Economic Duress Flashcards
Introduce economic duress.
- Vitiating factor is pre-contract issue - occurs prior to point of contract being formed.
- Can make contract void (contract declared nullity - never had legal impact, so void from beginning) or voidable (made void in certain circumstances - if right to make void isn’t valid, remains valid).
- Economic duress is whereby one party is forced into agreeing to a contract - shouldn’t be valid.
Explain undue influence, in relation to economic duress.
- One party entered contract as result of pressure which deprived party of independent judgement.
- Allcard v Skinner: presumed where relationship is one of trust (i.e. inappropriate + discrete pressure in manner of advice) + one party will benefit at expense of other.
- Includes relationships such as doctor + patient, solicitor / financial advisor + client, e.t.c.
Explain duress, in relation to economic duress.
- When contract is signed but might involve threats (e.g. blackmail or violence) to persuade one party to sign contract).
- Barton v Armstrong: threats of violence would amount to crimes / torts if threats were carried out (i.e. has to be serious threat)
Explain economic duress + how it’s decided.
- Threat to damage business / person financially.
- Threats must be ‘improperly coercive’ though not necessarily unlawful.
- Court needs to distinguish between legitimate commercial pressure + economic duress - look at individual circumstances.
- Universe Tankships: Lord Scarman saw duress as ‘victims intentional submission arising from realisation that there’s no practical choice open to him’.
- Atlas v Kafco: commercial pressure on its own not enough - must be economic duress.
How Economic Duress Is Decided:
* Times Travel: leading case- 3 things must be proved.
1) Pressure Was Illegitimate:
* No single test on what makes pressure illegitimate + not just commercial hard bargaining.
* CTN Cash + Carry: duress isn’t available when action threatened was lawful.
2) Caused C To Enter Contract:
* Economic pressure was effective - was an operating factor causing C to enter contract.
* Major factor in C agreeing to terms.
3) C Had No Reasonable Alternative Other Than To Give Into Pressure:
* D must’ve applied so much pressure to C, of such detrimental financial nature, that they were left with no valid alternative.
* Pressure can be in form of clear threat.
Explain the remedies for economic duress.
- Effect of finding duress is to make contract voidable - therefore repudiated with immediate effect - contract is void.
- Doesn’t always result in award of damages, but court can make order for restitution (rescission) of property / money.
