Contract Law - Duress
Common law duress
Doctrine of consideration has never been well equipped to deal with duress because
consideration need not be adequate.
Role of consideration in regulating duress situations diminished more after Williams v
Roffey
o Courts more willing to find consideration as they can leave it to duress to
regulate the fairness of the renegotiations.
Three types of duress
Duress to person – May consist of actual violence to claimant or his family members
o Duress need not be the sole reason for entering the contract, it is sufficient that
is a factor for victim entering the contract.
o Barton v Armstrong – suggests onus of proof switches to the defendant to show
illegitimate pressure would not have influenced the claimant either way.
Duress to goods – Threat to damage to victim’s goods.
o Old case of Skeate v Beale (1840) which held unlawful detention of another’s
good does not constitute duress is not good law, not likely to be followed today.
Lord Goff said it is ‘discarded’ in The Evia Luck.
o Astley v Reynolds (1731) – there was authority of proposition that money paid to
obtain unlawfully detained goods can be recovered back.
Economic duress – Where one party uses their superior economic power in an
‘illegitimate’ way to coerce the other contracting party to agree to terms.
o First recognised in The Siboen and The Sibotre and in R v AG it was defined as
‘pressure amounting to compulsion of the will’ and ‘illegitimacy of the pressure’
Theory developed but has not been abandoned because problem is victim
consented but they had a choice between two evils (Professor Atiyah)
Problem isn’t lack of consent but nature of threat used to bring about
consent.
Consent still used to determine causative link between pressure and
entry into contract.
o Establishing economic duress
Courts do not adopt a similar generous approach as in duress of person -
Onus is on claimant to prove causal link between pressure and entry
into contract (Huyton SA v Peter Cremer GmbH [1999])
Claimant must prove pressure applied was significant cause in inducing
him (The Evia Luck)
Sometimes claimant must prove but-for causation (Kolmar Group [2010])
Courts are likely to consider whether victim had alternative options.
Consent considered in distinguishing duress and honest claims (Pao On)
, Consent considered in barring a claim which would have succeeded due
to party affirming the contract (North Ocean Shipping Co)
o Illegitimate pressure – Main task for judges is to determine illegitimate pressure
R v A-G [2003] – Lord Hoffman identifies two aspects of illegitimacy,
nature of the demand and pressure applied to support it.
Unlawful threats are generally illegitimate such as threat to breach the
contract or commit a crime/tort. (Pao On v Lau Yin Long)
Where threats to breach contracts are made, courts won’t always
find illegitimate pressure, mostly bad faith breaches will be
illegitimate.
Where lawful threats are used to exert pressure, it is more difficult.
Where defendant threatens to do what he is legally entitled to do,
does not usually amount to pressure.
o Exception to this is blackmail
Demand for payment from owner of goods in return to not
repossess goods is not duress (Alf Vaughan & Co Ltd)
Threat to refuse contract is not duress because there is no
obligation to enter into a contract so not wrongful threat.
Cash and Carry Ltd v Gallaher – threat to refuse urgently needed
credit for future transaction was not duress. BUT much weight
given to good faith as defendant’s genuinely but erroneously
believed they were entitled to make the demand.
Borelli v Ting [2010] – Defendant used illegitimate means to
persuade claimant to enter into agreement using unlawful
(forgery) and lawful means but does NOT demonstrate expansion
of law as duress not found based on lawful acts alone.
Commentators have suggested as all threats of breach are not duress,
additional element are required.
Burrow advocates bad faith as an additional requirement. He
defines it as threat of breach made to exploit the claimant’s
weakness rather than solving financial problems of the defendant.
He also adds bad faith should not be illegitimate where it merely
corrects a clearly bad bargain or in circumstances like frustration.
BUT English law does not recognise bad faith explicitly, though it
can be used to tip the scales in favour of finding illegitimacy where
refusal to contract (which is not wrong in itself)
o Breach of contract is wrong in itself so no need to rely on
bad faith.
BREACH THREATENED IN BAD FAITH MORE LIKELY TO
CONSTITUTE DURESS THAN BREACH THREATENED IN GOOD
FAITH.
Williams v Roffey Bros
Duress was not pleaded.
There was potential for breach of contract by sub-contractors and the probability of that
breach caused main contractors to pay more for performance.
Common law duress
Doctrine of consideration has never been well equipped to deal with duress because
consideration need not be adequate.
Role of consideration in regulating duress situations diminished more after Williams v
Roffey
o Courts more willing to find consideration as they can leave it to duress to
regulate the fairness of the renegotiations.
Three types of duress
Duress to person – May consist of actual violence to claimant or his family members
o Duress need not be the sole reason for entering the contract, it is sufficient that
is a factor for victim entering the contract.
o Barton v Armstrong – suggests onus of proof switches to the defendant to show
illegitimate pressure would not have influenced the claimant either way.
Duress to goods – Threat to damage to victim’s goods.
o Old case of Skeate v Beale (1840) which held unlawful detention of another’s
good does not constitute duress is not good law, not likely to be followed today.
Lord Goff said it is ‘discarded’ in The Evia Luck.
o Astley v Reynolds (1731) – there was authority of proposition that money paid to
obtain unlawfully detained goods can be recovered back.
Economic duress – Where one party uses their superior economic power in an
‘illegitimate’ way to coerce the other contracting party to agree to terms.
o First recognised in The Siboen and The Sibotre and in R v AG it was defined as
‘pressure amounting to compulsion of the will’ and ‘illegitimacy of the pressure’
Theory developed but has not been abandoned because problem is victim
consented but they had a choice between two evils (Professor Atiyah)
Problem isn’t lack of consent but nature of threat used to bring about
consent.
Consent still used to determine causative link between pressure and
entry into contract.
o Establishing economic duress
Courts do not adopt a similar generous approach as in duress of person -
Onus is on claimant to prove causal link between pressure and entry
into contract (Huyton SA v Peter Cremer GmbH [1999])
Claimant must prove pressure applied was significant cause in inducing
him (The Evia Luck)
Sometimes claimant must prove but-for causation (Kolmar Group [2010])
Courts are likely to consider whether victim had alternative options.
Consent considered in distinguishing duress and honest claims (Pao On)
, Consent considered in barring a claim which would have succeeded due
to party affirming the contract (North Ocean Shipping Co)
o Illegitimate pressure – Main task for judges is to determine illegitimate pressure
R v A-G [2003] – Lord Hoffman identifies two aspects of illegitimacy,
nature of the demand and pressure applied to support it.
Unlawful threats are generally illegitimate such as threat to breach the
contract or commit a crime/tort. (Pao On v Lau Yin Long)
Where threats to breach contracts are made, courts won’t always
find illegitimate pressure, mostly bad faith breaches will be
illegitimate.
Where lawful threats are used to exert pressure, it is more difficult.
Where defendant threatens to do what he is legally entitled to do,
does not usually amount to pressure.
o Exception to this is blackmail
Demand for payment from owner of goods in return to not
repossess goods is not duress (Alf Vaughan & Co Ltd)
Threat to refuse contract is not duress because there is no
obligation to enter into a contract so not wrongful threat.
Cash and Carry Ltd v Gallaher – threat to refuse urgently needed
credit for future transaction was not duress. BUT much weight
given to good faith as defendant’s genuinely but erroneously
believed they were entitled to make the demand.
Borelli v Ting [2010] – Defendant used illegitimate means to
persuade claimant to enter into agreement using unlawful
(forgery) and lawful means but does NOT demonstrate expansion
of law as duress not found based on lawful acts alone.
Commentators have suggested as all threats of breach are not duress,
additional element are required.
Burrow advocates bad faith as an additional requirement. He
defines it as threat of breach made to exploit the claimant’s
weakness rather than solving financial problems of the defendant.
He also adds bad faith should not be illegitimate where it merely
corrects a clearly bad bargain or in circumstances like frustration.
BUT English law does not recognise bad faith explicitly, though it
can be used to tip the scales in favour of finding illegitimacy where
refusal to contract (which is not wrong in itself)
o Breach of contract is wrong in itself so no need to rely on
bad faith.
BREACH THREATENED IN BAD FAITH MORE LIKELY TO
CONSTITUTE DURESS THAN BREACH THREATENED IN GOOD
FAITH.
Williams v Roffey Bros
Duress was not pleaded.
There was potential for breach of contract by sub-contractors and the probability of that
breach caused main contractors to pay more for performance.
