Duress and undue influence cases
Lec 19
Duress is another example of a situation in which a contract which appears to be valid on its
face may be avoided.
pressure such as physical threats or threats to the economic interests of the other party
(‘duress’).
Duress renders the contract voidable. So, contract is valid until rescinded.
You have already seen duress in the context of consideration and the case of Williams v
Roffey and D & C Builders v Rees.
Two types of duress: duress to the person and economic duress
Duress is a common law concept. This lecture will examine duress to the person and
economic duress.
1. DURESS TO THE PERSON
was limited to actual or threatened unlawful physical force or violence or unlawful
constraint by one party to the contract to the other (or to a close relative of the other).
o Barton v Armstrong, [1975] 2 All ER 465: The managing director of a company was
threatened with death if he did not arrange for his company to make a payment to,
that the contract was set aside for duress.
o Threat to a party’s close relative or friend: Antonio v. Antonio [2010] EWHC 113
Comm
o Cumming v Ince [1847]: ‘unless you agree to this contract, I’m going to have you
locked up’. old woman- agrees to make settlement of her property under threat she
would be locked up in an asylum if she didn’t.
These cases are rare.
To amount to duress to the person the threat must:
a. Was nature of threat sufficient to be duress? (e.g., a threat to commit a crime or
illegitimate behaviour or behaviour short of criminal conduct); and
b. Have the necessary effect on the party threatened so that it destroys their consent.
Lord Scarman in Pao On v Lau Yiu Long [1979] 3 All ER 65:
Unlawful threat amounting to coercion of will which vitiates consent. In other words, if the
victim was acting involuntarily then his agreement to the contract is not real and can be
dismissed.
2. ECONOMIC DURESS (more likely in contract law)
example a party to existing contract threatens to breach that contract unless other party
will agree to new contract on better terms.
o North Ocean Shipping Co v Hyundai Construction Co (The Atlantic Baron) [1979] QB
705: Threat not to complete tanker= economic duress, was a threat to breach
contract, new contract= voidable, but c didn’t win as had affirmed contract.
Identifying economic duress in a commercial setting and differentiate it from bargaining
power-
, o Kolmar group AC v Traxpo enterprises PVT Ltd [2010]: 1. Illegitimate economic
pressure or threat, 2. A party wouldn’t enter a contract if not for duress and 3. A
party didn’t have any other choice or realistic alternative.
In early cases the test appeared to be:
o The test laid provided by Lord Scarman in Pao On v Lau Yiu Long [1979] 3 All ER 65
(see above)
To determine whether there has been sufficient coercion of the court will enquire:
a. Whether the person threatened protested that they had no alternative but to agree
to the new contract.
b. Whether he was independently advised
c. Whether he took steps to avoid the contract after entering it
There are 2 factors involved in determining whether duress is present:
o Enimont Overseas v Rojugotanker Zadar (The Olib) [1991] 2 Lloyds Rep 108
Illegitimacy of the Threat
The threat must be illegitimate. Hard to establish in commercial setting, only of acting in
good faith.
o CTN Cash & Carry Ltd v Gallagher Ltd [1994] 4 All ER 714: The threat was not
unlawful as it related to future contracts. Held: There was no duress partly because
the threat was issued in good faith.
What would the court look at?
a. The nature of the relationship between the parties
b. The bona fides of the person making the threat.
o Times travel (UK) ltd v Pakistan international airlines corporation [2019]
Lack of reasonable alternative
No reasonable alternative but to agree to new contract, no time to find alternative
o Atlas Express Limited v Kafco (Importers and Distributors) Ltd [1989] QB 833: In the
circumstances they reasonably believed that it would be impossible to find another
carrier and that breach of the Woolworth’s contract would ruin their business. When
Atlas bought an action to recover the increased charges Kafco resisted on the
grounds of duress. Damages wouldn’t have covered their loss.
The duress must be "operative”.
If duress is established, it must also be shown to have induced the contract.
For duress to the person the duress need not be the only or main reason for the claimant
entering the contract - Barton v Armstrong.
Whether economic duress is found will depend upon if it is a “significant cause” of the
contract – Dimskal Shipping Co SA v International Transport Works Federation (The Evia
Luck) [1992] 2 AC 152.
Remedy for Duress
o Rescission
NB this may be lost due to one of the bars being present:
Affirmation/Lapse of Time
In the Atlantic Baron the right to rescind the contract was lost due to affirmation due to
lapse of time.
Lec 19
Duress is another example of a situation in which a contract which appears to be valid on its
face may be avoided.
pressure such as physical threats or threats to the economic interests of the other party
(‘duress’).
Duress renders the contract voidable. So, contract is valid until rescinded.
You have already seen duress in the context of consideration and the case of Williams v
Roffey and D & C Builders v Rees.
Two types of duress: duress to the person and economic duress
Duress is a common law concept. This lecture will examine duress to the person and
economic duress.
1. DURESS TO THE PERSON
was limited to actual or threatened unlawful physical force or violence or unlawful
constraint by one party to the contract to the other (or to a close relative of the other).
o Barton v Armstrong, [1975] 2 All ER 465: The managing director of a company was
threatened with death if he did not arrange for his company to make a payment to,
that the contract was set aside for duress.
o Threat to a party’s close relative or friend: Antonio v. Antonio [2010] EWHC 113
Comm
o Cumming v Ince [1847]: ‘unless you agree to this contract, I’m going to have you
locked up’. old woman- agrees to make settlement of her property under threat she
would be locked up in an asylum if she didn’t.
These cases are rare.
To amount to duress to the person the threat must:
a. Was nature of threat sufficient to be duress? (e.g., a threat to commit a crime or
illegitimate behaviour or behaviour short of criminal conduct); and
b. Have the necessary effect on the party threatened so that it destroys their consent.
Lord Scarman in Pao On v Lau Yiu Long [1979] 3 All ER 65:
Unlawful threat amounting to coercion of will which vitiates consent. In other words, if the
victim was acting involuntarily then his agreement to the contract is not real and can be
dismissed.
2. ECONOMIC DURESS (more likely in contract law)
example a party to existing contract threatens to breach that contract unless other party
will agree to new contract on better terms.
o North Ocean Shipping Co v Hyundai Construction Co (The Atlantic Baron) [1979] QB
705: Threat not to complete tanker= economic duress, was a threat to breach
contract, new contract= voidable, but c didn’t win as had affirmed contract.
Identifying economic duress in a commercial setting and differentiate it from bargaining
power-
, o Kolmar group AC v Traxpo enterprises PVT Ltd [2010]: 1. Illegitimate economic
pressure or threat, 2. A party wouldn’t enter a contract if not for duress and 3. A
party didn’t have any other choice or realistic alternative.
In early cases the test appeared to be:
o The test laid provided by Lord Scarman in Pao On v Lau Yiu Long [1979] 3 All ER 65
(see above)
To determine whether there has been sufficient coercion of the court will enquire:
a. Whether the person threatened protested that they had no alternative but to agree
to the new contract.
b. Whether he was independently advised
c. Whether he took steps to avoid the contract after entering it
There are 2 factors involved in determining whether duress is present:
o Enimont Overseas v Rojugotanker Zadar (The Olib) [1991] 2 Lloyds Rep 108
Illegitimacy of the Threat
The threat must be illegitimate. Hard to establish in commercial setting, only of acting in
good faith.
o CTN Cash & Carry Ltd v Gallagher Ltd [1994] 4 All ER 714: The threat was not
unlawful as it related to future contracts. Held: There was no duress partly because
the threat was issued in good faith.
What would the court look at?
a. The nature of the relationship between the parties
b. The bona fides of the person making the threat.
o Times travel (UK) ltd v Pakistan international airlines corporation [2019]
Lack of reasonable alternative
No reasonable alternative but to agree to new contract, no time to find alternative
o Atlas Express Limited v Kafco (Importers and Distributors) Ltd [1989] QB 833: In the
circumstances they reasonably believed that it would be impossible to find another
carrier and that breach of the Woolworth’s contract would ruin their business. When
Atlas bought an action to recover the increased charges Kafco resisted on the
grounds of duress. Damages wouldn’t have covered their loss.
The duress must be "operative”.
If duress is established, it must also be shown to have induced the contract.
For duress to the person the duress need not be the only or main reason for the claimant
entering the contract - Barton v Armstrong.
Whether economic duress is found will depend upon if it is a “significant cause” of the
contract – Dimskal Shipping Co SA v International Transport Works Federation (The Evia
Luck) [1992] 2 AC 152.
Remedy for Duress
o Rescission
NB this may be lost due to one of the bars being present:
Affirmation/Lapse of Time
In the Atlantic Baron the right to rescind the contract was lost due to affirmation due to
lapse of time.
