duress

Question 1

What is the definition of duress at common law?

Answer 1

Duress was confined to actual or threats of violence calculated to produce fear of loss of life or bodily harm.

Question 2

How has the definition of duress evolved?

Answer 2

It was extended to duress of goods and other forms of pressure short of duress to the person.

Question 3

What is economic duress?

Answer 3

Economic duress relates to threats to interfere with another party’s economic interests or expectations.

Question 4

What are the difficulties associated with determining economic duress?

Answer 4

It raises difficulties in determining when the pressure became unlawful as pressure may be properly exerted in ordinary commercial bargains.

Question 5

List the 7 legal propositions regarding duress as stated in Pharmacy Care Systems v Attorney General.

Answer 5

• Threat or pressure must be improper
• The victim’s will must have been overborne by the improper pressure
• The threat/pressure must actually induce the victim’s manifestation of assent
• It must be sufficiently grave to justify assent
• The resulting agreement is voidable at the instance of the victim
• The victim may be precluded from avoiding the agreement by affirmation

Question 6

What are the three significant elements of duress?

Answer 6

• Pressure must be brought upon the innocent party
• The pressure is illegitimate
• The pressure is why the party entered into the contract

Question 7

What is the standard of proof required for duress of person/goods?

Answer 7

The threat must be a significant cause of why the innocent party entered the disputed contract (Huyton SA v Peter Cremer) and was a direct, immediate threat

Question 8

What is the standard of proof for economic duress?

Answer 8

The minimum basic test is a ‘but for’ test; the illegitimate pressure must have actually caused the making of the agreement.

Question 9

What does not amount to illegitimacy in duress?

Answer 9

A threat by one party to do which it is entitled to do e.g. you usually are rostered until 6pm, employer rosters you on until 8pm and says if you leave before, your salary may be reduced
If the pressure stemmed from one party warning that due to a change in circumstances, they may not be able to perform the contract (McIntyre v Nemesis DBK Ltd)
Where the source of pressure is a claim made by a party in good faith on account of the uncertainties concerning correlative rights and obligations of transacting parties (Yoram Amsalem v Raivid)
The right to withdraw an ex-gratia benefit (CTN Cash and Carry Ltd v Gallaher Ltd)
Driving a hard bargain in the course of negotiations (DSND Subsea Ltd v Petroleum Geo-Services ASA)

Question 10

what does Dold v Murphy say about duress?

Answer 10

Dold v Murphy: “illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining”

Question 11

what did Haines v Carter say about the policy objective?

Answer 11

Haines v Carter: the policy objective is that parties should be free to use their economic powers to secure the best economic outcomes or deals for themselves

Question 12

What is lawful act duress?

Answer 12

It refers to threats classified as lawful that may be improperly applied to secure contractual consent.

Question 13

What are the two primary forms of lawful act duress?

Answer 13

• A threat founded on knowledge of criminal activity committed by the innocent party
• Threat/pressure which manipulates the innocent party into a situation of weakness

Question 14

What is required to establish a causal connection between threat and contract formation?

Answer 14

There must be a demonstrable connection showing the threat induced the innocent party’s entry into the contract.

Question 15

What fact may be probative or otherwise of causation in duress according to McIntyre v Nemesis DBK Ltd?

Answer 15

• Whether the innocent party protested the threat
• Whether the party sought legal advice
• Whether the innocent party took steps to avoid the contract afterwards

Question 16

What happens if the innocent party affirms the contract after duress?

Answer 16

It may be taken that the party has willingly approbated the contract.

Question 17

What is affirmation and who is the onus on?

Answer 17

Where the innocent party affirms the contract or does not swiftly seek to undo it afterwards, it may be taken that the party has willingly approbated (Pharmacy Care). The onus is on the innocent party to prove that they did not affirm the contract after the pressure had ceased being exerted.

Question 18

What did North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd conclude regarding affirmation?

Answer 18

The innocent party may easily satisfy the element of affirmation by demonstrating they sought to undo the contract soon after the pressure ceased.

Question 19

What was the ruling in McIntyre v Nemesis DBK Ltd regarding lawful threats?

Answer 19

A threat to do something lawful is not an unlawful act via duress, especially regarding commercial self-interest.

Question 20

What did the court decide in Times Travel (UK) Ltd v Pakistan International Airlines Corp regarding lawful act duress?

Answer 20

Lawful act duress exists, but its scope is limited and requires a bad faith demand.

Question 21

What did the case Dold v Murphy illustrate regarding economic duress?

Answer 21

A lawful threat not to enter a contract was not economic duress, as the shareholder was entitled to act on self-interest.

Question 22

McIntyre v Nemesis DBK Ltd

Answer 22

Facts - a long-term joint venture where a manager demanded more pay, threatened to withdraw. The court differentiated between illegitimate threats and illegitimate warnings.
Law - in relational contracts, circumstances may change, justifying renegotiation. A threat to do something lawful is not an unlawful act via duress, especially regarding commercial self-interest. Commercial duress is not inherently illegitimate - businesses can use their bargaining power unless constrained by competition law.

Question 23

Times Travel (UK) Ltd v Pakistan International Airlines Corp Ch 98

Answer 23

Facts - airline was exploiting its monopoly position by threatening to cut ticket allocations unless a travel agent waived its commission claims.
Law - SC upheld that lawful act duress exists, but its scope is limited. A bad faith demand is a key requirement for lawful act dures. If the demanding party genuinely believed in their entitlement, it might not constitute duress. The mere assertion of monopoly power/lawful threat to terminate a contract does not automatically amount to illegitimate pressure without “reprehensible characteristics” of behaviour. The case clarified the doctrine of lawful act economic duress, limiting its application to situations of genuinely unconscionable behavior.

Question 24

Dold v Murphy

Answer 24

Minority shareholder demanding a premium for shares (a lawful threat not to enter a contract) was not economic duress, as he was entitled to act on his own self-interest, even if it deemed “opportunistic” or lacked courtesy.