Economic Duress

Question 1

What is economic duress and what must be present + cases ?

Answer 1

Economic duress is pressure which goes beyond the usual rough and tumble of business dealings ( INTERFOTO v STILETTO ) and every case is decided on its particular circumstances, but certain factors must be present ( PAO ON v LAU YIU LONG ).

Question 2

What is the first factor for economic duress + cases ?

Answer 2

Firstly, there must be an illegitimate threat, either to breach an existing contract (ATLAS EXPRESS v KAFCO ) or to commit a tort (UNIVERSAL TANKSHIPS v ITWF ).

Question 3

What pressure is not enough + case ?

Answer 3

Ordinary commercial pressure is not enough, (CASH AND CARRY v GALLAGHER ).

Question 4

IF RELEVANT: What can also be the basis for a claim in duress + case ?

Answer 4

A legitimate threat made in bad faith ( an unethical threat ) can be in fact the basis for a claim in duress ( PROGRESS BULK CARRIERS v TUBE COTY ).

Question 5

IF RELEVANT: What can D do to show there is no illegitimate threat + case ?

Answer 5

If D exerts pressure they think they’re legally entitled to exert, this will not be an illegitimate threat (TIMES TRAVEL v PAKISTAN AIRWAYS ).

Question 6

IF RELEVANT: What can the claimants do to show there is no illegitimate threat + case ?

Answer 6

If the claimants agree to negotiate, this isn’t an illegitimate threat (THE SIBEON AND SIBOTRE ).

Question 7

What is the second factor for economic duress + case ?

Answer 7

Secondly, the threat must leave no realistic alternative but to comply with it (ATLAS EXPRESS v KAFCO ).

Question 8

What other factors did the case of Pao on v Liu Yiu Long establish ?

Answer 8

The case established some more factors to consider when discussing whether the pressure is illegitimate or just ordinary hard bargaining : A- Was he or she independently advised before taking the action? B- After entering the contract, did he or she take the steps to make the contract void ?

Question 9

IF RELEVANT: What happens if a party seeks legal advice before complying with a threat ?

Answer 9

If a party seeks legal advice before complying with a threat they may be seen as having taken a business decision and be unable to claim duress.

Question 10

IF RELEVANT: What may be lost through a lapse of time + case ?

Answer 10

The party must protest at the time. The right to claim may be lost through lapse of time ( THE ATLANTIC BARON ).