Economic Duress Flashcards
What is economic duress?
When someone enters a contract as a result of a financial threat
Economic duress has been allowed since the case of…
The Siboen
A serious threat
Atlas v Kafco
Atlas v Kafco
Contract was void due to economic duress
Universe Tankships v International TWF
This was illegitimate pressure and the contract was voice due to economic duress
Pao On v Lao Yiu Long
- The person who was being pressurised must have protested against the pressure
- The person being pressurised had no other reasonable course of action
- The person being pressurised hadn’t seeked independent advice before agreeing
- The person took steps immediately after agreeing to the contract because of the threat
Lawful, commercial pressure will not be seen as ‘illegitimate’
CTN cash and carry v Galagher
Threat must involve illegitimate pressure
Universe Tankships v International TWF
CTN Cash and Carry v Galagher
Credit could be withdrawn at any time, threat was not illegitimate. Claim failed as there was no economic duress
May rarely be illegitimate pressure even if D’s conduct was lawful
Progress Bulk Carriers v Tube city
Progress Bulk Carriers v Tube City
D’s conduct was no unlawful, but it was illegitimate pressure. Therefore, economic duress. The agreement was void and could sue for the loss of original ship.
Very strict, limited situations where lawful threats could be illegitimate pressure
Times Travel v Pakistan Airlines
What is the effect on the contract if the court decided that there has been economic duress?
Voidable if the court agrees there was economic duress
What remedy might be available?
Restitution - any money/ property gained by ED must be returned
Why would restitution be barred?
Delay, 3rd party has rights, restitution is impossible and C has ‘affirmed’ the contract
