Economic duress

Question 1

Definition

Answer 1

When someone enters into a contract as a result of financial threats. In the case The Sibeon v The Sibotre, Lord Kerr defined it as “such a degree of coercion that the other party was deprived of his free consent and agreement.”

Question 2

Illegitimate pressure

Answer 2

Illegitimate pressure is the first factor. In economic duress, illegitimate pressure is pressure that is exerted on a person to force them into a contract due to threats of economic harm. However, coercion caused by pressure in itself is not enough, as then every hard-driven bargain would be at risk of being voided. The significance is defined by the case Pao On, and in economic duress, the pressure must be a significant cause in inducing the innocent party to enter into the contract, and the loss must be substantial or significant.

Question 3

Coercion of will

Answer 3

The next factor is coercion of will. The courts will take into account whether the injured party protested, whether there was an alternative route available, whether they were independently advised, or whether they took steps to avoid it