Economic Duress [Contract Law]

Question 1

What is Economic duress?

Answer 1

The threat of financial damage if one does not enter into a contract.

Question 2

What is the Acronym to remember?

Answer 2

PILS

Question 3

Pressure

Answer 3

This pressure must be more than ‘normal commercial pressure’. This was true in the case of The Sibeon and The Siborte in the context of a worldwide recession.

Question 4

Illegitimate

Answer 4

The Pressure must have been illegitimate, and therefore unlawful (Atlas Express v Kafco).

Question 5

Lack of choice

Answer 5

The Claimant must have been in a position where they had no real choice but to enter into the contract (The Universe Sentinel Case).

Question 6

Substantial

Answer 6

The loss must have been substantial. There were four things to consider whether it was under Pao On v Lau Yiu Long:

1. Did the person protest at the time?
2. Was there any alternative?
3. Was independent advice taken? (less likely to be duress)
4. Were steps taken to avoid the contract after entering?

Question 7

What remedies are available?

Answer 7

Restitution:

restoring the person to the position they were in before the ‘improper act’.