Economic Duress and Contract Law

This assignment delves into the complex issue of economic duress within contract law. It examines how undue pressure or coercion, often subtle and insidious, can influence individuals to enter contracts against their will. The discussion covers various scenarios where victims may attempt to exploit their submission to threats as a justification for contractual breaches. The ethical and legal implications of economic duress are analyzed, highlighting its potential to disrupt contract enforceability.

Law

Contents
INTRODUCTION...........................................................................................................................1
Evolution of Doctrine of Duress......................................................................................................1
Elements of Duress..........................................................................................................................2
Forms of Duress...............................................................................................................................2
Illegitimate pressure in economic duress.........................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Duress can be determined as a situation in which a person carries out an act because of
violence, pressure or threat towards an individual. As per the view points of Black’s Law
Dictionary, duress is considered to be unlawful threat or coercion that is used in order to
minimise another to act that others would not. In other words, it is the weapon that enables
common law protect victim of improper pressure. When a contract is formed, then there are
many terms and conditions that are included and these are important for all the parties included
to be followed. No party can force to get into a contract or to fulfil any type of term. The court
intervenes at the time when a party get into a contract due to pressure that is considered to be
unacceptable. For these terms which are unacceptable and acceptable there is a thin difference
that can get shifter overtime. All the boundaries that are considered to be unacceptable pressure
are pushed towards encompass different forms of other pressure like economic pressure.
Evolution of Doctrine of Duress
There are people who make use of restrictive approach for economic duress as it is
considered to be more difficult to relief for the available on this ground. In order to reduce the
duress, there is use of conceptual framework as it generally stems from the laudable notion that
is required to be focused on contracting with another.
All the laws that were related with duress were considered to be threatened violence to
the person. Common laws for duress are assimilated to tort or crime. However, all these
categories were overlapped and this is the reason due to which it considered to be developed
much beyond the narrow scope towards the threatening that is attained for personal violence1.
Apart from this equity is delivered with the promise that is made with immoral or unethical use
of superior bargaining position. On the other hand, inequality is the equitable doctrine of
pressure is the force made on another person in order to complete what is not willing by a person
to perform. However, it is identified that there is a duress that is created by voidable contract at
the time when it is threatened by the personal violence for duress of goods. It was in the 18 th
century when economic duress began that also in the single cases of detention or wrongful
seizure of personal property. However, there are not parallel developments in England that were
developed. Common law distress was considered to be crude, obscure notion, ill defined and
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crude that is except in the cases of overt threats. When involved in the court on frequent basis,
then pressure have lacked sufficiently definition for the effective control at the time when
economic coercion in the marketplace as at issue.
The case Dyson J, DSND v Petroleum Gas Services (2000) where DSDN entered into a
contract with PGS after which it was found by the former that there is a misrepresentation of
facts and figures in the original agreement. PGS then attempted to cancel the agreement claiming
that DSDN have breached the terms and conditions which were earlier discussed between the
two. Hence, false representation of facts and figures have been made by the party. Although
DSDN agreed to bring changes in the agreement, PGS have the right to terminate the agreement
due to misrepresentation. However, the claim is that whether the contract can be cancelled under
doctrine of duress or not. The judge initiated the decision claiming that PGS claim is required to
be dismissed. The misrepresentation does not allow the party to get into the contract. Further,
there was no such statement I the contract claiming that warranted the notice of termination to be
issued to the other party.
Elements of Duress
People get into a contract on regular basis and that also on daily basis and this is due to
the pressure that can be a kind or another. As per the case of Barton v Armstrong in the
life of finance and commerce there are various type of acts that are done
under pressure is considered to be liable. This is required to be avoided
towards the ground of duress, this means that all the agreement will be
vulnerable in order to attack the ground.
All the law that are included is required to be determined as a pressure
that is unacceptable and the stress is acceptable and so it can not be
considered as constitute duress2. This way only possible when two of the
requirements that are needed to be sissified for the relief for the availability
on grounds duress. It is important to have compulsion towards the will for
complainant and to and it is also required that the pressure should be regard
as law is not considered as legitimate. As per one of the elements that are
concerns the coercive effects that is made on consent was truly given.
2 Hall, S., Critcher, C. and Roberts, B., 2013. Policing the crisis: Mugging, the state and law and
order. Palgrave Macmillan
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Further, second element is considered to be very important. It is the
pressure that impairs complainant’s free exercise of judgment that is
required to be illegitimate. Further, this is concerned with the quality of
defendants conduct in exerting pressure3. It is important for defendants to be
behave in such a way that makes the impact of pressure affecting
complainants are regarded as illegitimate.
Forms of Duress
As per the parameters of the doctrine, they were very narrow. In this, there was various
agreement which could be avoided for duress in which duress was considered to be form of
threat for an individual. There are different forms of duress and some of them are as follows:
Duress of Person: This is considered or included in the violence of a person or
imprisonment or threats of violence that were threatened or actual. It is important that the threat
is required to be focused at claimant. All the threat that are focused on claimant and the threat
that are against employees have been held constitute duress. Apart from this, it is also stated that
threat from any other person is also enough for the condition of complainant genuinely for the
situation is another person is injured. This can be understood with the help of example of
Antonio v Antonio.
Duress colore officii: This is the type of condition in which illegitimate pressure is
formed at an unlawful demand towards the payment that is made by public official. It is
important to draw distinction among cases for the situation where amount is paid by complainant
so as to obtain service from the public official. Further, there is another situation in which the
complainant has already paid all the amount through tax or similar impost. As p the first category
court is required to readily infer that claimant has no way but he/she is required to submit
demand of the public official. This was the condition that happened in the case of Morgan v.
Palmer.
Duress of goods: It is the threat for damage or destroy property may raise the condition of
duress. This is similar for the threat to seize. All these aspects were considered to be common but
with time there were changes made when submission of defendant’s illegitimate pressure and
many pay were entered into an agreement so as to recover his goods that were determined by
3 Gorbatyuk, A., Van Overwalle, G. and van Zimmeren, E., 2016. The Role of IP law and
Contract Law in the Allocation of IP Ownership in Coupled Open Innovation Processes’. IIC-
International Review of Intellectual Property and Competition Law.
3

defendants. It consists of example of Astley v. Reynolds. This was the case in which
money were sent under duress of goods. Further, availability of legal remedy
do not had any type of reaching out for conclusion as the payment causes
was by illegitimate pressure4.
Economic duress: There are some of the forms of pressure that are not
related with person. Further, it is not limited seizure or withholding of goods.
In conditions when economic duress main question that claimant had
adequate alternatives or it may not have. This is occurred in the case of
North Ocean Shipping Company Limited v. Hyundai Construction Co. Ltd.
Barton v Armstrong (1976) is another decision within the periphery of Duress that was
taken to ensure that no illegitimacy of any kind is initiated in the contract. The court held in this
case that the contract which have been formed under any type of physical duress have the rights
to follow what has been written in the contract. In this case, Barton was the managing director of
the company who was involved in property development. Armstrong was threatened to kill
barton so as to come under the contract. Hence, the case will have direct application duress in it
for its cancellation.
Illegitimate pressure in economic duress
As per the traditional aspect, duress rendered a contract that was voidable only is the
condition if it is physical duress. However, in accordance with the decision taken in the case of
Pao On v. Lau Yiu Long, the condition of economic duress was recognised. It was found that
there were in total two different type of essential ingredients for voiding a contract and these are
as follows:
 It is required to have illegitimate pressure5
 It is important to have the pressure a significant cause of claimant entering into contract.
4 Honigsberg, C., Katz, S. and Sadka, G., 2014. State Contract Law and Debt
Contracts. Journal of Law and Economics. 57(4). pp.1031-1061.
5 Kwock, B., James, M. X. and Tsui, A. S. C., 2013. Doing business in China: What is the
use of having a contract? The rule of law and guanxi when doing business in China.
Journal of Business Studies Quarterly. 4(4). pp.56.
4

For all the requirement that were mentioned there are problems that arise. The contract is
required to be developed in such a way that all the parties involved in the process is able to
consider the business in such a way that they are able to determine the terms and conditions that
are included. All the parties are required to be free and conscious about the rights that they have.
Under pressure, it becomes difficult to carry out the contract in effective manner.
It is important the above mentioned two of the limbs is required to be proven so as to
claim for economic duress. However, there was a disagreement whether there are third
standalone elements that are needed to be victim so they are able to show that they did not had
any type of reasonable alternative but they have to agree to the contract and all the terms that are
included in it.
This is considered to be a common type of practice to subject another to high commercial
pressure in which negotiation take place in a contract. Further, it can be stated that there is a fine
line among actual economic and negotiations duress. However, it is identified that there are not
clear guidelines as to where that line is drawn6. As per the English system does not have concern
with the process of commercial bargaining but it can be used to measure circumstances in which
pressure were being exceeded. Apart from this, economic duress is totally new type of
mechanism that is used by the court to distinguish between orderly commercial bargaining and
illegitimate pressure. Before any type of contract is to be formed, then it requires that all the
parties included in the contract to discuss that details or the information that should be included.
When in the condition that does not include all the parties under contract, then it causes a type of
pressure that is faced. From doctrine of consideration, the doctrine of economic was drawn out.
With this respect, extra consideration, extra demands are required to be made for all contract and
these can be stated to be voidable7. The issues related with existing duty rule were needed to be
made promises that are paid in all the type of circumstances. Even in the conditions when there
are absolute legitimate and reasonable to pay.
6 Li, M., Zhou, L. and Zhang, C., 2015. The Effect of Labor Contracts on the
Psychological Contract Dynamics among Chinese Migrant Construction
Workers. ANTHROPOLOGIST. 21(1-2). pp.291-299.
7 Walker, M. and Townley, C., 2012. Contract cheating: a new challenge for academic honesty?.
Journal of Academic Ethics. 10(1). pp.27-44.
5

As per the case of Universe Tankships Inc of Monrovia v International Transport
Workers Federation explanation was given for the duress as it does not leave a party without any
choice8. However, it enables to put in the position in which no other practical solution is made
available. Further, it was added that duress victim understand and accept the contract terms
internationally at the time when they are being coerced9. Moreover, it is also important for the
parties to claiming signing under duress so as to prove that there is a requirement of indeed no
other alternative. Further, to make acceptance for the situation that provides under illegitimate
pressure. Further, they also need to protest against such type of proposal and it also required to
take up appropriate steps in order to avoid the deal. In the case of Maskell v Horner, Lord
Scarman stated that to recognize whether plaintiffs acted various type of conditions in which
there were true consent that were never given to the party and they left with not practical solution
and this also includes suitable legal measure. Apart from this, it is also important that for the
claimant to seek independent advice and to show after getting entered to the contract. Another
case that happened among B & S Contracts & Design Ltd v Victor Green Productions Ltd. in the
year 1984, all the defendants did not had any type of alternative but in order to pay off the
demanded amount they were facing significant losses and to take up the plaintiff to the court for
any type of breach of contract that were caused. As per the findings that were made by court, it
was identified that there were no duress. Further, it was also noticed that there was a threat faced
for not to break the contract unless money is paid. This is a type of pressures that are given by a
party under contract and is a duress.
Atlas v Kafco (1989) is another famous case on Doctrine of Duress where Kafco signed a
contract in Duress , even though the contract was honored. The court held that Kafco have signed
8 Lub, X. and et.al., 2012. Different or alike? Exploring the psychological contract and
commitment of different generations of hospitality workers. International Journal of
Contemporary Hospitality Management. 24(4). pp.553-573.
9 Rodwell, J. and Gulyas, A., 2013. The impact of the psychological contract, justice and
individual differences: nurses take it personally when employers break promises. Journal
of Advanced Nursing. 69(12). pp.2774-2785.
6

the contract under economic Duress. Hence, it unapproved the agreement and hence rejected the
proposition of contract10.
Duress related with economy is one of the most complicated and unclear areas in the law
as it are difficult to judges to establish essential factors that cause the issue of duress. Further, it
also includes factors like sort of environment that was agreed when it was signed, the contract
affirmed by victim party, etc11. When all these type of factors are also considered, then it
becomes difficult to make appropriate evaluation and thus there is a duress identified. When
these are an increase in reliance on adequacy of the consideration, there is a case in which
functional criterion that is identified for the adjudicating for the fairness of bargains. Further, it is
important that proper notice is made by people for the situation that is faced12. Notice is required
to be made of the past reluctance for interfere that was with the agreement of grounds of
economic duress. These are considered to be the cases that causes real duress and can also
mislead the condition that are faced. The individuals who possess power over the other parties
under contract, then it become difficult for the court to get appropriate information and in
making suitable findings.
Perceptible shift that is identified in the economic duress in order to make is required to
be will based on the emphasis to a moral based one in Barton, Universe Tankships and Lobb who
raised the issue related with Illegitimacy which is a sophisticated economic duress. When there
are involvements for any type of illegitimacy, then it becomes important to devise a working
definition. Further, it also provides details towards what are the aspects that are needed to be
10 Olander, M. and Norrman, A., 2012. Legal analysis of a contract for advanced logistics
services. International Journal of Physical Distribution & Logistics Management. 42(7).
pp.673–696.
11 Marks, R.J., Marks, R.J. and Jackson, R.E., 2013. Aspects of civil engineering contract
procedure. Elsevier.
12 Qi, C. and Chau, P.Y., 2012. Relationship, contract and IT outsourcing success:
Evidence from two descriptive case studies. Decision Support Systems. 53(4). pp.859-
869.
7

considered. This way main focus is made on gathering information and in following the aspects
that are required to be covered.
CONCLUSION
There are some of the findings that are made by judicial for economic duress with easy
and simple. Further, coercion related with economic is a very nature is often insidious and subtle.
There will be many different type of cases in which victims of duress subsequently attempts to
exploit their submission towards the threat that are developed as a cause of deliberate business
choice that can fail. Pressure on a person can cause serious issues and this is considered to be un
ethical and unlawful. There are different types of situations in which people find it difficult to
continue or follow all aspect of contract due to high pressure that is made by other parties. All
the cases that happened were causing serious problem for the carrying out the contract in
effective manner.
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REFERENCES
Books and Journals
Gorbatyuk, A., Van Overwalle, G. and van Zimmeren, E., 2016. The Role of IP law and Contract
Law in the Allocation of IP Ownership in Coupled Open Innovation Processes’. IIC-
International Review of Intellectual Property and Competition Law.
Hall, S., Critcher, C. and Roberts, B., 2013. Policing the crisis: Mugging, the state and law and
order. Palgrave Macmillan.
Honigsberg, C., Katz, S. and Sadka, G., 2014. State Contract Law and Debt Contracts. Journal
of Law and Economics. 57(4). pp.1031-1061.
Kwock, B., James, M. X. and Tsui, A. S. C., 2013. Doing business in China: What is the use of
having a contract? The rule of law and guanxi when doing business in China. Journal of
Business Studies Quarterly. 4(4). pp.56.
Li, M., Zhou, L. and Zhang, C., 2015. The Effect of Labor Contracts on the Psychological
Contract Dynamics among Chinese Migrant Construction
Workers. ANTHROPOLOGIST. 21(1-2). pp.291-299.
Lub, X. and et.al., 2012. Different or alike? Exploring the psychological contract and
commitment of different generations of hospitality workers. International Journal of
Contemporary Hospitality Management. 24(4). pp.553-573.
Marks, R.J., Marks, R.J. and Jackson, R.E., 2013. Aspects of civil engineering contract
procedure. Elsevier.
Olander, M. and Norrman, A., 2012. Legal analysis of a contract for advanced logistics services.
International Journal of Physical Distribution & Logistics Management. 42(7). pp.673–
696.
Qi, C. and Chau, P.Y., 2012. Relationship, contract and IT outsourcing success: Evidence from
two descriptive case studies. Decision Support Systems. 53(4). pp.859-869.
Rodwell, J. and Gulyas, A., 2013. The impact of the psychological contract, justice and
individual differences: nurses take it personally when employers break promises. Journal
of Advanced Nursing. 69(12). pp.2774-2785.
Walker, M. and Townley, C., 2012. Contract cheating: a new challenge for academic honesty?.
Journal of Academic Ethics. 10(1). pp.27-44.
9

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