Economic Duress

Question 1

Duress may take the form of violence or illegitimate threats or pressure which coerce a party into..

Answer 1

…entering a contract or varying a contract.

Question 2

The burden of proving duress is on the party who..

Answer 2

…alleges it.

Question 3

In Barton v Armstrong, Lord Cross of Chelsea made it clear that duress need not be the only reason..

Answer 3

…why the innocent party entered the contract.

Question 4

To amount to economic duress, the threat must be an improper or illegitimate threat (i.e……

Answer 4

…(ie a threat to breach a contract or commit a tort).
A threat to take business elsewhere, sell to a competitor, or not to give a discount in future, are all likely to be regarded as legitimate commercial pressure.

Question 5

The principle in Williams v Roffey can only apply where the promise is not obtained…

Answer 5

…as a result of fraud or duress.

Question 6

In Atlas Express v Kafco, Atlas Express were threatening to break their contract when they said they would not ** unless they were ***

Answer 6

• **deliver the goods

* ** paid more money

Question 7

The problem with the contract is not the lack of consent but the fact that the consent was obtained by ..

Answer 7

…improper pressure.

Question 8

In Carillion Construction Ltd v Felix (UK) Ltd it was established that the ingredients of actionable duress are that there must be pressure:

Answer 8

a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim,
(b) which is illegitimate, and
(c) which is a significant cause inducing the claimant to enter into the contract.

Question 9

In Carillion Construction Ltd v Felix (UK) Ltd - what factors will be used to determine illegitimate pressure?

Answer 9

▪ whether there has been an actual or a threatened breach of contract;
▪ whether the person allegedly exerting the pressure has acted in good or bad faith;
▪ whether the victim had any realistic practical alternative but to submit to the pressure;
▪ whether the victim protested at the time; and
▪ whether he affirmed and sought to rely on the contract.

Question 10

Duress makes an original or renegotiated contract voidable.

Answer 10

***voidable.

A voidable contract is a valid, binding contract unless and until it is rescinded by the innocent party.

Prima facie the innocent party can either rescind or affirm the contract (ie treat it as ongoing), but if he once affirms the contract, he cannot then change his mind.

Question 11

What must the innocent party do if they wish to rescind a contract?

Answer 11

Notify the other party.

Question 12

When a contract is rescinded, neither party need..

Answer 12

…perform any future obligations. Each party should return money or property transferred under the contract.

Question 13

The bars to rescission are;

Answer 13

(a) Affirmation.
(b) Delay.
(c) Where an innocent purchaser has already acquired an interest in the property.
(d) Where it is impossible to substantially restore goods or property, eg property has been consumed or destroyed.

Question 14

It is only the later variation which is affected by the duress, and therefore only the variation will be rescinded, not the…

Answer 14

…whole contract.

Question 15

Why did the court refuse to rescind the contract in The Atlantic Baron?

Answer 15

Because of two factors - affirmation and delay.

The court found that when the payment was made, there was no longer any pressure on the claimants, as market conditions had changed and there was no likelihood that the shipbuilders would refuse delivery. Payment therefore amounted to affirmation.

Also, the bar of delay applied, as the claimants left it for eight months before asking for the return of their money (the court said that delay was also evidence of implied affirmation).

Question 16

To establish duress, the innocent party must establish that there has been an ** threat which left him with no ** and which was a *** factor in inducing him to enter the contract or variation (Carillion Construction Ltd v Felix (UK) Ltd).

Answer 16

**an illegitimate threat
**no practical choice
***significant
(doesn’t have to be the only one)

Question 17

In which case was duress used as a defence when one party tried to enforce a renegotiated term?

Answer 17

Atlas Express v Kafco.
Rather than rescind as such, we have also seen that duress can be used as a defence if the other party tries to enforce the renegotiated terms or otherwise claim damages for breach.