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Contract Law: Duress (Elements ((1) Pressure
(a) threat, and
(b) demand,…
Contract Law: Duress
Elements
(1) Pressure
(a) threat, and
(b) demand
-
Other forms of duress involving persons
- to arrange for criminal prosecution/ imprisonment/ continued detention
- to disclose embarrassing/ incriminating information (Tam Tak Chuen v Khairul bin Abdul Rahman)
- redeployment from elite army squad to regular unit unless confidentiality agreement was signed: loss of prestige and social life, embarrassment, lower pay (R v A-G of England and Wales)
Duress of goods
- seizure of V's goods (Maskell v Horner)
- refuse to release V's goods
- threat to damage V's goods (The Siboen and The Sibotre, obiter)
Economic duress (not physical harm of property)
- formation or performance of contracts: negotiation of new contract/ renegotiation of contract/ negotiation of settlement contract for disputes
- threats to refuse to deal with V or to procure others to act in the same way
(The Universe Sentinel, "blacking" (blacklisting) by industrial action; Dimskal Shipping (The Evia Luck))
(The Port Caledonia and the Anna (threat to refuse to assist V's vessel in distress unless exorbitant rescue fee agreed))
(CTN Cash and Carry Ltd v Gallaher Ltd (threat to refuse to deal with V on credit terms in future, no duress)
Threatening to terminate a contract, or to refuse to perform (in whole or in part) a legal obligation:
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705 (threat to refuse to complete construction and deliver ship to V)
The Siboen and The Sibotre (refusal by T to pay full charter rate of hire to V: no duress on facts).
D&C Builders Ltd v Rees [1966] 2 QB 617 at 625 per Lord Denning MR (T insisting on paying lesser sum in discharge of debt owed to V)
Pao On v Lau Yiu Long [[1980] AC 614 (threat by T to refuse to complete transaction with a public company, in which V were major shareholders; no duress on facts).
B & S Contracts and Design Ltd v Victor Green Publications Ltd [1984] ICR 419 (T refusing to perform unless V shared cost of meeting demands by T’s striking workers) but cf Sharon Global and Williams v Roffey Bros
Threat to breach contract
- consider several factors, public policy
(1) Characterisation
- threat or genuine, factual statement?
- did T initiate demand/alternative suggested by V/developed jointly? (Sharon Global)
(2) Good faith or bad faith conduct by T (Sharon Global)
(3) Existence/absence of a reasonable commercial basis for demand by T
- not customer's responsibility to pick up half the bill demanded by striking employees (case?)
-
(3) Which compels V to enter into the contract
- what is the degree of duress?
- what is the strength of causality?
Onus of proof
- for physical threats, on T
- for economic duress and probably duress of goods, on V
Weird cases:
Tam Tak Chuen -> used standard for threat to duress of person
EC Investment -> accepting onus on T for economic duress too
Degree of causal influence
- physical duress: a factor sufficient, need not be predominant or decisive/"but for" factor (Barton v Armstrong)
- economic duress and probably duress of goods: "but for" test, necessary cause
Proving the pressure led to compliance with the demand
Factors:
(1) protest? but not fatal (Tam Tak Chuen)
(2) alternative course open to V?
(3) gravity of consequences of threat?
(4) did V have access to independent legal advice?
(5) actions of V after threat, what steps did V take to avoid the contract once the pressure had abated; length of time? (overlaps with issue of affirmation)
Clear threat, problem of causation:
- threats of physical violence/death being made
- but also good commercial benefits of entering contract
HELD: threats were sufficient inducement (maj); threats were not significant role (min)
(Barton v Armstrong [1976])
Remedies
Rescission
- voidable for duress
- bars to rescission apply (affirmation; estoppel; intervention of third party rights; impossibility of restitutio in integrum)
Restitution
- especially where money was paid in response to demand
Damages
Suing in tort of intimidation, some overlaps
- tort limited to unlawful threats only
Duress and consideration
- can argue on either ground
- practical benefit subject to duress (Williams Roffrey though on the facts it was not duress since it was honest statement of fact)