Duress

3 types of duress at common law:

Duress to person: violence to claimant or to members of his family or threats of such violence -
threat relates to physical wellbeing and not economic
o Actual/threatened, physical violence/ unlawful constraints of a person or a person's family
to induce contractual relations
• In Barton v Armstrong, A contract to purchase defendant’s shares induced by the threat of
murder was declared void.
Privy Council held that threats need not to be the sole reason to for entry into the contract,
sufficient that threats were a factor influencing the victim
o causation not a strong requirement - just “of reason” for other party’s decision, not
but for, onus of proof shifted to the party applying the pressure to show that it
contributed nothing to the entry into contract, Lord Cross
o Further, even if the agreement was signed firstly out of commercial necessity, the
fact that coercion had occurred made the agreement void as any duress was likely
to have an effect on a party, forcing them to sign.

• Show pressure is illegitimate and causation

• threat inferred from previous assaults - threat isn't explicit, can be implied (Mir v Mir)
o one party physically assaulted the other party in the past & the stronger party
demanded the other party to sign the document — the other party signed doc
o when signing there was no assault, but threat implied from past conduct - they know
if they dont sign - will be subject to assault

Duress to Goods
• Threat of damage to the victim's goods rather than to his person
o Actual/ threatened, violence/unlawful detention of a person's goods to induce
contractual relations
• Skeate v Beale (1840) where it was held that the unlawful detention of another's goods does
not constitute duress
• But other authority, money paid to release goods which had been unlawfully detained could
be recovered back in an action for money had and received
• Skeate no longer good law, and in the Evia Luck, Lord Goff stated that the limitation in
Skeate that only duress to the person would entitle a party to avoid a contract had been
'discarded'
• Threat to burn down the other’s house or to slash a valuable picture of his/hers (The Siboen
and The Sibotre, per Kerr J)
• Under-developed and possibly overshadowed by economic duress

Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) (1992)
Lord Goff made clear that the idea in Skeate v Beale that only duress to the person could entitle a
party to have a contract set aside is now discarded.

Lee Mason: There is no clear authority for the casual test of duress to goods, but the same test for
economic duress (named “but-for” test) would apply. (as duress to goods is the same as economic
duress in wider sense)
Astley v Reynolds (unlawful intentions: detention of p’s goods)
• money paid to release unlawfully detained goods was recovered
• p borrowed money from d; goods detained by d - paid for the goods -void

Maskell v Horner [1915] 3 KB 106

• Toll money was taken from P under a threat to close down his market stall and to seize his
goods if he did not pay. These tolls were, in fact, demanded from him with no right in law.
• Court of Appeal allowed P to recover all the toll money paid, even though the payments had
been made over a considerable period of time.
Lord Reading CJ: if a person pays money, which he is not bound to pay, under a compulsion of urgent
and pressing necessity or of seizure, he can recover it as money had and received under the law of
restitution.
• HELD: there was a wider restitutionary rule that money paid to avoid goods being seized or
to obtain their release could be recovered.
• Further, it was held that in the present case there was a compulsory agreement to enter
into, whereas in Skeate the agreement was entered into voluntarily.

The Sibeon & The Sibotre [1976]

• The charterers of two ships renegotiated the rates of hire after a threat by them that they
would go bankrupt and cease to trade if payments under the contract of hire were not
lowered.
• Since they also represented that they had no substantial assets, this would have left the
owners with no effective legal remedy.
• The owners would have had to lay up the vessels and would then have been unable to meet
mortgages and charges – a fact known by the charterers. The threats themselves were false
in that there was no question of the charterers being bankrupted by high rates of hire.
Kerr J: rejected the earlier confines of duress. But, he said, in a contractual situation commercial
pressure is not enough to prove economic duress. The court must, he said, be satisfied that the
consent of the other party was overborne by compulsion so as to deprive him of his free consent
and agreement. This would depend on the facts in each case.
• He considered that two questions had to be asked before the test could be satisfied:
(1) did the victim protest at the time of the demand and
(2) did the victim regard the transaction as closed or did he intend to repudiate the new
agreement?
• Kerr J considered that the owners would have been entitled to set aside the renegotiated
rates on the ground of economic duress, but that on the present facts their will and consent
had not been ‘overborne’ by what was ordinary commercial pressures.
Economic Duress
(1) Illegitimate pressure (doesn’t mean unlawful)
• procedural not substantive fairness
• highly artificial and one-sided agreement (Tam Lup Wai v Vong Shi Ming)
(2) Sufficient causal link - causation
• Protest
• Absence of independent advice (less relevant in duress of person cases: Mir v Mir)
(3) Coercion/ compulsion of will (eng law doesnt accept)
• is consent a factor (Pao on: settlement of honest claim)
• Move away from Pao On, the universe sentinel; evia luck - compulsion not needed
• consequence: contract voidable; not void (Tam Lup Wai v Vong Shi Ming)
(3) Lack of a real alternative
• equated with coercion of will (R v AG, per Lord Hoffmann at (15))
• not ‘an inflexible third ingredient’ BUT presence of alternative would negate causation
(Huyton v Peter Cremer) — in economic duress cases, lack of real alt. is a distant 3rd
alternative

• One party uses his superior economic power in an 'illegitimate' way to coerce the other
contracting party to agree to a set of terms
o Recognized by Kerr J in (above) The Siboen and The Sibotre
• economic wellbeing vs physical (Holyoake v Candy) - threaten to reduce ur wealth and make
you worse off in economic terms

• distinct form consideration: contract modification Cf Williams v Roffey bros

Dimskal Shipping Co SA v International Transport Workers’ Federation, The Evia Luck

• The claimants owned a vessel named ‘The Evia Luck’
• The defendant was the International Transport Federation. At the time of the dispute, the
defendant campaigned against ‘flags of convenience’, and enlisted many organisations in
Sweden to this end. Its main tactic was to threaten ships with ‘blacking’ (being prevented
from leaving port) unless they agreed to more favourable terms for their crew. This tactic,
while illegal in the UK, was legal under Swedish law.
• It was unloading at a Swedish port when official of the Swedish Transport Workers’ Union,
an affiliate of the defendants, told the crew that the ship would be blacked unless the
claimant agreed to enter International Transport Federation contracts with the crew.
• The claimant capitulated and signed a variety of contracts with the defendant.
• The House of Lords held that the contract was voidable for economic duress. Therefore, the
claimant was entitled to restitution. The defendant had exercised pressure on the claimant
by threatening to black their ship. This pressure was unlawful as a matter of English law, so it
was illegitimate. The fact that the acts complained of took place abroad where they were
lawful was not relevant.
Economic duress applies where one party exerts illegitimate pressure which is a ‘substantial cause’
of the other party’s decision to agree to a contract.

A trade union engages in economic duress if they force an employer to increase wages by procuring
a boycott of their business. To act lawfully, the union must comply with the statutory restrictions
imposed on trade unions and industrial action
Coercion of the will
'compulsion of the will of the victim'
• Must have been a 'coercion of the will' of the victim which was such as to 'vitiate' his
consent
• In duress to the person, the threat need only be a cause of the claimant acting as he did but
does not apply to economic duress
• Leggatt LJ in Al Nehayan v Kent 'the test of causation differs according to the nature of the
duress'
• In economic duress, the claimant must prove that the pressure applied was a 'significant
cause' inducing him to enter into the contract
• What is 'illegitimate pressure'

Unjustifiable demands
Estinah v Golden Hand Indonesian Employment Agency
• Estinah, a domestic helper, entered contract with an employment agent.
After the service was completed, the agent charged Estinah a price higher than the statutory
maximum
• Estinah was force to pay the price as otherwise the agent would not complete the procedure
for Estinah.
• Later, Estinah sued the agent for the difference in amount.
Kwan J found in favour of Estinah because:
Ø She did not have reasonable alternatives.
Ø The pressure exerted by the agent was illegitimate as the price exceeded the maximum under the
Regulations.
Ø The pressure had a significant influence in inducing her to pay. - Kwan J also noted:
Ø “For there to be economic duress, the pressure applied does not have to be in the manner of an
express threat or coercion.”

Illegitimate pressure
In R v A-G for England and Wales,
Lord Hoffmann stated that there were 2 elements to the 'wrong of duress'
1. first was 'pressure amounting to compulsion of the will of the victim'
2. second was the 'illegitimacy of the pressure'
Also stated that the legitimacy of the pressure must be examined from 'two aspects'
• 'nature of the pressure and… the nature of the demand which the pressure is applied to
support''

Generally speaking, the threat of any form of unlawful action will be regarded as illegitimate. But,
the fact that the threat is lawful does not make the pressure legitimate. As Lord Atkin said in Thorne
v Motor Trade Association "The ordinary blackmailer normally threatens to do what he has a perfect
right to do - namely communicate some compromising conduct to a person whose knowledge is
likely to affect the person threatened.. What he has to justify is not the threat, but the demand of
money."
1. Where the threat is unlawful, generally amount to duress
a. Unlawful threats such as threat to commit a crime, a tort, or breach of contract will
amount to application of illegitimate pressure
b. Only bad faith for breaches of contract will be classified as illegitimate pressure
 2. Where threat is lawful, but used to support a demand that is unlawful, may be duress
a. General rule is that if a defendant who threatens to do what he is entitled to do will
not be held to have applied illegitimate pressure upon claimant
b. And a demand for payment made by an owner of goods (who has validly terminated
a hire-purchase contract) as the price for not exercising his right to repossess the
goods has also been held to not constitute duress
c. A threat to refuse to contract should not constitute duress because no wrongful
threat is made in refusing to contract

In DSDN Subsea Ltd v Petroleum GeoServices ASA Dyson J stated

In determining whether there has been illegitimate pressure, the court takes into account a range of
factors. These include
1. whether there has been an actual or threatened breach of contract
2. whether the person allegedly exerting the pressure has acted in good or bad faith;
3. whether the victim had any realistic practical alternative but to submit to the pressure;
4. whether the victim protested;
5. whether he affirmed and sought to rely on the contract.
(2,4,5 side factors)
Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal
commercial bargaining.

CAUSATION & LACK OF PRACTICAL ALTERNATIVE

Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe
Sentinel) (1983)
Lord Scarman
1.. It is not otherwise the plaintiff would disagree but
2. “there is no other practical choice open to him” that forces him to enter the contract

Times Travel v Pakistan International Airlines Corporation, the court recognized that there may be
circumstances where lawful act duress can amount to economic duress in law
• times travel’s business was to sell air tickets for pakistan int airlines
• the agency did not sell air tickets for any other flights, only flights from london to pakistan -
PIA was only supplier of direct flight (at the time)
• PIA also contract with other agencies to sell tickets - airline company would pay commission
to agencies
• PIA witheld a large sum of commission from agencies, including Times Travel
• PIA sent a notice to all agents saying old contract is terminated and will implement new
contract terms - in which they will include a clause where all agents must waive their past
claims for commission
• times travel waived
• nature of threat by PIA: i wont contract with you unless you agree to new term
• NOT unlawful as it is every party’s liberty to decide to contract - so threat itself is not
unlawful
• court said there is no operating duress as there’s no illegitimate pressure
Neither PIA’s monopoly (strong position) nor its reduction of the ticket allocation to TT
constituted, without more, ‘unconscionable manoeuvring’ of TT into vulnerability (the
majority)
Court interpreted its earlier decision in CTN Cash and Carry Ltd v Gallagher Ltd as authority for the
proposition that where A uses lawful pressure to induce B to concede a demand to which A does not
bona fide believe itself to be entitled, B's agreement is voidable on grounds of economic duress -
pressure amounting to economic duress in such a case is applied in pursuit of a demand that is not
made in good faith
• Same result does not follow in the case where A genuinely but unreasonably believes its
demand to be well founded -> no economic duress

Threat to break a contract can constitute duress whereas refusal to waive an existing contractual
obligation cannot
• Burrows (2010) argued that bad faith should play an important role in deciding whether or
not a threatened breach of contract is illegitimate
"a threatened breach of contract should be regarded as illegitimate if concerned to exploit
the claimant's weakness rather than solving financial or other problems of the defendant'
- but in eng law threatened breach of contract is already wrongful so there is no need to
place reliance on bad faith

• Intermediate approach adopted by Christopher Clarke in Kolmar Group AG v Traxpo

Enterprises is to conclude that 'a threat to break a contract will generally be regarded as
illegitimate, particularly where the defendant must know that it would be in breach of
contract if the threat were implemented.' - breach threatened in bad faith is more likely to
constitute duress than a breach which is threatened in good faith
• compare the ‘range of factors’ approach (Take Point v Ngai)
o actual or threatened breach of contract
o good faith or bad faith
o protest
o affirmation of contract
o distinguish from ‘the rough and tumble of the pressures of normal commercial
bargaining’
• unconscionability model (majority in times travel)
o Exploitation of knowledge of criminal activity for one’s own benefit (Williams v
Bayley, Mutual Finance)
o Deliberate manoeuvring of the other party into a position of weakness in order to
force a waiver of claim (Borrelli v Ting, Progress Bulk Carriers or The Cenk K)

Special considerations
• Trade union legislation (The Universe Sentinel; The Evia Luck)
• Harder to establish economic duress in the case of a settlement agreement where the
parties are in ‘adversarial positions’ and ‘the courts have an interest in upholding’ the
agreement (Zebra Industries v Wah Tong Paper; Take Point v Ngai)

Requisite causal link

• a significant cause (evia luck per lord goff, take point investment holdings ltd v ngai lok kei)
• the but for test (Decisive or clinching cause - Huyton v Peter Cremer, per mance J; Kolmar v
traxpo)
• onus of proof on claimant (party seeking to rely on duress): huyton v peter cremer
No reasonable alternative
• no real alternative or practical choice (estinah v golden hand)
• “you have me over a barrel” - employer felt like he had no other choice but to give into
demand (b&s contracts v victor green) urgency of work
• demand made on the eve of completion through a third party; leaving no time for obtaining
independent advice, take point v ngai
Contract entered under duress is voidable, failure to do so within a reasonable time after the duress
has ceased to be operative may lead to the conclusion that the agreement has been affirmed and
cannot be set aside (North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd)

(a) Rescission - Generally, duress renders a contract voidable. That means the parties will be put
back to their position before the amendment of the contract.
Exception: If the contract is affirmed, rescission cannot be performed even duress is proved. (e.g.
The Atlantic Baron), (other limitations of rescission also applies, like
(1)lapse of time,
(2)restitution being impossible,
(3) third party interests,
(4) partial rescission

(b) Damages? - General rule: According to Lord Diplock in The Universe Sentinel, duress is not a tort
which damages can be awarded.
Exception: Duress is actionable as a tort if it causes loss or damage, e.g. tort of intimidation.