Economic Duress

• Economic duress is when someone enters a contract due to financial threats - the pressure goes beyond the usual rough and tumble of business dealings

  • If economic duress is established, it makes the contract voidable - Atlas Express v Kafco
• 1. Did the pressure force you into the contract/leave a lack of practical choice for the C?

  • There must be evidence that there was no choice but to agree - Universe Tankships v ITW
• 2. The pressure must be illegitimate

  • The factors for this were set out in Pao On v Lau Yui Long
  • If the action threatened is lawful, this may not be economic duress - CTN Cash and Carry v Gallagher
• 3. The illegitimate pressure is a significant cause of making the contract - apply the Pao On factors

  • If the person claiming did not protest, this is not economic duress
  • If there was another reasonable course of action available, this is not economic duress - Progress Bulk Carriers v Tube City
  • If the C independently sought advice, this is not economic duress
  • If the C didn't take steps to avoid the 'thing' in question, this is not economic duress
  • (The right to claim economic duress may be lost due to lapse of time - The Atlantic Baron)
• Remedies:

  • Restitution of property or money - the court can order the property or money gained through economic duress to be returned to the innocent party