Economic Duress CASES
In English law, economic duress refers to situations where one party exerts illegitimate commercial pressure, forcing another to enter or modify a contract against their free will.
Definition and Principles
Economic duress involves wrongful or improper threats, typically economic in nature, leaving the pressured party with no reasonable alternative but to agree. Contracts or contract modifications entered under economic duress may become voidable.
Key Elements
- Illegitimate pressure: Threats or actions exceeding lawful commercial pressure.
- Lack of practical choice: The victim has no realistic alternative but to comply.
- Causation: The duress directly causes the victim’s agreement.
Consequences and Remedies
Contracts formed or modified under economic duress can be rescinded, with the parties potentially returned to their original positions. Damages may be available if applicable.
Practical Importance
The doctrine protects parties from coercive practices, preserving commercial fairness and genuine freedom of contract.
Home » Economic Duress
A main contractor, Roffey, agreed to pay a sub-contractor, Williams, an extra sum to complete work on time. The court held this promise was enforceable as Roffey gained a 'practical benefit', refining the traditional doctrine of consideration. Facts The defendants, Roffey Bros & Nicholls (Contractors) Ltd, were main contractors for a project to refurbish a block of 27 flats. Their own contract contained a penalty clause for late completion. They subcontracted the carpentry work to the plaintiff, Lester Williams, for a price of £20,000. Part-way through the work, the plaintiff realised he had underestimated the cost and was in financial
Ship owners paid money into a union's welfare fund under threat of their ship being 'blacked' and prevented from sailing. They sued successfully to recover the payment, claiming economic duress. The case established a key test for economic duress. Facts The appellants, Universe Tankships Inc of Monrovia, owned the ship ‘The Universe Sentinel’. While it was docked at Milford Haven, the respondent union, the International Transport Workers Federation (ITF), ‘blacked’ the ship. This meant tugs would not service the vessel, preventing it from sailing. The blacking was part of ITF’s policy to improve the poor pay and conditions of crews
Shipbuilders threatened to breach a contract unless the price was increased by 10% after a currency devaluation. The buyers reluctantly agreed to ensure their ship was delivered. The court held this was economic duress, but the buyers lost their right to repudiate through delay. Facts The plaintiffs, North Ocean Shipping Co Ltd (‘the owners’), contracted with the defendants, Hyundai Construction Co Ltd (‘the shipbuilders’), for the construction of a tanker, ‘The Atlantic Baron’. The price was fixed in US dollars, payable in five instalments. After the first instalment was paid, the US dollar was devalued by 10 per cent. The
A small building firm was owed £482. The debtor's wife, knowing the builders were in financial difficulty, offered £300 in 'full settlement'. The builders accepted under pressure. The court held that this did not extinguish the debt, as the agreement was obtained by intimidation. Facts D & C Builders Ltd, a small building company, performed work for Mr Rees amounting to £746 13s. 1d. Mr Rees paid £250 on account, leaving a balance of £482 13s. 1d. Despite several requests for payment, the balance remained unpaid. The builders were in a desperate financial situation. Mrs Rees, acting for her husband,
A supplier threatened to withdraw future credit facilities from a customer unless a disputed invoice was paid. The customer paid under protest and sued, claiming economic duress. The court held the threat, being a lawful act made in good faith, was not duress. Facts The plaintiff, CTN Cash and Carry Ltd (CTN), was a wholesaler of tobacco products. The defendant, Gallaher Ltd, was a major cigarette manufacturer and CTN’s supplier. The parties had a long-standing commercial relationship, but no overarching supply contract. Gallaher provided credit facilities to CTN, but this was at Gallaher’s sole discretion and could be withdrawn at
Facts Kafco (Importers and Distributors) Ltd, a small company importing basketware, secured a major contract to supply goods to Woolworths plc. They engaged Atlas Express Ltd, a national road carrier, to handle the distribution to Woolworths’ retail outlets. An Atlas manager inspected Kafco’s goods and, based on a visual assessment, quoted a carriage rate of £1.10 per carton, anticipating that each of Atlas’s trailers could hold between 400 and 600 cartons. A contract was concluded on this basis. However, after the first collection, the Atlas driver discovered that due to their size, only 200 cartons could fit onto a trailer.
