Economic Duress Flashcards
What is the definition of economic duress?
-When someone enters into a contract as a result of financial threats (a threat to damage a business or person financially)
What are the 3 requirements to prove economic duress?
-A serious financial threat
-Amounted to illegitimate pressure
-Which induced C to agree to the contracts new terms in contracts
Was this type of claim allowed in the past? Was case shows this? (Use in definition)
-IN past not allowed, Skeate v Beale. Only physical threats duress
-Has been allowed since in The Siboen v the Sibotre. Financial threats can be economic duress but only if threat is serious enough.
Case example for serious threat
-Atlas v Kafco
-Demonstrates any of economic duress, Kafco was small basket company
-Signed contract with A to deliver goods to Woolworths stores. Small business secured deal with large company
Agreed a deliver charge per box no agreement about the min no o boxes, around $400 estimated.
Case example for illegitimate pressure/compulsion or lack of choice for the victim
-Universe Tankships v International TWF: vessel threatened by ITWF as vessel sailing under flag of convenience. Unless owners complied with ITWF demands to rate of pay and other terms of employment of crew and pay money into worker’s welfare fund then wouldn’t tug shift so couldn’t leave port. Ship owners agreed
-Court: money had been extracted as result of economic duress so must be repaid
What case sets out the criteria for an illegitimate pressure?
-Explain what the 4 criteria are?
-Pao On v Lao Yiu Long
1. Did the person claiming to be coerced protest about the pressure?
2. Did the person have any other available course of action that was reasonable?
3. Was he/she independently advised before taking action?
4. After entering the contract did he or she take steps to make the contract void?
What will lawful commercial pressure be seen as normally?
What is the case for this ?
-Normally not seen as illegitimate so no economic duress
-CTN Cash and Carry v Gallagher : G sent cigs to wrong address and stolen. G believed at CTN’s risk so sent invoice. G threatened to withdraw C’s credit facility if didn’t pay the invoice. CTN needed so paid.
-G genuinely believed the money was owed to them so not trying to exploit weakness but getting back entitlement. ‘Illigitimate not synonymous with unlawful’
What is the case for when there may be illigitimate pressure even when D’s conduct is unlawful
-Progress Bulk carriers v Tube city
-Delay in D providing a promised ship for C. D refused top supply substitute unless C gave up their right to claim compensation (for delay and cost)
-Court upheld claim as conduct, viewed in light of the original breach and them taking advantage of consequences of breach, illegitimate.
What is the case for situations where lawful threats could be illegitimate pressure?
-Times Travel v Pakistan airlines
-Small business sold tickets for flights, only operator of direct flights between UK and Pakistan. In dispute airlines gave notice to terminate. Condition of entry to new contract, required waiver of any prior claims and those in dispute.
-Where unlawful acts, economic duress not available as defence unless bad faith can be shown.
What is the effect on a contract us the court decides there has been economic duress?
-Declare the contract void
What is the remedy available for if there has been economic duress?
-Why could this be barred?
-Make order for restitution of property or money extracted under duress
-It is discretionary so up to the judge
What is the case example for remedies for economic duress?
-The Atlantic Baron
-Agrred to build ship for C at price in dollars. After the contract dollars devalued by 10%. D threatened not to complete unless C paid extra 10%.
-Contract no voidable for duress bc took 8 months so contract affirmed
