Duressq Flashcards
CTN Cash v Gallagher
COA
CTN relied heavily on credit from G, but (crucially) G had no contractual obligation to sell to CTN nor give credit. G sent cigarettes to the wrong address, got stolen. G threatened to withdraw the claimant’s credit facility unless the invoice was paid. CTN paid. Held: no economic duress, G is entitled to refuse to enter into any future agreements with CTN whatsoever.
COA stopped short in saying that the threat to contract can NEVER amount to economic duress.
G was acting in good faith.
Barton v Armstrong
PC
A threatened B with death if he did not agree to purchase A’s shares in the company. B was actually going to do this anyway. But later he regretted this and sort to argue duress.
Lord Cross: “If A’s threats were ‘a’ reason for B executing the deed, he is entitled to relief”.
The Universe Sentinel
HOL
The ITWF blacked a ship, The Universe Sentinel, to prevent it from leaving port. They demanded the ship owners pay a large sum of money. The ship owners agreed in order that the ship could leave port and then sought to recover the sum paid to the fund.
Held: The money had been extracted under economic duress and could be recovered.
Pao on v Lau Yiu Long
In this case, D was in a strong position to resist the claimants’ pressure as it only agreed because it was worried about the effect of commercial reputation. Moreover, it had been advised that it need not accommodate the claimants’ demands but did so anyway.
In the present case the defendant did not protest at the time. He also could have enforced the contract of sale through specific performance and thus had another avenue of redress available to him. He had taken legal advice and took no steps to avoid the agreement prior to the claimant seeking to enforce the guarantee. Therefore no economic duress could be established. It was simply commercial pressure far short of duress.
B &S Contracts v Victor Green
A contractor who had undertaken to erect stands for an exhibition at Olympia told his client, less than a week before the exhibition was due to open, that the contract would be cancelled unless the client paid an additional sum to meet claims which were being made against the contractor by his workforce. The consequence of not having the stands erected in time would have been disastrous for the client in that it would have gravely damaged his reputation and might have exposed him to heavy claims for damages from exhibitors to whom space on the stands had been let. In these circumstances it was held that the payment had been made under duress and that the client was entitled to recover it back.
Atlas Express v Kafco
K made a contract with A to deliver baskets. In fact, A made an error when calculating the rate (through no fault of K) and had overestimated the number of baskets that would fit into each lorry. Therefore, A threatened that, unless K agreed to double the rate, no further deliveries would be made. It would have been almost impossible for K to have found another hauler in time in honour to deliver the baskets to X who they could not afford to lose, so they agreed. Held: K’s agreement was procured through economic duress.
Duress Requirements
1) Illegitimate pressure or threat
2) Factual causation: Which (Subjectively) caused the victim to act as he did
3) Objective causation: Which (objectively) would have caused a reasonable person in the victims position to act in the same way.
1) Illegitimate pressure or threat
This can be a threat to BREACH an existing contract. This is very different from a threat to do something that the defendant is entitled to do.
Huyton v Peter Cremer
The purchaser of wheat, which had been duly delivered by the seller, refused to pay for it unless the seller presented shipping documents in proper form and if PC would not arbitrate. H said he would not arbitrate if PC gave the money. Held: this was not illegitimate threat because he was not contractually obliged to pay the price unless and until it received proper shipping documents.
Atlas Express v Kafco
PRINCIPLE
Suggestion that for there to be illegitimate threat, there has to be bad faith.
Mance in Huyton v Peter Cremer said
“The pressure must have been decisive”
(PC) Pao On v Lau Yiu Long
Factors for factual causation of duress.
Lord Scarman emphasised four relevant factors
1) Whether the victim did or did not protest
2) Alternative course open such as an adequate legal remedy
3) Whether he was independently advised
4) After entering the contract, he took steps to avoid it.
The Atlantic Baron
The shipyards demand for the price increase did amount to economic duress but the fact the purchaser paid without protest for years amounted to an affirmation of the variation of terms.
