Duress And Coercion - LAWS202 Law of Contract

Duress Sunday, 12 September 2010 11:04 p.m. Threat Lawful threat Unlawful threat - Barton (Against public policy) - Whetton Nature of demand Unlawful demand (blackmail) (Universal) Lawful demand (CTN v Gallagher) (Peter Cremer) Breach = unlawful? (Almost certainly) Unjustified Threat - Carillion Reasonable communication in good faith - McIntyre Illegitimate threat/pressure Legitimate threat/pressure General test from The Universe Sentinel Duress requires two elements: 1. Illegitimate (illegal or lawful) threat/pressure 2. Coercion, 'no practical alternative' (not lack of intention) Illegitimate threat/pressure From unlawful actions: Mutual Finance Ltd v Wetton Loan secured by threatening to prosecute family member for forgery. The threat giving rise to a claim of duress need not be illegal so long as it is 'contrary to public policy' Extortion through threatening prosecution = contrary to public policy. Extortion as never intended to prosecute. Extortion is unlawful. The question is whether the contract was undertaken owing to the pressure, and whether that fact was known to the threatener. Barton v Armstrong A threat need not be the sole reason behind a contract being undertaken. A threat will still give rise to a claim of duress even though the plaintiff would have entered the contract without it. Threatened breach of contract (economic duress) Occidental Worldwide Investment Corps v Skibs (1976) If a contract is concluded under compulsion not relating to the person, the Court must be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of any animus contrahendi. If an agreement is the result of intimidation, it won't be upheld. The source/form of intimidation does not matter. Mere 'commercial pressure' is not enough though, must be something more. Pao on v Lau Yiu Long Nothing in principle stopping economic duress if pressure coerced will and vitiated consent. B & S Design v Victor Green A threat of unlawful damage to economic interest (i.e. Breaching a contract) = illegitimate threat. A threat to break a contract unless money is paid can constitute duress if the consequences of a refusal would be serious and immediate, leaving no reasonable alternative open. Atlas Express v Kafco [1989] Defendant had threatened to repudiate contract if not paid more, because it had contracted on the basis of making more profit. Court followed Victor Green, economic duress. The Universal Sentinel 1. Illegitimacy of the pressure exerted, determined by: 1. The nature of the pressure 2. The nature of the demand which the pressure is applied to support. Pressure may be illegitimate even if the threat is of lawful action. Is a threat to breach unlawful/illegitimate? Carillion Construction Ltd v Felix [2000] Threat to supply - judge looked to see whether there was any justification for this. There wasn't, but had there been, no duress. Huyton SA v Peter Cremer [1999] Contract Page 44