Paper 3 Law Flashcards
Define Economic duress
Economic duress is a threat to damage a business or a person
financially.
State the elements of economic duress
There was pressure exerted on the contracting party.
The pressure was illegitimate.
The pressure induced the claimant to enter the contract.
C was left with no choice but to enter the contract.
C protested at the time or shortly after the contract was made.
Case for element 1 of economic duress
(There was pressure exerted on the contracting party.)
The Atlantic Baron (1979)-
The contract was voidable for duress, however, since the claimants had left it so long in bringing their claim they had affirmed the contract and lost their right to rescind.
D agreed to build a ship for C for a certain price specified in dollars. After entering the contract the dollar was de-valued by 10%
D threatened C they would not build the ship unless they paid 10% more
C agreed without protest
8 months after delivery of the ship the claimants brought an action to recover the additional sums paid.
Case for element 2 of economic duress
( The pressure was illegitimate.)
Atlas Express v Kafco (1989)-
The court ruled in favour of Kafco as Atlas express pressured them into paying more money per load. Kafco had to agree as it was a small company and it was essential that it be delivered on time.
Kafco then refused to pay as the agreement was made under economic duress.
Cases for element 3 of economic duress
(The pressure induced the claimant to enter the contract.)
Interfoto v Stilletto Visual-
The pressure should be significant and go beyond the general rough
and tumble of business negotiations.
In Pao On v Lau You Long, the judges established if the claimants
seeks legal advice prior to complying with the threat, it may be
regarded as a business decision so no economic duress.
Cases for element 4 of economic duress
(C was left with no choice but to enter the contract.
In Atlas v Kafco, The claimants were left with no alternative because
they would have went bust had the baskets not been delivered to
Woolworths stores.
In The Universal Sentinel, the claimants had no choice because their
ship would have been stranded at port.
Case for element 5 of economic duress
(C protested at the time or shortly after the contract was made.)
The judges outlined this as a factor in – Pao on v Lau Yiu Long
In The Atlantic Baron, the claimant objected to the extra payments
shortly after the contract was made.
What 4 factors did the Court identify in Pao v Lau Yiu Long to help decide whether economic duress was present?
Did the person claiming to be coerced protest about the pressure
Did that person have any other available course of action that was reasonable
Was he or she independently advised before taking action
After entering the contract did he or she take steps to make the contract void
