A relative of a forger gave a guarantee in circumstances where the forger had been threatened with prosecution. He now pleaded economic duress.
Held: The guarantee should be set aside. The court considered the distinction between dures and undue influence. Porter J said: ‘Not only is no direct threat necessary, but no promise need be given to abstain from a prosecution. It is enough if the undertaking was given owing to a desire to prevent prosecution and that desire were known to those to whom the undertaking was given. In such a case one may imply (as I do here) a term in the contract that no prosecution should take place . . A threat made by a party to a contract may be illegitimate when coupled with a demand for payment even where the threat is one an action which would otherwise be lawful.’
The line between permissible forms of persuasion and undue influence is ultimately regulated by considerations of public policy.
Judges:
Porter J
Citations:
[1937] 2 KB 389, [1937] 2 All ER 657
Jurisdiction:
England and Wales
Cited by:
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 – CTN Cash and Carry v Gallaher CA 15-Feb-1993
The buyer paid a sum demanded by the seller who threatened otherwise to withdraw the credit facilities it provided to the buyer. The sum was not in fact due, but the demand had been made honestly. The buyer said the agreement was voidable for . .
Lists of cited by and citing cases may be incomplete.
Contract, Undue Influence
Updated: 08 May 2022; Ref: scu.451443