North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron): 1978

The defendant had contracted to build a ship for the plaintiff. When part built and paid for, the defendants demanded further payments over and above that agreed to finish the contract. The plaintiffs paid without protest, and took delivery, but some time later sued, alleging that the additional payments had been made under duress.
Held: The claim failed. The now owners had so conducted themselves as to affirm the contract. The Court considered whether an agreement had been entered into under duress.
Mocatta J discussed the nature of consideration by a promise to perform an existing duty: ‘Counsel for the yard relied on what Denning L.J. said in two cases dealing with very different subject matters. The earlier was Ward v. Byham (1956) 2 All E.R. 318. There the father of an illegitimate child who had lived with her mother for some years turned the mother out of the house, retaining the child for a while for himself. Later he made an offer to let the mother have the child and pay an allowance of pounds 1 a week, provided the child was well looked after and happy and was allowed to decide for herself where she wished to live. When the mother married, the father discontinued payment, but on being sued by the mother he was held liable. The mother was by statute bound to maintain her illegitimate child, but Denning LJ said that he thought there was sufficient consideration in the promise to perform an existing duty or in its performance. Apart from the fact that the existing duty on the mother was imposed on her by statute law, which I think differentiates the case, the other two members of the Court of Appeal thought that compliance with the special terms of the father’s letter, about keeping the child happy and leaving her freedom of choice constituted ample consideration. Again in Williams v. Williams (1957) 1 All E.R. 305 at 307, whilst Denning L.J. said that ‘a promise to perform an existing duty is, I think, sufficient consideration to support a promise’, nonetheless he went on to find two separate grounds for good consideration for the husband’s promise. Similarly Hodson L.J. and Morris L.J. found good consideration for the husband’s promise. I do not therefore think either of these cases successfully enables counsel for the yard to avoid the rule in Stilk v. Meyrick.’
He considered the effect of duress: ‘I was referred to a number of cases decided overseas: Nixon v Furphy, Knutson v Bourkes Syndicate and Re Hooper and Grass’ Contract, all of which have a similarity to Close v Phipps. Perhaps their greatest importance, however, is the quotation in the first mentioned from the judgment of Isaacs J in Smith v William Charlick Ltd, where he said:
‘It is conceded that the only ground on which the promise to repay could be implied is ‘compulsion’. The payment is said by the respondent not to have been ‘voluntary’ but ‘forced’ from it within the contemplation of the law . . . ‘Compulsion’ in relation to a payment of which refund is sought, and whether it is also variously called ‘coercion’, ‘extortion’, ‘exaction’ or ‘force’, includes every species of duress or conduct analogous to duress, actual or threatened, exacted by or on behalf of the payee and applied to the person or the property or any right of the person who pays . .. Such compulsion is a legal wrong, and the law provides a remedy by raising a fictional promise to repay.’


Mocatta J


[1979] 3 WLR 419, [1978] 3 All ER 1170, [1979] QB 705


England and Wales

Cited by:

CitedTimes Travel (UK) Ltd v Pakistan International Airlines Corporation CA 14-May-2019
This appeal concerns the area of lawful act duress, where a contract results from a threat of a lawful act or omission. Does lawful act duress exist at all and, if so, in what circumstances may it be invoked? . .
Lists of cited by and citing cases may be incomplete.


Updated: 09 July 2022; Ref: scu.372849