Vitiating Factors - Economic Duress

Question 1

A vitiating factor is a pre contractual issue, something that occurs before the contract is formed, that makes it void or voidable

Answer 1

Void contract- has no legal standing and never existed in the eyes of the law

Voidable contract- allows the innocent party to rescind the contract if they wish

Question 2

Economic duress occurs when there is a threat to damage a business or person financially. They are forced to the demands of the other party

Question 3

Pressure: where a party is coerced so much, so they cannot properly consent, the contract is set aside. Pressure was exerted on the C

Answer 3

The Siboen and The Sibotre

Question 4

Illegitimate Pressure: this occurs when the innocent party endures unacceptable pressure, resulting in them being forced to agree to the contract. (If a business could also include above normal commercial pressure)

Answer 4

Atlas Express v Kafco

Question 5

Illegitimate pressure: if the threat is lawful it is not economic duress (E.G threatening to withdraw credit)

Answer 5

CTN cash & carry

Question 6

Illegitimate pressure: although the pressure may appear to be lawful, it can be illegitimate where the innocent party has no other choice, but to agree to the demands

Answer 6

Tube City v Progress Bulk Carriers Ltd

Question 7

Lack of choice: if there are other options available to the innocent party it is NOT economic duress

Question 8

Lack of choice: if the innocent party had no other option available to them, it might be that economic duress

Answer 8

The Universe Sentinel

Question 9

Extra criteria: …….. requires 4 factors to be considered when deciding if the innocent party entered the agreement due to economic duress (see next 4 flash cards)

Answer 9

Pao On v Lau Yiu Long

Question 10

Extra criteria: did the innocent party protest about the pressure. If not might be no economic duress. If yes might be economic duress.

Question 11

Extra criteria: did the innocent party have any other reasonable alternatives available. If not might be economic duress. If so there might be no economic duress

Question 12

Extra criteria: were they independently advised before agreeing to the parties demands. If not might be economic duress. If so might not be economic duress

Question 13

Extra criteria: after the agreement did they take steps to make the contract void. If not this indicates there might not be economic duress. If so there might be economic duress

Question 14

Extra criteria: when considering the Pao On v Lau Yiu Long factors, on balance does this indicate economic duress was present (for example if 3:1 for might be economic duress then on balance economic duress)

Question 15

Remedies: the contract can be rescinded by the innocent party

Answer 15

Atlas Express v Kafco

Question 16

Remedies: damages cannot be claimed

Question 17

Remedies: restitution is available for the return of any money or property that had been extracted under economic duress

Question 18

Remedies: exception- if the innocent party takes too long to bring a claim the right to rescind the contract is lost as their inaction has affirmed the agreement

Answer 18

The Atlantic Baron