Contract Law-Duress and Undue Influence(LLB, Exam plans)
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Course
Contract Law
Institution
University Of Oxford
These notes comprehensive notes on Duress and Undue Influence in UK Contract Law are meticulously designed to provide an in-depth understanding of these complex legal doctrines. Perfect for students and legal practitioners alike, these notes thoroughly analyze key elements, categories, and the most...
This will examine the doctrines of duress and undue influence. These doctrines both provide ameans for
an individual to avoid an already concluded contract. These doctrines operate where the individual has
been forced or coerced into a contract by threats, unfair pressures or unreasonable influences. The
justification for these doctrines is fairly obvious, it is that it prevents one party takingunfair advantage
of another. The effect of these doctrines on a contract is that it makes the contractvoidable at the
request of the aggrieved party. The chapter will start with the doctrine of duress, before moving on to
undue influence.
Duress
Duress is defined as some kind of threat, violent or other action which is used to coerce somebody
into doing something against their will. In the context of contract law, this refers to where a party uses
duress against the other party in order for them to enter into a contract which they either do not want
to, or where the terms of the contract are unfavourable to them.
History and development
The doctrine of duress has always been recognised in the English common law, here are some of the
main examples of the forms it may come in:
• Duress by the threat of violence - Barton v Armstrong [1976] 1 AC 104
• Duress by threat of imprisonment - Williams v Bayley (1886) LR 1 HL 200
• Duress by creating a threatening environment - Antonia v Antonia [2010] EWHC 1199
• Duress by threat to damage property - Dimskal Shipping Co SA v International Transport
Workers’ Federation, The Evia Luck [1991] 4 All ER 871
• Duress by economic pressure - D & C Builders v Rees [1966] 2 QB 617
The two categories this chapter will explore are threats of force or violence, and economic duress.
Duress by threat of violence
Duress by threat of violence is self-explanatory. If a party is able to prove they were coerced into a
contract due to a threat of violence, the contract will be voidable. There are two main requirements of
duress by threat of violence:
1. The nature of the threat must be sufficient to amount to duress
2. The effect of the threat must have been that it forced the claimant into the contract
The nature of the threat
The threat made must be sufficient in its nature to amount to duress. Usually, the indicator the courts
have used is whether the threat is illegal. If the threat is illegal, there is a presumption that this will
amount to a sufficient threat. The illegal act in question must be a criminal act, as opposed to one of a
tortious nature. The case of Barton v Armstrong [1976] AC 104 is authority for this point. In this case, a
threat of murder was one amounting to an illegal act of sufficient nature.
Effect of the threat
,The distinction to make when ascertaining the effect of the threat is whether there is a threat which
results in a claimant voluntary entering the contract, or whether the claimant involuntary entered the
contract. In the first case, it is suggested that the claimant would have had another alternative to
entering the contract, and would therefore not be sufficient to amount to duress, as the claimant must
have no other alternative.
The criminal case of Northern Ireland v Lynch [1975] AC 653 provides an effective explanation of this.
The judges accepted that even in extreme circumstances there is always usually an option, but it must
be that only one option is realistically available.
In contract law, there has been unwillingness to accept the position in Northern Ireland v Lynch. It has
been suggested that the claimants will must be overborne and he must have no choice. However, if we
examine Barton v Armstrong, surely despite the threat of murder there was still a choice. Overall, it
can be concluded that the threat must be one which is illegal
Economic duress
Economic duress refers to a threat to an individual’s financial interests. This was not suggested as a
potential ground of duress until the case of Occidental Worldwide Investent Corporation v Skibs A/S
Avanti, The Siboen and the Sibotre [1976] 1 Lloyd’s Rep 293. A typical scenario of such duress would be
as follows:
• Party A and Party B negotiate a contract
• Party B threatens to breach the contract unless the contract is renegotiated
• Party A opt to renegotiate the contract in favour of Party B because of the potential outcomes
in B were to breach the contract
In this situation, a breach of contract by Party B could have any number of unwanted consequential
results for Party A. Perhaps the contract is a subcontract, and if Party B breach the contract, Party A
will be liable in damages to another party.
This doctrine requires a fine balance with the commercial needs of society. Legitimate economic
pressure can be recognised as a useful negotiation tool, and the courts risk going too far with the
scope of economic duress.
The doctrine of economic duress was established in the case of Pao On v Lau Yiu Long [1980] AC 614.
Lord Scarman set out these two requirements:
1. Coercion of the will that vitiates consent
2. The pressure or threat must be illegitimate
The first requirement, that requires a coercion of the will that vitiates consent, was highly criticized by
academics such as Atiyah. It was also criticised in Dimskal Shipping Co SA v International Transport
Workers’ Federation, The Evia Luck [1991] 4 All ER 871. The judges criticised the ‘coercion of the will
that vitiates consent’ requirement on the ground that a victim of duress’ consent has not been
vitiated, as they are completely aware of what they are doing, they consent intentionally. This has
been recognised in the criminal law, where it is recognised that the party under duress does consent,
, but they do so with no other potential alternative. Therefore, when the opportunity arose in DSND
Subsea Ltd v Petroleum Geo Services ASA [2000] BLR 530, Dyson J altered the requirement to be:
1. Pressure
2. The practical effect of the pressure is that there is compulsion, or lack of practical choice for
the victim
3. The pressure is illegitimate
4. The pressure is a significant cause in inducing the claimant to enter the contract
Lack of practical choice
A practical example of this principle in operation can be found in B & S Contracts & Design Ltd v Victor
Green Publications Ltd [1984] ICR 419. In this case, there was a contract to erect some exhibition
stands. A week before the due date of the contract, the builders refused to work unless they were paid
more money. If the claimant had not paid the extra money, they would have suffered serious loss as a
result of the contract they had involving the completed exhibition stands. In this case, they had no
realistic option but to pay the extra money to avoid the serious losses.
Here are some classic examples of conduct which can amount to economic duress:
• Threat to stop supply of components needed in manufacture process - Adam Opel GmbH v
Mitras Automotive Ltd [2007] EWHC 3205 (QB). This was because there was no realistic choice
other than to pay the higher price for the components
• Threats to withhold delivery once under contractual obligation - Carillion Construction Ltd v
Felix (Ltd) [2001] BLR 1
• Revising a contract for carriage of goods where it would be impossible for the claimant to
obtain alternative carriage quick enough for the goods if they require those goods for another
contract - Atlas Express Ltd v Kafco (Importers & Distributors) Ltd [1989] 1 All ER 641.
Case in focus: Atlas Express Ltd v Kafco (Importers & Distributors) Ltd [1989] 1 All ER 641
In this case, Kafco were contracted with a third party for the supply for baskets. Kafco had an
agreement with Atlas Express for delivery of the baskets. Atlas Expressed realised they had
miscalculated the size of the baskets, and would have to spend more on delivery and cut their profits.
Atlas told Kafco if they did not pay a higher price for delivery, they would not deliver the baskets at all.
Kafco had no choice but to pay the higher price, as if they did not delivery the products to the third
party they would go into liquidation. They paid the price and later claimed economic duress.
It was held that Kafco had no choice but to pay the price. If they had decided to claim damages for the
failure of Atlas to delivery the goods, it would have not compensated them for missing the subsequent
contract with the third party, and a claim forcing them to deliver under a specific performance remedy
would have been too time consuming, due to the immediate requirement of delivery to the third
party. Therefore, the only viable option for Kafco was to pay the higher price.
Illegitimate pressure or threat
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