Economic Duress in Contract Law: Leyland Daf Ltd v Automotive Products plc and Atlas Express Ltd v Kafco

This article discusses economic duress in contract law with a comparison of Leyland Daf Ltd v Automotive Products plc and Atlas Express Ltd v Kafco. It explains the concept of economic duress and the elements required to prove it. The article also highlights the new criteria for economic duress that can be drawn from these cases. The subject is Foundation Criminal Law and the course code is not mentioned. The content is relevant for law students and professionals.

Foundation Criminal Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Briefly give and then compare the facts in Leyland Daf Ltd v Automotive Products plc and
Atlas Express Ltd v Kafco What criteria for economic duress can be drawn from comparing
these cases?.................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Criminal laws are the laws that is been used in order to develop understanding over
criminal factors giving birth to crime. In these laws different aspects is been used that makes
crime analysis possible in more effective way. As per criminal laws societies management is
done on the basis of crimes taking place within society. Also these laws makes criminals
punished through applying penalties and punishment over wrong that is been committed by
them. Also criminal laws makes society clean and better place to live through removing crime
from society. Scope of criminal laws is wider as they cover society and various aspects of it
which makes factors of crime identified. Nature is dynamic since it impacts growth of society
from all perspective. In this file economic duress is been covered with two cases is required to be
analysed in relation to economic duress.
MAIN BODY
Briefly give and then compare the facts in Leyland Daf Ltd v Automotive Products plc and Atlas
Express Ltd v Kafco What criteria for economic duress can be drawn from comparing
these cases?
Economic duress is that kind of situation within which party to contract threatens over
cancellation of contract unless the other party agrees over demands been presented by another
party. 1Further such duress makes contracting party stuck over particular options that may lead
over changing terms of contract. In simple words it means those conditions which make
particular obligation impact over contract and its formation. There are certain elements required
to make economic duress proved and claim attained from it. Such element are given as follows:
 There should be existing contract between two parties.
 Further threat is required to be presented by another party over contract cancellation.
 No alternative available to party but only to accept the new terms that is been presented
by parties.
1 Boister N, 'International Criminal Law Cases And Materials. BY Edward M Wise, Ellen S
Podgor And Roger S Clark (2Nd Edn, Lexis Nexis Newark, San Francisco And Charlottesville,
2004) 830Pp Plus Index And References ISBN 0-82056-223-8International Criminal Law
Cases And Materials: Teachers Manual (2Nd Ednlexis Nexis Newarksan Francisco And
Charlottesville2004) 117Pp.' (2018) 54 International and Comparative Law Quarterly

In detail the concept of duress is based over enforcement of new terms regarding contract which
has taken place between parties. In this threat may exists in the form of economic, political and
social duress that affects obligations of contract.2 Such duress has taken place over making
evolution done upon various aspects of contract. So, it can be marked out that economic duress is
based upon contract laws. These laws are used in order to form legal agreement attain shape of
contract that is formed through expressed and implied manner. Also contract cam be formed in
written and unwritten form. Such laws give rise to obligations which is been decided by parties
only when offer is been accepted of contract formation by another party. The obligations formed
must be legally validated in more effective way.3 It can be observed that economic duress is
based upon contract laws since rules of contract is been affected through this. Example related to
economic duress is if a person is charged with a crime or violation, then they may raise duress as
a defence and claim that they may not be held liable for their actions. This because the fact they
were under duress caused them to commit the crime or violation. Thus, they may actually be
admitting to the act, but they should not be held liable because they had no choice but to do the
act. In relation to this relevant cases has been explained as follows:
Leyland Daf Ltd v Automotive Products plc
In this case Leyland DAF Ltd is member of Dutch group DAF Trucks is been granted
over Stichting Ofasec which is an mortgage debenture over securing loan which includes
floating charges. Then in the year 1993 DAF group collapsed and Ofasec appointed
administrative receiver which is been making floating charges turned into fixed charges. In this
receiver realised that assets is been paid over preferential debts and made interim distribution to
Ofasec of £72m. The litigation was ongoing within Netherlands and have been insufficient over
meeting claims of debenture holders. In 1996 Leyland DAF Ltd enter over voluntary liquidation.
The liquidator’s costs exceeded the amount realised, but they applied for a declaration that their
expenses and pay should come out of the proceeds of the realisation of the assets of Leyland
2 Canick S, 'Availability Of Works Cited In Recent Law Review Articles On LEXIS,
Westlaw, The Internet, And Other Databases' (2020) 21 Legal Reference Services Quarterly
Diamond R, 'Turning Online Time Into "Quality Time"' (2021) 12 Legal Reference
Services Quarterly
3 Lewis-Somers S, 'Electronic Research Beyond LEXIS-NEXIS And Westlaw' (2016) 19
Legal Reference Services Quarterly

DAF Ltd including those subject to a floating charge. In this case section 175(2)(b) of
Insolvency Act 1986 was applied and the liquidators were entitled over expenses by the Court of
Appeal. 4The the case went to House of Lords and it was held that no priority over liquidators
expenses and Re Barleycorn Enterprises Ltd was wrongly convicted. Also the bench held that
section 175(2)(b) was not applied over predecessors since they were not authorised liquidators.
5So, in this case it was found that when a company was in receivership and liquidation, the
company’s former assets were comprised in two separate funds, each with its own costs of
administration. None of the cost and expenses were paid by Leyland DAF Ltd over assets under
floating charges upon all principles and interests been paid.
Atlas Express v. Kafco
Facts of the case says that Kafco Ltd. had a contract over supplying of Woolworths with
Altlas Express. The delivery was to be done over six months over taking delivery. Atlas Express
realized that size of cartons were more and so delivery cost increased. The on 18 November 1986
an empty truck was send to Kafco with letter saying that of higher charge were not agreed the
truck would be left empty. Kafco was compelled to sign the contract and would broke without
contract. Later they refused to pay and argued that economic duress exists with no new
consideration. Kafco also successfully argued that Atlas had given no consideration for its
promise to pay more money on the basis that Atlas was merely performing an existing
contractual duty. In this case court held that economic duress within the situation makes contract
voidable. Further providing justification upon the case court said that Kafco has signed the
contract under ‘unwillingly and under compulsion' where there was no bargaining power to it.
This has been fully justifying within judgement and the economic duress was distinguished from
'commercial pressure' to vitiate over consent. In this case it was held that Kafco doesn’t require
to pay more than agreed price mentioned in the contract between the former and Atlas Express.
Both the cases has provided new criteria of identifying economic duress and developing
new understanding upon it. These cases has justified that economic duress can occur in case of
winding up but only when there is no floating charges and only fixed charges is there. This
4 Hazelton P, 'How Much Of Your Print Collection Is Really On WESTLAW Or LEXIS-
NEXIS?' (2017) 18 Legal Reference Services Quarterly
5 Russell G, 'Re-Engineering The Law Library Resources Today For Tomorrow's Users'
(2019) 21 Legal Reference Services Quarterly

means that when an contract is been formed over goods and services between organizations the
fixed charges is decided over mortgage which cannot be changed after contract is initiated.
Further of due to any reason the debts to be paid is divided in to two types the parties to
contract cannot be bound over economic distress. Second case has made new term arise that is
commercial pressure that means those kind of pressure which is been put in order to increase the
production or fulfil the requirement of it. In this condition the organization is required to fulfil
the new contractual terms. 6So, from these cases the new criteria of economic distress were
identified that common can be applied within economic duress in order to mark out justification
upon it. Further the first case has justified that threat must be of breach and existing which
become one of the main element over economic duress. Second case it was marked out that
agreement been made by pressurizing the other party cannot be legal binding of the contract
which can never amounts to economic duress within contract existing.
CONCLUSION
From the above discussion it can be marked out that criminal laws are the laws which is
been used in order to form balance within society by controlling crimes existing within it. These
laws has provided concrete framework over dealing with criminal offences. Such laws has wider
scope and dynamic nature due there tendency over affecting society. In this file the main
discussion is done over the concept of economic duress which takes place within the contract
laws. This duress is based upon threat that is been made leading over cancellation of contract if
the terms presented by another party is not accepted. Further the file discusses about two case
laws that has made enhancement over the concept of economic distress.
6 Joergensen J, 'Second Tier Law Reviews, Lexis And Westlaw' (2016) 21 Legal
Reference Services Quarterly

REFERENCES
Books and Journals
Boister N, 'International Criminal Law Cases And Materials. BY Edward M Wise, Ellen S
Podgor And Roger S Clark (2Nd Edn, Lexis Nexis Newark, San Francisco And Charlottesville,
2004) 830Pp Plus Index And References ISBN 0-82056-223-8International Criminal Law
Cases And Materials: Teachers Manual (2Nd Ednlexis Nexis Newarksan Francisco And
Charlottesville2004) 117Pp.' (2018) 54 International and Comparative Law Quarterly
Canick S, 'Availability Of Works Cited In Recent Law Review Articles On LEXIS, Westlaw, The
Internet, And Other Databases' (2020) 21 Legal Reference Services Quarterly
Diamond R, 'Turning Online Time Into "Quality Time"' (2021) 12 Legal Reference Services
Quarterly
Hazelton P, 'How Much Of Your Print Collection Is Really On WESTLAW Or LEXIS-NEXIS?'
(2017) 18 Legal Reference Services Quarterly
Joergensen J, 'Second Tier Law Reviews, Lexis And Westlaw' (2016) 21 Legal Reference
Services Quarterly
Lewis-Somers S, 'Electronic Research Beyond LEXIS-NEXIS And Westlaw' (2016) 19 Legal
Reference Services Quarterly
Russell G, 'Re-Engineering The Law Library Resources Today For Tomorrow's Users' (2019)
21 Legal Reference Services Quarterly