Economic Duress Flashcards
What are the 2 elements of economic duress?
-Illegitimate commercial pressure
-Compelled one party to enter a contract
What is legitimate commercial pressure?
An integral part of trading in a free market economy e.g. threatening to take one’s business elsewhere to get a better deal.
In which case was there just ordinary commercial pressure?
CTN Cash and Carry v Gallagher- Gallagher had the right to withdraw credit, they were not threatening to do anything unlawful or illegitimate- they only used pressure that they were free to use.
In which case was there illegitimate pressure to breach a contract?
Atlas Express v Kafco- Atlas had a contract to deliver the goods and so not doing this would be breach of contract. Threatening to breach a previous contract is illegitimate pressure as it is a threat to do something unlawful.
What did Williams v Roffey say about illegitimate commercial pressure?
A mere indication that a contract will not be completed is not illegitimate commercial pressure. (One party might inform the other that they might not finish and money is not demanded or asked for).
In which case was there illegitimate pressure to commit a tort?
The Universe Sentinel- the pressure was illegitimate as they had no right to block the boat in and so they were committing a tort.
What does it mean that the party was forced into making the contract against their will?
Pao On sets out factors that prove one party was compelled:
-They protested about the pressure at the time
-There was no other reasonable/practical course of action that could have been taken
-They were not independently advised before contracting
-After making the contract, they tried to take steps to get out of the contract as soon as possible
Why were there no practical alternatives in Atlas Express v Kafco?
If the goods were not delivered very soon, they would have lost their biggest client and gone out of business- therefore there was no time for them to agree- no practical alternative. They protested against the extra charges at the time and refused to pay the extra charges as soon as the deliveries were made.
Why could the contract not be set aside in The Atlantic Baron?
There was an illegitimate threat to breach the contract, the party didn’t have an alternative but didn’t protest at the time and waited 8 months after the contract was done before doing anything about the contract (not taken steps to get out of the contract). Waiting too long is a bar to rescission under economic duress.
Why did economic duress fail in The Siboen and The Sibotre?
Only using legitimate pressure as they were simply threatening not to contract with them in the future. C had other alternatives as they weren’t forced to keep doing business with these people, they chose to do so for carefully considered business reasons.
What is the remedy for economic duress?
Successfully proving economic duress means that a contract can be rescinded as long as no bars apply. This would put victim back in the position they were in before entering the contract.
