Contract - Duress

The final part of consideration - usually occurs with variation of existing contract

Makes contract voidable, but not void (Pao On v Lau Yiu Long (1979)) - still exists but action can be taken to have rescinded (set aside)

Equitable remedy - at discretion of the courts

Types of duress

Duress to the person

Barton v Armstrong (1976)

Duress to goods

The Siboen and the Sibotre (1976) per Kerr J: "If I should be compelled to sign a contract under an imminent threat to have my house burnt down, I do not think that the law would uphold that agreement."

"But for" test for causation - significant cause

Economic duress

Vague test for causation - need not be 'the' reason for entering contract but 'a' reason

Unlawful detention of another's goods - more complex - similar to physical duress in that there is a bad faith element that goes beyond hardnosed business

Emerging doctrine - first recognised in The Siboen and the Sibotre #

Discretionary test - usually occurs when there is time pressure involved - need to know facts of cases in terms of what the pressure point was

Must be pressure, resulting in...

a) Lack of practical choice for the victim,

b) Which is illegitimate, and

c) Which is a significant cause inducing the claimant to enter into the contract

Per Dyson J, DSND Subsea v Petroleum Geo Ltd (2000)

Affirmed in Carillion Construction Ltd v Felix Ltd (2001) - Felix knew they were only people able to supply cladding in time and Carillion needed to avoid heavy fees for late competition #

Kolmar Group AG v Traxpo Enterprises Ltd (2010) - Traxpo refused to release ship and checmicals until Kolmar agreed a variation - needed to satisfy order to very important client who needed it urgently #

Dyson: "Whether the victim had any realistic practical alternative but to submit"

B&S Contracts & Design Ltd v Victor Green Publications Ltd (1984) - B&S went on strike and tried to pass cost onto the customer - cancellation of contract would have caused serious damage to defendant's economic interests

Atlas Express v Kafco Ltd (1999) - like Traxpo, Atlas realised they would make a loss and told Kafco that they wouldn't deliver for Christmas time - heavily reliant and had no alternative

Factors to consider

  1. Threatened breach of contract? # # #
  1. Was pressure applied in good or bad faith?
  1. Did victim protest? # #
  1. Did victim affirm? # # #

Bad faith # # # #

North Ocean Shipping v Hyundai (The Atlantic Baron) - lengthy delay - contract confirmed - contrast with immediate action to avoid

Universe Tankships Inc of Monrovia v International Transport Workers' Federation (The Universal Sentinel) (1983)

Good faith #

CTN v Gallaher (1994)

If there is no illegitimate pressure, there is no duress

Alec Lobb v Total Oil (1983) - "a hard bargain"

R v Attonrey General of England v Wales (2003) - "overwhelming pressure" but no duress

Huyton S.A. v Peter Cramer - "but for"

Actual or threatened violence

Originally thought would not result in setting aside - Skeate v Beale (1841)