Duress is an element of force either physical or economic, which is used to override on parties freedom to choose to enter into a contract. Under such circumstances the contract is voidable at the instance of the innocent party. Its application used to be restricted to contracts entered into as a consequence of a threat.
Originally it was held that the threats to person’s goods could not amount to duress, but a doctrine of economic duress has now been developed by the courts. The effect of the doctrine stated that an abuse of economic power can render a contract invalid, following lord denning’s decision in D&C builders V Rees and was developed in later cases such as the sibeon and sibotre and the Atlantic Baron. In this case the plaintiffs took delivery of the ships in name and 8 months later they sought to recover on the basis in inter alia, economic duress. It was held the plaintiffs action failed as the delay in seeking recovery amounted to affirmation of the contract and therefore lost the right to rescission.
There is a difficulty in distinguishing ordinary commercial pressure stated by kerr J which is inadequate to set up a defence from economic duress , LJ Scarman stated recognising economic duress as a factor which may render a contract voidable provided always that a basis of such recognition is that it must amount to a coercion of will which vitiates consent.
In CTN cash and carry v Gallaher ltd where the court of Appeal confirmed that a lawful act with a demand for payment may amount to economic duress as in the given scenario.
In order to benefit from the doctrine of duress claimants must show that the payments made on the contract entered into was not a voluntary act. The test devised seeks if the victim protested at the time of the contract. It also must be shown that there was no alternative course of action. Also included in the test is of they intended to repudiate the contract. Finally that the pressure was considered to be...
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