Duress
Threats, violence, or constraints illegally exercised to force someone to perform an act.
Impact of duress on a Contract
- Duress renders a contract voidable as per McDermott & McDermott, as supported by Byle v Byle
- The validity of a contract depends on the consent of the contracting parties.
- If one party forced the other to enter the contract against his will, this absence of voluntariness will be a factor which can vitiate the contract.
Physical Threat
Court is likely to find the contract was entered into under duress. Physical threats vitiate the consent of the contracting part
Lessee of Blackwood v Gregg [1831]
- 92 year old man abducted by his own relatives
- During captivity he executed a deed in favor of one of the relatives
- Subsequently, the legitimacy of said deed is challenged under the argument of duress
- The court accepted that their had been duress
- “[I]f A threatens B with death if he does not execute some document and B, who takes A’s threats seriously, executes the document it can be only in the most unusual circumstances that there can be any doubt whether the threats operated to induce him to execute the document.” (Barton v Armstrong [1978])
Use of Emotional Force
The operation upon a contracting party of emotional factors such as fear or intimidation may also work to vitiate consent on grounds of duress, E.G. fear of prosecution and marriage
Fear of Prosecution, developed
- The threat of prosecution of X unless his near relative Y undertakes to pay off X’s creditor may be able to raise a plea of duress: Rourke v Mealy [1879]
- A threat to report someone to the authorities can also amount to duress: Haines v Carter [2001]
Haines v Carter [2001]
- One party to a separation agreement claimed he had only agreed to it because his former cohabiting partner had threatened to make trouble for him with the Inland Revenue and his bank.
- Young J held (at 189) that this sort of threat is capable of raising a plea of duress: “Threats to report a person to a law enforcement agency unless that person submits to a particular bargain is conduct which could amount to the crime of blackmail and is thus illegitimate.”
- However, on the facts of Haines the court was satisfied that the man’s partner had only “stated the obvious” in relation to his tax difficulties, which fell short of amounting to a threat sufficient to establish duress.
- The court observed that the environment of family-type mediation was generally to give rise to viable claims of duress
Marriage
- Duress has been found to operate in marital contracts
- No such thing as Divorce in Ireland up until 1995; annul, judicial separation, but couldn’t end a marriage. Couldn’t remarry without an annulment.
- Traditional Legal definition of marriage, “a voluntary union of one man and one woman for the rest of time at the exclusion of all others”
- If one entered the marriage involuntarily it can be annulled
Griffith v Griffith [1944]
- Young man and woman, 19 and 16, went on a camping holiday to Howth head
- After holiday, it is discovered that the girl is pregnant
- Young man is told by his parents and the local parish priest that they must get married, and if he doesn’t, it’ll bring dishonor on the family and he may be faced with a criminal prosecution
- He decided he did want to marry, but then sought an annulment as the child was not his !!! 😧
- Said marriage wasn’t valid as there was improper pressure placed upon him and he felt he wasn’t acting voluntarily
- Granted annulment on the grounds of duress, wouldn’t have granted if the child wasn’t his. Product of it’s time and not directly relevant.
Economic Duress
- Not emotional or physical health being threatened, but your financial interests instead
- Most contracts are entered into for financial means, most common form of duress
- Striking a hard bargain is not duress!
SCENARIO 1: James is hosting and NYE party and needs to construct a marquee for the occasion. He goes to John and agrees to construct it. John then says he won’t be able to construct it, unless his fee is increased to complete it on time. In theory, James has a choice to not comply with this demand, but, due to time constraints and his selling of tickets and hiring of entertainment etc. The party is a success. John comes looking for the increased fee after this. James refuses and will only pay the original agreed price. John sues for his lost finances. Advise John
- In Contract, chances are that John won’t succeed. Defense of Economic Duress
- Also past consideration
SCENARIO 2: Marquee needed. James goes to Paul Ward and he agrees on December 1st to construct it for 10,000. December 30th, Paul Ward has gone into liquidation and has ceased to trade. Panic from James. No marquee for the party. New builder John O’Dowd, sees panic, asks for 15,000. Party goes ahead and is a huge success. Over Christmas, discovers that the standard industry price for this job is 10,000. Comes looking for 15,000, James refuses to only pay for 10,000. John sues for breach of contract. Advise John.
- In this scenario, the legal action the action would succeed as their was no prior contract.
- There was no legal obligation for John O’Dowd to act, especially at Christmas
- All John did was strike a hard bargain and negotiated as large a fee as he could
Atlas Express v Kafco [1989]
- Store, Woolworths, one of the leading retailers in the UK.
- Didn’t do well in Ireland
- Were selling basket ware manufactured by the Defendants.
- Plaintiff agreed to deliver the baskets to Woolworths stores all over the country.
- Plaintiff agreed this for set price but, there was a miscalculation, the price estimated in the contract was economic.
- The lorries couldn’t fit all the baskets.
- The plaintiff charged a higher rate, and the defendant agreed to pay it because they rely on their contract with Woolworths. Would be sued if they did not get to Woolworths, may not find another company
- Pay the higher rate and sue for economic duress. Argument succeeds
- Tucker J was satisfied that the defendant’s apparent consent was induced by illegitimate pressure
Rogers v Iaraclo Ltd [2007]
- A number of outstanding invoices being claimed on by the plaintiff, disputing the prices
- A compromised figure had been reached and paid by the defendants but the plaintiff claimed that he had only agreed to that reduced figure due to duress
- Plaintiff sues for the outstanding balance
- Plaintiff argues that he only agreed to the compromised figure because he was under pressure, two fold, in relation to payment of wages and his health
- Rejected the claim of duress, dismissed the plaintiff’s action
- Wages; O’Neill J takes the view that in commercial life, the pressure to pay wages is almost universal, it goes without saying. Not enough to constitute duress
- Health; O’Neill J accepted that the plaintiff had undergone surgery but was satisfied that there was no evidence to suggest that he hadn’t recovered, to be able to conduct business on the day the settlement was entered
Test for Duress
- The illegitimacy of the threat
- The lack of reasonable alternatives: did you have to given in to the threat?
Universe Tankships v ITWF [1982], SCARMAN test
Dissenting judgement of evidential factors in duress to determine if the pressure was unacceptable or not
1. did the person protest?
2. was there an alternative course open to him?
3. was he independently advised?
4. after entering the contract, did he take steps to avoid it?
B&S Contractors v Victor Green Publications [1984]
- Trade fair in Olympia, London
- Defendants are organizing, need somebody to construct the stands
- Plaintiff agrees to do this
- Some plaintiff employees discover that at the end of this project they are going to be made redundant
- Annoyed, won’t finish job unless granted severance pay
- Increases rate for the defendant, won’t build stands otherwise. Don’t want to pay more, doesn’t want to pay higher rate. No extra consideration. But, if they don’t pay, the stands won’t be built- no trade fair without stands
- Best case; fiasco. Worst case; sued by companies at the fair who didn’t get their stand
- Court accepted duress; LT and NA
- “[I]t is not on every occasion when one of the parties unwillingly agrees to a variation that the law would consider that he had acted by reason of duress. The cases will have to be examined in the light of their particular circumstances.” - Griffiths LJ
Loss of the Right to Rescind: Delay/Affirmation
A failure to declare the contract void and to claim duress promptly may mean that the threatened party loses its right to
rescind the contract. If the person threatened does not seek immediate relief once the pressure has been removed, he is
likely to be held to have consented to the demand and affirmed the contract.
North Ocean Shipping v Hyundai [1979]
- Shipbuilder agrees to build a tanker at a fixed price
- Subsequently, the ship builder demands an extra 10% from the plaintiff to deliver the tanker, despite the FPC
- The HC held that this extra money had been procured through economic duress
- Illegitimate threat and no alternatives established by means of the test
- But, plaintiff company lost the right to have the contract aside by virtue of affirmation. The duress was not indefinite. Ended once tanker was delivered at the very most
- The plaintiff had received the ship in November 1974, but waited until July 1975 before seeking recovery
- (May be a price variation clause to protect against inflation in the performance of a contract)
