Duress Flashcards
What are the three categories of Duress?
- Duress to the person
- Duress to goods
- Economic Duress
In circumstances where a contract is entered into or modified, where there’s duress, the contract is voidable i.e. it can be rescinded.
What are the elements of Duress?
- Must be pressure that is illegitimate
- Pressure must cause the party wishing to set the contract aside, to enter the contract.
Universe Tankships v International Transport Workers
Duress to the person:
How do you distinguish between legitimate business pressure and duress?
Barton v Armstrong - Barton and Armstrong are major shareholders in a company. Both want control of company.
Armstrong then wants Barton to buy his shares, so that Armstrong can get out of the race with money.
Armstrong proposes on very generous terms and overreacts saying “if you don’t buy my shares, I’ll murder your family and you.”
At trial, threat was obvious.
Nevertheless, the reason Barton bought the shares was because he wanted control of the company.
Held: Privy Council held it’s enough to show in cases of duress to the person, that the duress was A cause for entering into the contract. There may be other reasons, BUT majority say once you can show that the threats WERE A CAUSE for entering into the contract and illegitimate pressure can be shown as a cause, the onus is on the D to show that the threats were not a cause.
What is Duress to goods?
Duress to goods is taking somebody’s goods or threatening to do so.
Astley v Renolds - Astley gave plate to Reynolds. Reynolds said that plate could not be recovered unless astley paid more than the legal rate of interest which was fixed at the time. It was said to be duress to goods here. The overpayment was recovered.
Hawker Pacific v Helicopter Charter
P owned a helicopter. Helicopter need a respray and D agreed to repaint it.
Cost of repainting is relatively high. The work was unsatisfactory and the price was increased. P was still not satisfied and the helicopter is returned again.
D by this stage is pissed off. P’s agent goes to pick up his helicopter. D says yo ucan have helicopter if you agree to pay a further $4,300 and release us from any further liability.
Helicopter was taken away, P refused to pay.
Question was whether this agreement to pay the $4000 and to release D from liability was a result of duress
Held: Yes it was.
P genuinely believed D would not release helicopter unless P signed the contract.
Plus on the day, P needed it immediately.
It was then said duress can be used to avoid a contract.
Duress to goods in the sense that retention of these goods which is a cause for the other party to enter into a contract allows the contract to be avoided.
What are the two categories of economic Duress?
- Where P makes a payment under economic duress in the absence of a contract or where there’s a contract which is unenforceable.
- Where there’s a contract modification. The parties are already in a contractual relationship and one party says to the other, I will breach the contract unless you agree to pay more or accept less performance than what was agreed.
Smith v William Charlick
P was a miller. P needed wheat and he bought his wheat from wheat board. They agreed on a price which was fine.
Wheat delivered and pay for at the agreed price.
P was told unless they agreed to pay additional sums, the board wouldn’t supply P with anymore wheat.
At the time, this was significant as P was unable to buy from anyone else, so he wouldn’t be able to continue his business.
Held: He couldn’t recover, the pressure wasn’t illegitimate
TA Sundell v Emm Yannoulatos
They said in Smith v William Charlick, claim failed because the threat not to deliver the wheat in the future didn’t infringe any of Miller’s existing rights.
In this case held: Can recover for duress
The Siboen & The Sibotre
Economic Duress in the presence of a valid contract.
A ship was chartered. Ship charterer told the ship owner, unless the price was reduced, they would go into liquidation.
At the time, there was massive oil prices etc so it was a problem.
If they hadn’t agreed to the lowering of the price, the charterer’s would have gone bust.
Somebody who is bankrupt wouldn’t be worth suing. So they agreed to the modification.
They agreed that they would accept a lower price.
P the argued the contract should be set aside for economic duress.
Held: It was said that economic duress can set contract aside.
This is for modification of a contract.
Nevertheless on the facts, there was no economic duress, there was only commercial pressure.
Pau On v Lau Yiu
P agreed to sell a building under construction to D.
Payment was to be made via a share swap.
One of the parties it was disadvantagesout t othem if the market moved in a certain direction.
They said we will terminate main contract unless you’re prpared to move into a more advantageous contract.
So second contract product of duress?
Held: No duress. This was only commercial pressure which was legitimate.
Crescendo Management v Westpac Banking
In determining economic duress, there are two questions:
- Did pressure induce victim to enter into contract; and
- Was the pressure beyond what the law is prepared to count as legitimate?
Westpac holding x amount and it belongs to Mr and Mrs Hillbrink. They are Crescendo management.
they have a close relationship with Westpac. Allegation from Crescendo is that Westpac said yo ucan’t have the money back unless you sign the mortgage document. Crescendo brings an action in duress and wants to set aside doc.
Held: Unlaful for WEstpac to do that because the money was the Hillbrink’s money, but it was found that Hillbrink’s signed mortgage doc before Westpac made any representation as to whether they would get their money back.
This failed because there was no causal link between the docs signing and the representation
What if a person protests the duress, but still enters in? Is the protest taken into account?
Yes, it’s a factor, but it won’t be sufficient by itself.
Mason v NSW
White Rose Flour Milling
Fixed term contract with a fixed price. Wheat booard won’t deliver unless you pay more.
P pays.
If we apply Smith’s case, then payment can’t be recovered.
However in this case, court held can be recovered.
Great weight is placed on the fact that the payments weren’t voluntary. They were made to continue production since wheatboard controlled all of Aus at the time.
Atlas Express v Kafo
Similar to The Siboen & The Sibotre.
Altas was a courier company delivering goods.
They underquote on the contract for carrying Kafco’s goods.
Atlas realised they had made mitake and said they won’t deliver goods unless Kafco will pay double.
Kafco had no choice as the retailer delivering to them was their major market, there was short notice and it was around christmas time, so other couriers not available. If they had not been delivered to their major store, they would have lost a lucrative contract.
Held: This was economic Duress
Crescendo v Westpac
In terms of causal connection, the economic duress must only be A REASON to enter into the contract, not the only reason.
But News Australia v Australian Rugby Football League says that it’s not enough to show it was a cause, it must be a significant cause.
