Duress Flashcards
What is economic duress R9
Duress is making a threat to force someone to enter a contract.
If duress found the contract becomes voidable.
Voidable means there is a contract until the victim takes steps to end.
What are the two main components to duress R9
Threat: a treat that is improper and not just acceptable business negotiation - a threat to end the contract is improper as it’s a threat to end the contract.
Effect: the threat left the other party with no choice but to agree, if they did have an alternative course of action this will be seen as a business choice and not duress.
But sometimes other factors prevent a contract being made void for duress, lapse of time for example you have to complain immediately.
Key cases on economic duress R9
Filler
Siboen and Sibotre R9
The case involved a renegotiation for the charter (rental) of two ships. The threat was that if the claimant refused to lower the price, the defendant would let their subsidiary, who was chartering the ships, go out of business.
Held: this was not an unlawful threat, it was legitimate commercial pressure, but the court said that economic duress was possible to claim.
Relevance of this case:
In an introduction it’s the first case to recognise ED and it’s an example of tough bargaining which falls short of ED, a threat to let a company go out of business.
Atlantic Baron R9
A shipbuilding contract was negotiated in dollars. During construction the dollar was devalued so the builders would, in reality, get less for their ship. They threatened not to deliver the ship unless an increase in the price was paid was paid. The sellers were anxious to get the ship as they had a profitability contract with Esso, so they paid the extra money. After they got the ship they then sued for the return of the extra money, claiming that they had paid it under duress.
Held: this would have been ED except that they waited too long and so lost the right to claim rescission through lapse of time.
Relevance - use this case to illustrate the idea of lapse of time.
Pau On R9 not sure what specific performance is, need to ask Tim whether I need to know or not.
Duress was argued in this case where someone threatened to pull out of a contract to sell a building, unless the terms of the contract were changed in their favour.
This was an illegitimate threat but the court said the buyers did have an alternative course of action, they could have sued for specific performance and made the other party sell the building.
Relevance - use this case to illustrate the threatened party having an alternative open to them, so no ED.
What was said in Pau On which gave extra guidance on arguing duress R9
Lord Scarman gave the following extra guidance on arguing duress:
If the victim protested at the time it will be easier for them to argue that they did not agree to the new terms.
If they had a realistic alternative open to them they may not be able to argue duress.
If they had independent advice it may show that they knew what they were doing and were not influenced by the duress.
Always discuss these extra criteria to go from an ok to a great answer.
Universal Tankships R9
International Transport Workers’ Federation (ITWF) boycotted a ship owned by the claimant, by instructing its members not to handle it, and therefore prevented it from leaving port. In order to avoid this the owners made a payment into the union’s welfare fund of $6,500. Later the owners claimed that the payment was made under duress.
The ship owners won as the threat went beyond legitimate union action and the ship owner was left with no alternative but to pay.
Relevance - this case illustrates both aspects - an illegitimate threat and a lack of alternatives.
Atlas Express R9
The defendants, Kafco, were a small manufacturing company who had a very profitable contract with Woolworth’s. Kafco employed Atlas, a national firm of carriers, to make the deliveries to Woolworth’s. Atlas found they had overestimated what could be carried on their lorries at one time, so had made an unprofitable deal. The told Kafco that they must agree too an increase in charge, or else Atlas would not make the deliveries. Kafco could not risk being in breach of their contract with Woolworth’s, and so agreed to pay the increased charge under protest. When Atlas bought an action to recover the extra payment Kafco refused on the grounds of duress.
Kafco won as both the criteria of economic duress were satisfied.
Relevance - this is the classic basic ED case, really useful to explain both criteria.
CTN Cash and Carry V Gallagher R9
The claimant (CTN) owned a cigarette warehouse, they bought cigarettes from the defendant who gave them credit facilities to buy them (they could pay for the delivery once they had sold them on). Gallagher is the third largest cigarette manufacturer in the UK.
One order worth £17,000 was delivered to the wrong warehouse of CTN, Gallagher agreed to take them to the correct one but before they could do so the order was stolen.
Gallagher insisted that CTN had to pay for the order, threatening that they would withdraw all credit facilities. CTN did pay but later claimed that the payment had been made because of economic duress and that they should be able to get their money back.
CTN’s claim of ED failed - Gallagher was entitled to threaten to withdraw credit facilities for the future, this was not a breach of contract.
Relevance - this is a really useful case to illustrate a legitimate threat that doesn’t amount to ED.
How to write a duress question R9
Was the threat illegitimate?
Did it leave the other side with no realistic alternative?
Were there any other factors such as lapse of time?
Conclude
