Consequently pleas of duress have been traditionally

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Consequently, pleas of duress have been traditionally restricted to either actual or threatened violence to or imprisonment of either the party coerced or his or her close associates (in other words, to cases of physical duress). More recently however the concept has also been extended to cover threats to a person’s property (duress of goods) and/or to his or her economic well-being (economic duress). Economic duress Economic duress is a relatively modern development which acknowledges that contracts can be induced by influences other than fear of physical violence or imprisonment. Like the traditional pleas of physical duress, a successful plea of economic duress allows those who contract because of economic threats to escape the consequences of the thereby wrongfully-induced contract. For example, in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705, North Ocean Shipping Co Ltd engaged Hyundai Construction Co Ltd to construct a
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© Stephen Graw 2012 ship. The price was fixed in US dollars which were subsequently devalued by 10 per cent. Hyundai demanded an increase in the agreed price and made it clear that it would not complete construction of the ship unless the North Ocean agreed to the increase. Because North Ocean needed the ship for a particularly profitable charter it reluctantly agreed. However, after the ship was delivered, North Ocean sued Hyundai to recover the extra payment arguing that it had been obtained through economic duress. The court held that the agreement to pay the increase could be set aside for economic duress (with the result that North Ocean could recover its money). However, because North Ocean had not done anything to dispute the validity of the payment for nine months after the ship had been delivered (that is, for nine months after the effectiveness of Hyundai’s threat had been removed) it had impliedly affirmed the variation and could not recover. In Australia the courts have accepted economic duress as a justification for invalidating contracts that were entered into because of threats to the economic interests of either of the parties. The courts’ only real concern has been where to draw the line between what might be regarded as valid everyday commercial pressure and the sort of illegitimate pressure that underpins any plea of duress. In Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 McHugh JA dealt with the problem very simply, saying (at 46): The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether the pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats of amounts to unconscionable conduct.
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