Contractual Obligations – Prof. Helge Dedek Introduction 1
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- CML – Atlas Express Ltd. v. Kafko Ltd., [1989] QB 833, CB2: 44
Duress (CML)“Coercion of the will so as to vitiate consent”
Traditional Types: Duress to the Person: Actual or threatened violence – reasonable belief of threat also necessary Duress of Goods: Bundy case – agreement made under urgent need of goods (e.g. pawnbroker holding goods and extorting more money than is justly due from the actual owner of the goods) Economic Duress: this is assessed on a continuum - “in a contractual situation economic pressure is not enough.” CML - Atlas Express: Economic Duress
“Duress is coercion of the will so as to vitiate consent. […] In a contractual situation economic pressure is not enough. […] Compulsion had to be such that the party was deprived of his ‘freedom of exercising his will’” – Lord Scarman in Pao On
Modification in Universe Tankships (gave a very high threshold for economic duress);
“The victim’s intentional submission arising from the realization that there I no other practical choice open to him”
Shift away from a “psychological” test
Note: policy reason for the pre-existing duty rule was duress! (Remember the ship cases). Now, a legitimate criticism of the pre-existing duty rule is that it is over-inclusive – parties now cannot rewrite a contract even if they want to! (Creative lawyering may have a part to play here though – note obiter in Roffey Bros. – if it had been made explicit that “Consideration for this agreement is the annulment of the previous agreement,” it may have worked to get around the pre-existing duty rule) What is “illegitimate” pressure? “Nature of the demand” can render a threat illegitimate, even if the act one threatens to commit is in itself not considered unlawful, such as a breach of contract (e.g. if there is a “hint of blackmail”?) Note that, just as we have seen in the CCQ, the contract is rendered voidable, which means that it can be affirmed (such as happened in Stott v. Meritt)! This means that immediate action must be taken. Re. Industry culture – this is not so much in regards to whether or not there was duress, but rather just in regards to the question of whether the employer believed itself to have a legitimate claim to payback for the losses Remember the pre-existing duty rule!
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