Contract Supervision 7: Duress, Undue
Influence and Unconscionable Bargain
Textbook Reading
McKendrick TCM Chapter 18: Duress
Contract may be set aside for duress; duress to the person, duress to goods and economic
duress. Economic duress: illegitimate pressure applied by one party + this threat is a
significant cause of the other party entering into the contract. Threat to commit a crime
or a tort is illegitimate; threat to breach contract may be illegitimate; threat not to
contract is legitimate.
I. Introduction
Duress to the person well-established; duress to goods stunted by Skeate v Beale (1841);
economic duress recognised latterly: Occidental Worldwide Investment Corporation v
Skibs (The Siboen and The Sibotre) [1976]. There was an initial doctrinal unwillingness to
permit economic duress but the modern trend is to plead duress when needed.
Smith (1997): Why do we allow the plea of duress? To prevent the wrongdoer from
profiting from his wrongdoing, and because the accepting party did not really consent. It
is enough as long as either element is present.
Note: substantive unfairness is not a ground for duress – no problem if forced to lelong.
II. Duress of the Person
Well-recognised – Barton v Armstrong [1976] AC 104, PC.
Facts: B and A were shareholders of Landmark Corporation in Australia. LC was building
‘Paradise Waters’ estate. Armstrong was the Chairman; Barton was MD. Power struggle:
Barton got rid of Armstrong. A and B then had to work out how to buy out A’s share. A
threatened to kill B – B agreed to but A’s share; later transpired that B’s main reason for
entering into the contract was for commercial reasons.
Held: enough that A’s illegitimate threats were a reason for B entering into the contract,
even if not a but-for reason. This vitiates consent. Surely burden of proof should be on the
rogue to show that the other party was not influence by his wrongdoing. Lord Cross drew
analogy with fraudulent misrepresentation when the test is also a reason, not the reason.
However, fraud is a serious matter which must be clearly and distinctly proved: Derry v
Peak. Further, duress includes various levels of turpitude.
Note further – PC treated contract as void for duress, but normal approach is voidable –
Pao Onn v Lau Yiu Long. Finally, duress may overlap with undue influence.
III. Duress of Goods
Skeate v Beale (1841): detention of another’s goods did not constitute duress. However,
early authority indicated that money paid to get back unlawfully detained goods could be
recovered: Astley v Reynolds (1731) – pawn of plate – pawnshop asked for more than the
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Influence and Unconscionable Bargain
Textbook Reading
McKendrick TCM Chapter 18: Duress
Contract may be set aside for duress; duress to the person, duress to goods and economic
duress. Economic duress: illegitimate pressure applied by one party + this threat is a
significant cause of the other party entering into the contract. Threat to commit a crime
or a tort is illegitimate; threat to breach contract may be illegitimate; threat not to
contract is legitimate.
I. Introduction
Duress to the person well-established; duress to goods stunted by Skeate v Beale (1841);
economic duress recognised latterly: Occidental Worldwide Investment Corporation v
Skibs (The Siboen and The Sibotre) [1976]. There was an initial doctrinal unwillingness to
permit economic duress but the modern trend is to plead duress when needed.
Smith (1997): Why do we allow the plea of duress? To prevent the wrongdoer from
profiting from his wrongdoing, and because the accepting party did not really consent. It
is enough as long as either element is present.
Note: substantive unfairness is not a ground for duress – no problem if forced to lelong.
II. Duress of the Person
Well-recognised – Barton v Armstrong [1976] AC 104, PC.
Facts: B and A were shareholders of Landmark Corporation in Australia. LC was building
‘Paradise Waters’ estate. Armstrong was the Chairman; Barton was MD. Power struggle:
Barton got rid of Armstrong. A and B then had to work out how to buy out A’s share. A
threatened to kill B – B agreed to but A’s share; later transpired that B’s main reason for
entering into the contract was for commercial reasons.
Held: enough that A’s illegitimate threats were a reason for B entering into the contract,
even if not a but-for reason. This vitiates consent. Surely burden of proof should be on the
rogue to show that the other party was not influence by his wrongdoing. Lord Cross drew
analogy with fraudulent misrepresentation when the test is also a reason, not the reason.
However, fraud is a serious matter which must be clearly and distinctly proved: Derry v
Peak. Further, duress includes various levels of turpitude.
Note further – PC treated contract as void for duress, but normal approach is voidable –
Pao Onn v Lau Yiu Long. Finally, duress may overlap with undue influence.
III. Duress of Goods
Skeate v Beale (1841): detention of another’s goods did not constitute duress. However,
early authority indicated that money paid to get back unlawfully detained goods could be
recovered: Astley v Reynolds (1731) – pawn of plate – pawnshop asked for more than the
1|Page
