economic duress Flashcards
what is economic duress?
when a party enters into a contract as a result of financial threats is vitiating factor that makes a contract voidable It is pressure which goes beyond the usual rough and tumble of business dealings INTERFOTO V STILETTO
what can the victim do?
the victim can rescind (end ) the contract if he chooses, known as RECISSION
how is each case decided
every case is decided on its particular circumstances but CERTAIN FACTORS must be present PAO ON V LAU YIU LONG
what is the first rule
There must be an illegitimate threat either to breach an existing contract ATLAS EXPRESS V KAFCO or to commit a tort UNIVERSAL V ITWF
is ordinary commercial pressure enough?
ordinary commercial pressure is not enough for example a threat not to renew a contract in the future or threat to let a company go bankrupt or withdraw a credit facility CASH AND CARRY V GALLAGHER. A legitimate threat made in bad faith for example an unethical threat can in fact be the basis for a claim in duress PROGRESS BULK CARRIERS V TUBE CITY
what the case of PAO ON V LAU YIU LONG establish?
The case of PAO ON V LAU YIU LONG established some factors to consider when discussing whether pressure is illegitimate or just ordinary hard bargaining
A was he or she independently advise before taking action
B after entering the contract did he or she take the steps to make the contract void?
seeking legal advice before complying with a threat may be seen as what?
so seeking legal advice before complying with a threat may be seen as having taken a business decison and be unable to claim duress
can a party legally exert pressure?
however if a party exerts pressure they think are legally entilted to exert there will be no claim for economic duress TIMES TRAVEL V PAKISTAN INTERNATIONAL AIRLINES CORPERATION. Also if the claimants agree to negotiate this is not an illegitimate threat THE SIBOEN AND SIBOTRE
what is the second rule
the threat must leave no realistic alternative but to comply with it ATLAS EXPRESS V KAFCO
what is the third rule
the party must protest at the time
what is the fourth rule
the party must not hesitate to take legal action the right to claim may be lost through lapse of time THE ATLANTIC BARON
to conc
the contract is voidable due to economic duress recission of the contract may occur and any money or property extracted under economic duress will be returned to c
