c The third type of duress is a new concept of economic duress In Universe

C the third type of duress is a new concept of

This preview shows page 4 - 6 out of 15 pages.

(c) The third type of duress is a new concept of economic duress. In Universe Tankships of Monrovia v International Transport Workers Federation ( The Universe Sentinel ) [1983] , the HOL accepted the concept of economic duress. In this case the defendant’s trade union refused to release the plaintiff’s ship unless certain monies were paid including a payment to the union’s welfare fund. The HOL held that the plaintiff could recover the later payment which was made as a result of ‘illegitimate’ pressure by the defendant. Malaysia law has also followed the English law as regards to coercion. s.15 provides that coercion occurs where a party commits or threatens to a criminal act or unlawfully detains or threatens to detain an innocent party’s property with the intention to cause the innocent party to enter into a contract. Thus the Act provides for coercion to a person as well as a person’s goods, the latter not being accepted the much criticised case of Skeate v Beale [1840] . However, the Act does not provide for economic duress and hence Malaysia courts have invoked s.3 and s.5 CLA 1956 to follow the decision in The Universe Sentinel [1983] . In Teck Guan Trading Sdn Bhd v Hydrotech Engineering (S) Sdn Bhd & Ors [1996] , the court said that the economic blackmail, also known as commercial pressure or economic duress is recognised in English Law and our courts are not against it. However, this will not be allowed where the parties have dealt with each other at arm’s length and where one party could not be said to be in such a position so as to be able to dominate the will of the other. This suggests that our courts will not look at the state of mind of the innocent party but will examine the nature of the pressure applied by the more dominant party.
Image of page 4
The effect of coercion is that the agreement is a contract voidable at the option of the innocent party as provided under s.19(1) , when consent to an agreement was caused by coercion, fraud or misrepresentation, the contract is voidable at the option of the party whose the consent was so caused. Hence, he has a choice whether to rescind the contract or to affirm it and claim for compensation. Where the innocent party elects to rescind the contract, he may exercise his right by giving notice to the other party of his intention to rescind the contract, or he may apply to the court under s. 34(1)(a) of the Specific Relief Act 1950 to have the contract rescinded by the court. Where the innocent party elects to rescind s.34(1)(a) of the SRA 1950 provides: Any person interested in a contract in writing may sue to have it rescinded, and such rescission may be adjudged by the court where, the contract is voidable or terminable by the plaintiff. The purpose of rescission is to put the parties in the original position they were in before the contract was entered into. s.65 provides that when a person at whose option a contract is voidable rescinds it, the other party is released from any further obligation. Also, the party rescinding a viable contract shall restore any benefits received from the other party.
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 15 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors