Economic Duress Flashcards
(9 cards)
- Def
Occurs where there has been a threat to a person’s financial situation, or where
one party to a contract is in a stronger bargaining position than another
- Ilegitimate pressure
The courts will draw a line between ordinary commercial pressure (the ‘rough and tumble’ of everyday
business) and illegitimate pressure
- In Pao On v Lau You Long (1980), Lord Scarman approved the definition of ED as ‘a coercion of the will which vitiates consent’, setting out factors for consideration:
a. Did the innocent party/victim protest?
b. Was there an alternative course of action open to them?
c. Was the party independently advised?
d. After entering into the contract, did they take steps to avoid it?
- Takes away choice
The pressure must be illegitimate and take away the party’s choice, in Universe Tankship v ITWF the
money extracted to allow the ship to be leave port left the D’s without a choice
- Need not be illegal
Illegitimate pressure may be an unlawful action carried out by one of the parties, however, it does not
necessarily need to be an illegal action, in Progress Bulk Carriers v Tube City the breach of contract
and the threat to leave the contract was illegitimate
- Bad faith
Whether the defendant acted in bad faith is critically important, in Cash and Carry v Gallagher, the
defendant was acting in good faith as they had a genuine belief they were entitled to the payment
Unconsiably or reprehensively
Even where one party has a monopoly position this will not about to illegitimate pressure unless the parties acted unconscionably or reprehensively (Times Travel v Pakistan Airlines)
- Remedy
Parties will not be awarded damages for a successful claim of economic duress, instead the equitable
remedy of recission to restore the party back to their original position may be awarded
- Lapse of time
Where there has been a lapse in time between agreeing the contract in duress and seeking court
action, a remedy may be cut off
