in inducing the claimant to enter the contract.
• Remedies of Economic Duress

  • Wherever you find economic duress, this will make a contract voidable.
  • If you are wanting to make a claim for economic duress, you will not get an award of damages.
  • Instead, the Courts will make an order of restitution of property or money.
  • Restitution is an equitable remedy which restores a person to the position they would have been in if it not for the improper action of another.