Economic Duress
Introduction
A contract is voidable or vitiate under several situations, economic duress is one of the examples. Economic duress is a vitiating factor in a contract as it is a common law defense. When there happens to be an economic duress in a contract, the party can make the contract voidable if the requirements are fulfilled. One needs to be noted that the contract is only voidable instead of being voided completely. A contract has no legal force or effect at all if it is being voided. However, a contract that is voidable simply means that the contract is still legally binding until avoided by the party. The affected party may cancel the contract and claim for remedies. Kerr J proposed that the contract can be set aside when there is economic duress exerting on one of the parties. Occidental Worldwide Investment Corporation v Skibs A/S Avanti, The Sibeon and The Sibotre [1976] 1 Lloyd’s Rep 293
Economic duress is a threat to a person’s financial or business interests. (Contract Law, 10th edn, Jill Poole pg564). The threat must be directed to the person’s financial standing but not to the person himself or his property. (Contract Law in Perspective, John Tillotson pg165). There is an economic duress exerted on a party when one party threatens to breach the contract unless the other party who is being threatened complies or renegotiates with him/her. Normally, the party who is being threatened would rather to comply or renegotiate with the other party, as it would be more practical to do so. This is because the breaching of the contract might bring more disadvantages than to comply with it despite that the party is being threatened. For example, A and B entered into a contract that A would provide something to B and B would pay for it. A then threatened to breach the contract if B did not want to pay more for the stuffs. B is in an urge to get the stuffs or else he will breach another contract with a third party and A is the only company that provides such
A contract is voidable or vitiate under several situations, economic duress is one of the examples. Economic duress is a vitiating factor in a contract as it is a common law defense. When there happens to be an economic duress in a contract, the party can make the contract voidable if the requirements are fulfilled. One needs to be noted that the contract is only voidable instead of being voided completely. A contract has no legal force or effect at all if it is being voided. However, a contract that is voidable simply means that the contract is still legally binding until avoided by the party. The affected party may cancel the contract and claim for remedies. Kerr J proposed that the contract can be set aside when there is economic duress exerting on one of the parties. Occidental Worldwide Investment Corporation v Skibs A/S Avanti, The Sibeon and The Sibotre [1976] 1 Lloyd’s Rep 293
Economic duress is a threat to a person’s financial or business interests. (Contract Law, 10th edn, Jill Poole pg564). The threat must be directed to the person’s financial standing but not to the person himself or his property. (Contract Law in Perspective, John Tillotson pg165). There is an economic duress exerted on a party when one party threatens to breach the contract unless the other party who is being threatened complies or renegotiates with him/her. Normally, the party who is being threatened would rather to comply or renegotiate with the other party, as it would be more practical to do so. This is because the breaching of the contract might bring more disadvantages than to comply with it despite that the party is being threatened. For example, A and B entered into a contract that A would provide something to B and B would pay for it. A then threatened to breach the contract if B did not want to pay more for the stuffs. B is in an urge to get the stuffs or else he will breach another contract with a third party and A is the only company that provides such