Chapter 14 Duress Undueinfluence Unconscionability

Chapter 14 Duress Undueinfluence Unconscionability -...

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Chapter 14 Duress, Undue influence, Unconscionability Duress Barton v Armstrong – see page 140 of contract revision book Issue: Duress to the person North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] Issue: Economic duress Facts: A contract existed for the construction of a boat but the shipbuilders sought to increase the price after the building had commenced due to fluctuations in exchange rate. The shipbuilders threatened not to complete the contract if this increase was not paid. North Ocean agreed to the demand as negotiations for a lucrative contract for the charter of the new tanker were ongoing. Verdict: The court held that the threat amounted to economic duress and the resultant contract to pay more than originally agreed was thus voidable at the option of North Ocean. Pao On v Lau Yiu Long Issue: Requirements of economic duress Facts: Claimants threatened not to proceed with the sale of shares unless the defendants agreed to renegotiation on other peripheral issues. The defendants wanted to avoid litigation and were anxious to reach agreement for the sale of the shares so agreed. Claimants tried to enforce agreement but defendants resisted on basis on duress. Verdict: Facts disclosed ordinary commercial pressure that was not sufficient to amount to duress since the acts did not coerce defendants into contracting. - Defendants did not protest - Considered the matter thoroughly with legal advice - Weighed all the risks involved before finally agreeing with the renegotiation THEREFORE, the defendants were NOT coerced. Lord Scarman identified factors that indicated duress was established. 1. Whether the victim protested at the alleged point of coercion. 2. Whether he had any alternative course open to him e.g. an adequate legal remedy 3. Whether he had received independent legal advice 4. Whether he took steps to avoid the contract after entering into it. NB: there are 2 elements of duress (1) coercion (2) by illegitimate pressure This case dealt with (1) – lack of coercion CTN Cash & Carry v Gallaher Ltd Issue: Illegitimate pressure; lawful acts
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Facts: Gallaher supplied cigarattes and a consignment of cigarettes ordered by CTN went astray. The defendants agreed to redeliver but the goods were stolen. CTN was told that their credit facilities would be withdrawn if they did not agree to pay for the stolen cigarettes so they agreed but subsequently claimed that the agreement was obtained by duress. Verdict: Court held that threats of lawful action (to withdraw credit facilities) could amount to illegitimate pressure but it DID NOT do so in this situation. It would require extreme circumstances before “lawful act duress” would be recognized in a commercial contract. It has to leave the innocent party with no reasonable alternative other than to agree to the other party’s demands.
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