Economic duress

Question 1

Definition

Answer 1

May take the form of violence or illegitimate threats or pressure which coerce a party into entering a contract or varying a contract. Usually involves improper threat and innocent party has no practical alternatives but to agree. E.g threat to breach contract or commit a tort.

Question 2

Commercial pressure

Answer 2

Legitimate commercial pressure is not duress. A threat to take business elsewhere, sell to a competitor or not to give a discount in future = legitimate commercial pressure.

Question 3

Definition - Atlas Express v Kafco

Answer 3

Would have been very difficult for Kafco to find someone else to deliver the goods and if they had not been delivered their customer would have sued them and not dealt with them again

Question 4

What is needed?

Answer 4

There must be pressure:
- Which is illegitimate
- Whose practical effect is that there is compulsion on or lack of practical choice for the victim
- Which is a sig. cause inducing the claimant to enter into the contract

Question 5

Effect

Answer 5

Makes an original or renegotiated contract voidable. A voidable contract is a valid binding contract unless and until it is rescinded by the innocent party. If it is only the variation which has been brought about by duress then only the variation is voidable and the main contract stands. Rescission will be possible unless a bar to rescission applies. Duress can also be used as a defence if the other party tries to enforce the renegotiated terms or otherwise claim damages for breach

Question 6

Consequences

Answer 6

Duress makes a contract voidable not void!

Question 7

Affirmation

Answer 7

Affirmation makes it barrable to claim money back despite duress

Question 8

Bona fide purchaser

Answer 8

For recission to be barred by a bona fide purchaser - has to be by a 3rd party

Question 9

When will it amount to illegitimate threat

Answer 9

‘Need X amount of money to carry on and do job’ = illegitimate threat