LAW P3 CONTRACT (ECONOMIC DURESS)

Question 1

What does duress in contract law mean?

Answer 1

Duress in contract law relates to where a person enters an agreement as a result of threats.

Question 2

What is economic duress?

Answer 2

Economic duress is where a party is coerced into a contract through a threat to a persons financial situation.

It is not a true agreement - Lord Kerr in The Sibeon and The Sibotre said economic duress is “such a degree of coercion that the other party was deprived of his free consent and agreement.”

Question 3

What are the main 4 factors to consider with economic duress?

Answer 3

• Pressure - the claimant must have been pressured into entering the contract
• illegitimate - the pressure must be unlawful
• Significant - the loss needs to be substantial or significant
• lack of choice - there must be no choice but to enter the contract

Question 4

What are the cases for the 4 factors of economic duress?

Answer 4

1st point:

• Pao on v lau yiu long, lord scarman held that commercial pressure is not enough
• The sibeon and the sibotre, Economic duress occurs when one party exerts illegitimate pressure on another forcing the to enter a contract without genuine consent

2nd point:

• The Atlantic baron, the illegitimate pressure exerted by the building company was a threat to break a contract which led to a further contract
• The universe sentinel, economic duress arises where one party exerts illegitimate pressure which coerces the other party into entering a contract without genuine consent

3rd point:

• B&S contractors v Victor green publications, the payment had been made under duress and the client was entitled to recover it back
• PIAC v Times travel, it must be proven whether the pressure was a significant cause inducing the claimant to enter the contract

4th point:

• The Alev, the contract was voidable on the ground of duress
• Atlas express v Kafco, if the pressured party has no practical alternative but to comply, the contract is voidable under the grounds of economic duress

Question 5

What are the 4 factors to consider in assessing whether economic duress was present?

Answer 5

The privy council identified 4 factors to consider in assessing whether economic duress was present:

• Did the person claiming to be coerced protest?
• Did that person have any other available course of action?
• Were they independently advised?
• After entering into the contract, did they take steps to avoid it?