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DURESS (General (Categories (Physical: Threats of physical harm., Duress…
DURESS
General
Categories
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Economic duress: Occidental Worldwide Investment Corp v Skibs A/S Avinti (The Siboen and the Sibotre). SG case EC Investment v Ridout Residence treated it as separate category.
Applied only in exceptional circumstances. Need to balance freedom of contract and procedural fairness. Ultimately depend on distinction between legitimate commercial pressure and illegitimate pressure.
Threat made by one party to another. Threat accompanied by demand. Threatened party perceives threat as real and agrees to the demand.
Universe Tankships Inc of Monrovia v International Transport Workers Federation: (1) pressure amounting to compulsion of the will of the victim; and (2) the illegitimacy of the pressure exerted. There must be pressure, the practical effect of which is compulsion or the absence of choice.
Voidable. Even if there's duress, court may not rescind if victim affirmed contract.
Universe Tankships: Duress is not about not knowing what you are contracting for, but 'his apparent consent was induced by pressure exercised on him by that other party which the law does not recognize as legitimate...consent...revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind'.
Huyton SA v Cremer GmbH Co: Stronger causal connection needed for economic duress, more than to person or property. Min "but for" test. Illegitimate pressure must have caused making of agreement. Otherwise not made or at least in the terms which it was made. Pressure must be decisive / clinching.
Illegitimate pressure
Unlawful threat
Includes criminal and civil wrongs
Haines v Carter [2001] 2 NZLR 167: Duress necessarily involves the illegitimate application of pressure by threats. The illegitimacy of the pressure may lie in the illegality of the actions threatened or, alternatively, may be associated with the illegitimacy of the particular threats in the context in which they were made.
Threat + demand. And even so, not always sufficient. Unlawful threat / unreasonable demand generally = illegitimate pressure. But lawful threat may sometimes constitute illegitimate pressure.
Enonchong's classification of circumstances where threat of lawful action is illegitimate (accepted in Tam Tak Chuen at [50]): threat is an abuse of legal process; demand is not made bona fide; demand is unreasonable.
Exception: breach of contract always unlawful. But question is not whether breach of contract is lawful, but whether it is reasonable.
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Unreasonable demand
Tam Tak Chuen: demand was unreasonable because the plt's shares were sold at a severe undervalue. Court also found that there was an element of premeditation to spring a surprise on plt and to unnerve him.
Universe Tankships: Availability of benefits from welfare funds had nothing to do with terms and conditions of their employment. Demand for payment into fund "not connected with" T&C, not trade dispute, money is recoverable. Legitimacy: got right to make the demand?
Coercion of will
Factors to determine, in Pao On v Lau Yiu Long (accepted in Tam Tak Chuen):
In determining whether there was a coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy (main one!); whether he was independently advised; and whether after entering the contract he took steps to avoid it.
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Pao On: Commercial pressure, but no coercion. Def considered matter thoroughly, chose to avoid litigation, and formed opinion that the risk in giving the guarantee was more apparent than real.
Must affect the mind of the threatened party to enter into contract. Kan J in Sharon Global Solutions: “it is incumbent on the party raising it to show that the duress placed it in a position where it was compelled to accede to the other party’s demands”
EC Investment Holding: Anwar was a seasoned businessman. Anwar knew what he was doing, did not protest. Plt had legitimate commercial advantage and not exerting illegitimate pressure since not obliged to lend Anwar money.