Economic Duress

Question 1

First step of economic duress answer: (define)

Answer 1

Economic Duress is defined as a threat to a person’s financial situation which coerces them into a contract through pressure. It makes a contract voidable.

According to the case of The Sibeon and The Sibotre, it should be such a degree of coercion that the other party was deprived of his free consent and agreement.

Question 2

Second step of economic duress answer: (no practical)

Answer 2

The effect of the pressure must be such that there is no practical choice for the victim
Atlas Express v Kafco - a threat to a small firm by a larger firm that they would breach a contract amounted to pressure and left them with no realistic alternative or choice.
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Question 3

Third step of economic duress answer: (illegitmate)

Answer 3

The threat must be illegitimate, meaning that it is unlawful in some way. The courts have developed the meaning of illegitimate:

· The unlawful threat can be to breach a contract (Atlas Express v Kafco)

· The unlawful threat can also be to commit a tort (The Universe Sentinel)

·**Ordinary commercial pressure will not amount to an unlawful threat and so will not be classed as illegitimate: CTN Cash and Carry v Gallagher
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Question 4

Fourth step of the economic duress answer: (significant)

Answer 4

It was confirmed in Pau On v Lau Yiu Long that the illegitimate pressure must be the significant cause in inducing the claimant into entering into the contract. This means asking whether the claimant had any other reasonable available course of action. If there was another reasonable available course of action, it will not be the duress that was the significant cause in entering into the contract.
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Question 5

Fifth step of the economic duress answer: (protest)

Answer 5

The party seeking to claim duress must have protested at the time
If the party hasn’t protested at the time, it will be hard for them to claim that they acted as a result of illegitimate pressure.
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Question 6

Sixth step of economic duress answer:

Answer 6

The party must have taken steps to make the contract void, if they have waited for a period of time before trying to suggest they have been subject to economic duress

Question 7

Final step of economic duress answer:

Answer 7

The courts can make an order for the restitution of property or money extracted under such duress and also the avoidance of any contract that has been induced by it. Restitution is discretionary and restores a person to the position they would have been in if not for the improper action of another.
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