Week 18 Contract: Duress

What is duress in contract law?

Duress refers to situations where one party enters into a contract due to improper pressure, vitiating their consent.

What is the difference between substantive and procedural unfairness?

Substantive = “bad deal” (not duress); Procedural = “how deal was made” (duress).

How does duress differ from undue influence (UI)?

Duress requires a specific act of pressure; UI relies on a relationship where influence is exerted, even without an overt act.

What are the three main types of duress?

1. Duress to the person, 2. Duress to goods, 3. Economic duress.

What is duress to the person?

Threats of physical violence to the contract party, their family, or even strangers.

What is duress to goods?

Threats to seize or damage property to force contract consent.

What is economic duress?

Illegitimate economic pressure, usually involving contract variation.

What are the two essential elements of duress?

1. Compulsion of the will (causation), 2. Illegitimacy of pressure.

What case established the two-part test for duress?

The Universe Sentinel [1983] AC 366.

What case is key for duress involving threats of violence?

Barton v Armstrong [1976] AC 104 – contract made under threat of death.

Does violence need to be the sole reason for contract entry?

No – only one factor among others (as in Barton v Armstrong).

What was the old position on duress to goods?

It wasn’t recognized (Skeate v Beale [1840]).

How did the law change regarding duress to goods?

Recognized in later cases such as Maskell v Horner [1915] and The Siboen and The Sibotre [1976].

When is economic pressure considered duress?

When it is illegitimate and leaves no reasonable alternative.

What case first recognized economic duress?

The Atlantic Baron [1979] – threat to breach contract with no justification.

What case confirms economic duress and clarifies pressure must be illegitimate?

The Universe Sentinel [1983] AC 366.

What factors make pressure illegitimate?

Unlawful acts (e.g., breach of contract), bad faith, or unacceptable moral/social conduct.

Can lawful threats be illegitimate?

Yes – if used in bad faith or with unacceptable conduct (e.g., blackmail or B & S Contracts).

What if a threat was made in good faith?

Then it’s less likely to be considered duress (CTN Cash & Carry v Gallaher [1994]).

What are the two causation requirements?

1. "But for" test: Would contract have been made anyway? 2. No practical alternative.

What four evidential factors help establish causation?

From Pao On v Lau Yiu Long [1980]:

1. Protest

2. Alternatives available

3. Independent advice

4. Steps to avoid contract

What did Times Travel v Pakistan Int. Airlines [2021] establish?

Lawful act duress requires:

1. Illegitimate pressure,

2. Causation,

3. No reasonable alternative.

Does lawful act duress require bad faith?

No, but more than self-interest is needed. Focus is on the justification and behaviour.

What is the main remedy for duress?

Rescission – contract is voidable.

What are bars to rescission?

Affirmation, lapse of time, third party rights, restitution impossible.

Can damages be claimed for duress?

No contractual damages; may be similar to misrepresentation (tort or statute damages).

How does duress differ from mistake in remedies?

Duress = voidable (rescission possible); Mistake = void (no contract at all).