Economic Duress

Question 1

Define Economic Duress

Answer 1

1. Violence, illegitimate threats or pressure which coerces a party into entering a contract or varying a contract
2. The Threat must be Improper or Illegitimate (i.e.: to breach a contract or commit a tort)
3. Legitimate Commercial Pressure is acceptable
4. Burden of proving duress is on the Alleging Part

Question 2

To establish duress, the Innocent party must establish that there has been

Answer 2

Carillion Construction Ltd v Fenix (UK) Ltd

a. An Illegitimate Threat of Pressure
• Whether there has been Actual or Threatened Breach?
• Whether the Person allegedly erecting the pressure has Acted in Good or Bad Faith?
• Whether the victim has any Realistic Practical Alternative but to Submit to the Pressure?
• Whether the victim Protested at the Time?
• Whether he Affirmed or Sought to Rely on the Contract?

b. Which left him with No Practical Choice; and

c. Which was a Significant Factor in Inducing him to enter the Contract or Variation
• Need not be the only reason why the Innocent Party entered the Contract (Threat of violence & Financial gain) - Barton v Armstrong

Question 3

Duress may also be used as a Defence if the Other Party tries to enforce a variation of contract

Answer 3

Atlas Express

Question 4

Is the Contract Voidable?

Answer 4

Atlas Express
• Contract is Void if conditions 1-4 of Williams v Roffey are satisfied but not 5 (ECONOMIC DURESS & NO CONSIDERATION)

But; Opel v Mitras Automobile
• If conditions 1-4 of Williams v Roffey are satisfied but not 5 (BOTH CONSIDERATION & ECONOMIC DURESS) = Contract is VOIDABLE

Question 5

Rescission is Not possible if any Bars to Rescission exists - Delay

Answer 5

Atlantic Baron (C left I 8 months before alleging duress)

Question 6

Rescission is Not possible if any Bars to Rescission exists - Affirmation

Answer 6

Atlantic Baron (C paid while not under any pressure)