Economic Duress

Question 1

What is economic duress?

Answer 1

When there is illegitimate pressure that compels a party into a contract.

Question 2

What are the 2 things that must be proven?

Answer 2

1. There must be illegitimate pressure

2. The party must be compelled to act

Question 3

Discuss illegitimate pressure

Answer 3

Pressure can either be through a breach of contract (Atlas v Kafco) or through committing a tort (The Universe Sentinel).
In CTN Cash and Carry v Gallagher, there was only ordinary commercial pressure, which was not illegitimate.

Question 4

Discuss being compelled to contract

Answer 4

This means the party was forced into making the contract ‘against their will’.
Pao On shows that 4 factors must be considered:
-Did V protest
-Were there other practical steps that could be taken
-Was V independently advised
-Did V take any steps to get out of the contract

However, economic duress failed in The Atlantic Baron as there was no protest and they waited 8 months to act.

Question 5

What is the remedy under economic duress?

Answer 5

Successfully proving economic duress can rescind a contract, as long as no bars apply.