Economic Duress

Question 1

Nature of The Threat

Answer 1

• Commercial pressure is not enough and there must be significant threat (Atlas Express v Kafco)
• Does not cover threat towards property except in sever circumstances

Question 2

What is the 3-part test?

Answer 2

(The Universe Sentinel)
- Take’s away V’s choice
- Is illegitimate
- Significant cause

Question 3

Take’s away V’s choice

Answer 3

• The practical effect of the pressure must be that there is compulsion on C so that they have a lack of choice or a realistic alternative.
• No choice but to agree (Atlas Express v Kafco)
• Normal commercial pressure does not amount to duress (Williams v Roffey)

Question 4

Is Illegitimate

Answer 4

4 factors (PAAV) - (Pao on v Lau Yiu Long)
1. Did the person claiming to be coerced, protest about the pressure?
2. Did that person have any other available course of action that was
reasonable?
3. Was he/she independently advised before taking the action?
4. After entering into the contract, did he/she take steps to make the contract
void?
- Pressure must be illegitimate:
- Duress not available when the action threatened is legitimate (CTN Cash + Carry v Gallagher)
- Pressure can be illegitimate even when the threat is lawful (CTN Cash + Carry v Gallagher)
- If the acts are lawful then duress not available unless can prove they had bad faith (Times Travel Ltd v PIA)

Question 5

Significant Cause

Answer 5

• The pressure must be a significant cause inducing the innocent party to enter into the contract
• Must be established that the C would not have entered the contract ‘but for’ the pressure (Huyton v Peter Cremer)

Question 6

Remedies

Answer 6

• Rescission
  
  • Contract is set aside (as if never happened), undo the events since contract was formed. Both parties are returned to their pre-contractual positions
• Restitution
  
  • A payment/returning something by one party to another to but them back in the position they would have been in if not for their improper action
• Both are only given if it’s fair in all circumstances to both sides
• A claim under Economic Duress DOES NOT result in being awarded damages
• However if the party carries on with the contract, they will be unable to show that their will was overborne by pressure (The Atlantic Baron)