DURESS AND UNDUE INFLUENCE
1. DURESS – Common Law
What is it?
Originally the common law concept of duress meant threatening something unlawful
– e.g. an assault or a tort or a breach of contract (and see “economic duress” below).
What is the consequence?
The contract is voidable – i.e. it is a valid contract which can be set aside if the party
under duress wishes to set it aside (see Misrepresentation – rescission).
The requirements:
● Exertion of pressure
● Illegitimate pressure
● Pressure induced the contract
● Claimant had no real choice
● Claimant protested at the time or soon afterwards
Barton v Armstrong [1976] AC 104: A, the former chairman of a company,
threatened to kill B, the managing director, if B did not agree to buy A’s shares on
terms highly favourable to A. B did buy the shares but there was evidence that he
thought the purchase was a good one. Held: the contract was voidable as the threats
had contributed to the decision to buy.
Antonio v Antonio [2010] EWHC 1199 (QB): Y set out to intimidate X by creating a
frightening and threatening environment for her and her daughter at home and for X
and her staff at work; a process which was also clearly illegitimate and unlawful. All
such conduct was directed, at least in part, towards pressuring X into transferring
half of her valuable business to Y for next to no consideration. In those
circumstances the burden was on Y to prove that the threats and intimidation were
not at least a reason why X had entered into the agreements, Barton v Armstrong
[1976] A.C. 104 considered. Y had failed to discharge that burden. The agreements
were executed by X under duress and were voidable when made.
Duress includes ‘economic duress’
Stilk v Myrick (1809) 2 Camp. 317: Was this the first case of economic duress? (See
consideration handout).
1
, Williams v Roffey [1991] 1 QB 1: (See consideration). It is interesting to consider
whether the decision in Stilk would have been different today given the Roffey case.
If the true basis of Stilk is that the captain was under undue pressure and that to
decide in favour of the crew would have been an encouragement to crews to hold
captains to ransom then Roffey would make no difference to the outcome.
D & C Builders v Rees [1966] 2 QB 617: (See estoppel). Equitable estoppel was the
basis of this decision with the undue pressure meaning it was not inequitable for the
builders to go back on their promise. Had the case been decided on the basis of
consideration then possibly the outcome would have been that the facts amounted
to economic duress in any event.
Pao On v Lau Yiu Long [1979] 3 All ER 65: (See consideration) In an exchange of
shares Cl agreed not to re-sell the shares for one year and entered into a separate
agreement with D under which D agreed to cover any fall in share price over the
year. These arrangements were made because Cl threatened to break the purchase
agreement unless D entered into the second agreement of guarantee. Held: on the
facts this amounted to pressure but not to duress. Lord Scarman set out four
questions to be answered in order to establish economic duress:
● Did the person allegedly under duress protest at the time?
● Was there an alternative course of action open to them – e.g. a legal
remedy?
● Was the person independently advised?
● Did they take steps to avoid the contract?
The Siboen and The Sibotre [1976] 1 Lloyds Rep 293: In a recession the hirer of two
ships told the owners that they would become insolvent unless the owners reduced
the hire charge. The hirer also said they had no assets if sued for the original charge.
The hirers knew there was no real prospect of the owners being able to hire the
ships out elsewhere and that without income from the ships the owners may
themselves become insolvent. Held: Duress required compulsion such that free
consent or agreement did not occur. Although there was pressure on the facts there
was not duress. (The contract was however voidable for fraud.)
Vantage Navigation Corpn. V Suhail and Suad (The Alev) [1989] 1 Lloyds Rep 138: X
hired the Alev to carry steel but ceased paying because they were in financial
difficulty. Under a separate contract this meant the Cl owners of the ship were
required to transport the steel at their own expense (so not only did they not get
paid they were also incurring cost). D had a significant financial interest in the steel.
The owners threatened not to deliver the steel unless D agreed to pay the cost of
using the port. Held: the contract with D to pay the port charges was voidable for
economic duress – the threat to break the transport contract was duress.
2
1. DURESS – Common Law
What is it?
Originally the common law concept of duress meant threatening something unlawful
– e.g. an assault or a tort or a breach of contract (and see “economic duress” below).
What is the consequence?
The contract is voidable – i.e. it is a valid contract which can be set aside if the party
under duress wishes to set it aside (see Misrepresentation – rescission).
The requirements:
● Exertion of pressure
● Illegitimate pressure
● Pressure induced the contract
● Claimant had no real choice
● Claimant protested at the time or soon afterwards
Barton v Armstrong [1976] AC 104: A, the former chairman of a company,
threatened to kill B, the managing director, if B did not agree to buy A’s shares on
terms highly favourable to A. B did buy the shares but there was evidence that he
thought the purchase was a good one. Held: the contract was voidable as the threats
had contributed to the decision to buy.
Antonio v Antonio [2010] EWHC 1199 (QB): Y set out to intimidate X by creating a
frightening and threatening environment for her and her daughter at home and for X
and her staff at work; a process which was also clearly illegitimate and unlawful. All
such conduct was directed, at least in part, towards pressuring X into transferring
half of her valuable business to Y for next to no consideration. In those
circumstances the burden was on Y to prove that the threats and intimidation were
not at least a reason why X had entered into the agreements, Barton v Armstrong
[1976] A.C. 104 considered. Y had failed to discharge that burden. The agreements
were executed by X under duress and were voidable when made.
Duress includes ‘economic duress’
Stilk v Myrick (1809) 2 Camp. 317: Was this the first case of economic duress? (See
consideration handout).
1
, Williams v Roffey [1991] 1 QB 1: (See consideration). It is interesting to consider
whether the decision in Stilk would have been different today given the Roffey case.
If the true basis of Stilk is that the captain was under undue pressure and that to
decide in favour of the crew would have been an encouragement to crews to hold
captains to ransom then Roffey would make no difference to the outcome.
D & C Builders v Rees [1966] 2 QB 617: (See estoppel). Equitable estoppel was the
basis of this decision with the undue pressure meaning it was not inequitable for the
builders to go back on their promise. Had the case been decided on the basis of
consideration then possibly the outcome would have been that the facts amounted
to economic duress in any event.
Pao On v Lau Yiu Long [1979] 3 All ER 65: (See consideration) In an exchange of
shares Cl agreed not to re-sell the shares for one year and entered into a separate
agreement with D under which D agreed to cover any fall in share price over the
year. These arrangements were made because Cl threatened to break the purchase
agreement unless D entered into the second agreement of guarantee. Held: on the
facts this amounted to pressure but not to duress. Lord Scarman set out four
questions to be answered in order to establish economic duress:
● Did the person allegedly under duress protest at the time?
● Was there an alternative course of action open to them – e.g. a legal
remedy?
● Was the person independently advised?
● Did they take steps to avoid the contract?
The Siboen and The Sibotre [1976] 1 Lloyds Rep 293: In a recession the hirer of two
ships told the owners that they would become insolvent unless the owners reduced
the hire charge. The hirer also said they had no assets if sued for the original charge.
The hirers knew there was no real prospect of the owners being able to hire the
ships out elsewhere and that without income from the ships the owners may
themselves become insolvent. Held: Duress required compulsion such that free
consent or agreement did not occur. Although there was pressure on the facts there
was not duress. (The contract was however voidable for fraud.)
Vantage Navigation Corpn. V Suhail and Suad (The Alev) [1989] 1 Lloyds Rep 138: X
hired the Alev to carry steel but ceased paying because they were in financial
difficulty. Under a separate contract this meant the Cl owners of the ship were
required to transport the steel at their own expense (so not only did they not get
paid they were also incurring cost). D had a significant financial interest in the steel.
The owners threatened not to deliver the steel unless D agreed to pay the cost of
using the port. Held: the contract with D to pay the port charges was voidable for
economic duress – the threat to break the transport contract was duress.
2
