Economic Duress Flashcards
What is economic duress?
When a party uses its superior economic power in an ‘illegitimate’ way so as to coerce the other party to agree to a particular set of term
Times Travel Ltd v Pakistan International Airlines POL
Hint: 3 different points
To establish economic duress:
1. The application by D of illegitimate pressure
2. Caused C to enter into the contract when
3. C had no reasonable alternative other than to give in
What is illegitimate pressure?
Any threat to commit an actual crime or a tort will always be illegitimate
Progress Bulk Carries Ltd v Tube City POL
C does not have to prove that what D did was illegal; a threat can be illegitimate even when lawful
How to identify illegitimate pressure?
• In a scenario, first identify the economic threat: what has been said or done that would damage a business or a person financially? If you identify the threat is to breach an existing contract then ask yourself:
• did the ‘threat’ have any clear commercial or moral justification?
What is lawful act duress?
Three elements need to be established for lawful act economic duress: an illegitimate threat; causation; and that the threatened party had no reasonable alternative but to give in to the threat.
What is part 2 of making economic duress
Caused C to enter into the contract…The pressure must be a significant cause of C entering ono the contract
What test can you use to measure if the pressure from D was legitimate
The ‘But For’ test
Atlas Express v Kafco POL
Establishes 3rd part of economic duress: C had no reasonable alternative than to give into the pressure
What is the remedy for a finding of duress?
It makes the contract voidable (capable of being made void)
• This is the same as for misrepresentation i.e. the contract will still be valid unless steps are taken to avoid the contract by the innocent party (who has suffered economic duress)
What is the remedy for economic duress?
• The courts can make an order of restitution of property or money extracted,
meaning that whatever has been extracted is returned to the other party
• Restitution is an equitable remedy that restores the person to the position they would have been in if it were not for the improper action of another
