Business Law: Detailed Analysis of Duress in Contract Formation

This case study examines the concept of duress in business law, focusing on its impact on contract validity. It identifies three types of duress: duress to the person, duress to goods, and economic duress, illustrating each with relevant case examples like Antonio v Antonio and Skeate v Beale. The anal...Read More

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Business Law

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Part 2
Answer 1
A contract is formed based on duress if the party signs the contract as a result of
threats. There are three types of duress:
Duress to the person
In case an individual has formed a contract due to the risk of physical violence, then
such contract can be set aside by the court provided that the objective of such threat was to
form the contract. In Antonio v Antonio [2010] EWHC 1199 (QB) case, the husband and wife
were operating a business together. Mrs Antonio alleged her former husband that he violently
assaults her to sign the shareholder agreement. The court agreed to set aside the contract by
providing that it was signed based on duress (Tamblyn, 2017).
Duress to goods
The duress to goods is not sufficient to set aside a contract. In Skeate v Beale [1840]
11 Ad & El 983 case, a landlord seized the goods of the tenant and threatened to sell them if
the payment is not within time. The tenant wanted to set aside the agreement based on duress,
however, the court rejected the claim.
Economic Duress
Generally, the contract is not considered as voidable in economic duress, unless, the
coercion of the will exist in the case to vitiate consent.
Answer 2
The legal effect of finding duress in a case resulted in making the contract voidable or
not because the objective of duress is to deflect a party’s will rather than vitiate consent
(Parker and Box, 2013). The contract becomes voidable which gives the option to the
innocent party to set it aside. In IFR Ltd v Federal Trade Spa [2001] EWHC 519 case, it was
held that finding of duress is always resulted in making a contract voidable rather than void.
The presence of duress did not mean absence of consent, therefore, the contract is initially
valid, and it becomes voidable rather than void ab initio.

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Answer 3
In Barton v Armstrong [1976] AC 104 case, Barton alleged that he signed a contract
to purchase the shareholding of Armstrong at substantially high value because he made death
threats against him. Barton also agreed to sign the contract because he wanted Armstrong to
have a controlling interest in the company. Privy Council provided in the appeal that the
contract can be set aside based on two key points. Firstly, it is sufficient that the threat was a
cause for signing the contract (contributing factor). Secondly, the party who made the threat
has the onus to prove that it did not affect the contract (inducement) (Parker and Box, 2013).
Answer 4
Economic duress is present when economic pressure or threats are used by a party to
overcome the free will of another to involuntary sign a contract (Parker and Box, 2013). Key
factors of economic duress include:
 Whether the person against whom allegations are made have been coerced protested
 Whether an adequate remedy or alternative course of action was present when
coercion occurred
 Whether independent advice was received and
 Whether any avoiding actions were taken after forming of the contract

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References
Antonio v Antonio [2010] EWHC 1199 (QB)
Barton v Armstrong [1976] AC 104
IFR Ltd v Federal Trade Spa [2001] EWHC 519
Parker, D. & Box, G. (2013). Business Law for Business Students (3rd ed.). Toronto: Thomson
Reuters.
Skeate v Beale [1840] 11 Ad & El 983
Tamblyn, N. (2017). The Law of Duress and Necessity: Crime, Tort, Contract. Abingdon:
Routledge.