Dyson J set out the principles applicable in establishing a pleading of commercial duress:
(i) Economic pressure can amount to duress, provided it may be characterised as illegitimate and has constituted a ‘but for’ cause inducing the claimant to enter into the relevant contract or to make a payment. See Mance J in S.L. Huyton S.A. v Peter Cremer GmbH and Co [1999] 1 Lloyds Rep 620;
(ii) a threat to break a contract will generally be regarded as illegitimate, particularly where the defendant must know that it would be in breach of contract if the threat were implemented;
(iii) it is relevant to consider whether the claimant had a ‘real choice’ or ‘realistic alternative’ and could, if it had wished, equally well have resisted the pressure and, for example, pursued practical and effective legal redress. If there was no reasonable alternative, that may be very strong evidence in support of a conclusion that the victim of the duress was in fact influenced by the threat.
(iv) the presence, or absence, of protest, may be of some relevance when considering whether the threat had coercive effect. But, even the total absence of protest does not mean that the payment was voluntary.
More generally: ‘there must be pressure, (a) whose practical effect is that there is compulsion on, or lack of practical choice for, the victim; (b) which is illegitimate; and (c) which is a significant cause inducing the claimant to enter into the contract: see Universal Tankships Inc of Monrovia v. International Transport Workers’ Federation [1983] 1 AC 366 at 400B-E and Dimskal Shipping Co SA v. International Transport Workers’ Federation [1992] 2 AC 152 at 165 G. In determining whether there has been illegitimate pressure, the Court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time; and whether he affirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.’
and ‘The ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract: see Universal Tanking of Monrovia v. ITWF [1983] AC 336, 400 B-E, and The Evia Luck [1992] 2AC 152, 165 G. In determining whether there has been illegitimate pressure, the court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time; and whether he confirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.’
Judges:
Dyson J
Citations:
[2000] EWHC 185 (TCC), [2001] BLR 23, [2000] BLR 530
Links:
Citing:
Cited – Universe Tankships Inc of Monrovia v International Transport Workers Federation HL 1-Apr-1981
A ship belonging to the appellants had been blacked by the defendant union. Negotiations to clear the threat resulted in payment by the appellants to a welfare fund of the defendant. The company sought its refund saying that it had been paid under . .
Cited – Dimskal Shipping Co SA v International Transport Workers Federation (‘The Evia Luck’) HL 1991
The Plaintiff shipowners had been induced by industrial action against a vessel in Sweden, which actions would be lawful under Swedish law, to undertake to enter into written agreements with the ITF under which, inter alia, more generous agreements . .
Cited – Huyton SA v Peter Cremer Gmbh and Co ComC 21-Oct-1998
Mance J discussed the law of economic duress saying it was established law that economic pressure could amount to duress and referred to two basic ingredients for duress of that character. He identified those ingredients as first, ‘illegitimate . .
Cited by:
Cited – Kolmar Group Ag v Traxpo Enterprises Pvt Ltd ComC 1-Feb-2010
The claimant sought damages in contract alleging economic duress. They said that at a late stage, when the defendant knew of the urgent needs of the caimant, he imposed an exorbitant change of price.
Held: The claim succeeded. The pressure . .
Cited – Adam Opel Gmbh and Another v Mitras Automotive (UK) Ltd QBD 18-Dec-2007
The parties had agreed for the supply of automotive parts by the defendant to the claimant under a sole supply arrangement. None were in fact ordered for the first few years. The manufacturer then changed its design and made a new arrangement with a . .
Approved – Carillion Construction Ltd v Felix (UK) Ltd 2001
. .
Cited – Progress Bulk Carriers Ltd v Tube City IMS Llc ComC 17-Feb-2012
The claimant sought to set aside an arbitration saying that the arbitrator had misapplied the test for economic duress. . .
Cited – Farm Assist Ltd v Secretary of State for Environment Food and Rural Affairs TCC 12-Dec-2008
The claimant, now in liquidation, sought to have set aside for economic duress the mediated settlement of its dispute with the defendant. The defendant sought disclosure of legal and similar advice given to the claimant.
Held: Paragon Finance . .
Lists of cited by and citing cases may be incomplete.
Contract, Torts – Other
Updated: 13 August 2022; Ref: scu.396476