Contract Law – Prepare 8 14.12.21
Unit 8 – Duress and Undue Influence
Reading 1 – Unit 4: Sub-Unit 2 of the Contract Law Manual
As the essence of agreement (upon which contract law is based) is that the parties freely
consent to the agreed terms, it follows that a party who has been forced into a contract by
threats or undue pressure should not necessarily be bound by it
o N.B. we are only talking about some sort of improper (immoral/criminal) pressure
A party cannot generally complain about ordinary commercial pressure or mere inequality
of bargaining power
It is only where there has been duress or undue influence that a contract will be voidable,
thus giving the innocent party the option to rescind it
1. Duress
1.1 What Constitutes Duress in Contract Law?
Duress may take the form of violence or illegitimate threats or pressure which coerce a
party into entering a contract or varying a contract
Duress occurs, for example, when there is a threat of violence or damage to property
o The burden of proving duress is on the party who alleges it
Legitimate commercial pressure, such as threatening to never enter into business with a
company if they don’t sign a contract, doesn’t affect the validity of the contract, unlike
improper threats (e.g. to breach a contract or commit a tort)
1.1.1 Physical threats
This occurred in Barton v Armstrong [1975] – A threatened to kill B if he didn’t buy his
shares in a company
o Barton agreed to do so under the fear of the threat to his life
o There was evidence to suggest that he thought it to be a satisfactory business
arrangement in any event, but it was still held that B shouldn’t be bound
Lord Cross of Chelsea made it clear that duress need not be the only reason why the
innocent party entered the contract – if the threats were a reason for entering the contract,
B is entitled to relief even though he may’ve entered into contract without the threats
Threats of physical violence to encourage a person to enter into a contract are quite rare
o In the commercial world, threats to a person’s economic or business interests are
far more common
1.1.2 Economic Duress
Legitimate commercial pressure will not affect the contract
A threat to take business elsewhere, sell to a competitor, or not to give a discount in future,
are all likely to be regarded as legitimate commercial pressure
To amount to economic duress, the threat must be an improper or illegitimate threat
o i.e. a threat to breach a contract or commit a tort if other party doesn’t agree
1
, Contract Law – Prepare 8 14.12.21
It can sometimes be difficult to draw a distinction between legitimate commercial pressure
and illegitimate threats
Atlas Express v Kafco [1989] – there had been economic duress as agreement had been
obtained by illegitimate pressure and Kafco had no alternative but to agree
o Had the goods not been delivered, Kafco would have been sued by Woolworths – so
Kafco had no practical choice but to concede
o Kafco successfully argued that Atlas had given no consideration for its promise to
pay more money on the basis that Atlas was simply performing an existing
contractual duty, as per Stilk v Myrick (1809)
The principle in Williams v Roffey [1991] can only apply where the promise is not obtained
as a result of fraud or duress
o In Williams, D didn’t argue that there had been duress
The fact that Atlas Express had used duress to obtain the promise from Kafco meant that
the principle in Williams v Roffey could not be used to allow Atlas Express to recover the
extra money – the duress made the renegotiation voidable
1.1.3 Concepts on which the doctrine of duress is based
The early cases on economic duress emphasised that there must be coercion of the will so
as to invalidate consent – Pao On v Lau Yiu Long [1980]
o However, it may be misleading to say that duress is based on consent being
impaired so that the resulting act is not voluntary
The person alleging duress does consent – the problem with the contract is not the lack of
consent, but the fact that the consent was obtained by improper pressure
Given that the courts are no longer emphasising consent being invalidated as the key
aspect of duress, more attention may have to be paid to the nature of the pressure in order
to decide whether this pressure is illegitimate
1.1.4 Illegitimate pressure
Illegitimate pressure includes unlawful threats, such as a threat to commit a crime/tort, or
a threat to break a contract
In Atlas Express v Kafco, Atlas Express were threatening to break their contract when they
said they wouldn’t deliver the goods unless they were paid more money
1.1.5 Ingredients for economic duress in Carillion Construction Ltd v Felix Ltd [2001]
The ingredients of actionable duress are that there must be pressure:
o (a) whose practical effect is that there is compulsion on, or a lack of practical choice
for, the victim,
o (b) which is illegitimate, and
o (c) which is a significant cause inducing C to enter into the contract
Dyson J also said that, in determining whether there has been illegitimate pressure, the
court will consider a range of factors, such as:
o Whether there has been an actual or a threatened breach of contract
o Whether the person allegedly exerting the pressure has acted in good or bad faith
2
Unit 8 – Duress and Undue Influence
Reading 1 – Unit 4: Sub-Unit 2 of the Contract Law Manual
As the essence of agreement (upon which contract law is based) is that the parties freely
consent to the agreed terms, it follows that a party who has been forced into a contract by
threats or undue pressure should not necessarily be bound by it
o N.B. we are only talking about some sort of improper (immoral/criminal) pressure
A party cannot generally complain about ordinary commercial pressure or mere inequality
of bargaining power
It is only where there has been duress or undue influence that a contract will be voidable,
thus giving the innocent party the option to rescind it
1. Duress
1.1 What Constitutes Duress in Contract Law?
Duress may take the form of violence or illegitimate threats or pressure which coerce a
party into entering a contract or varying a contract
Duress occurs, for example, when there is a threat of violence or damage to property
o The burden of proving duress is on the party who alleges it
Legitimate commercial pressure, such as threatening to never enter into business with a
company if they don’t sign a contract, doesn’t affect the validity of the contract, unlike
improper threats (e.g. to breach a contract or commit a tort)
1.1.1 Physical threats
This occurred in Barton v Armstrong [1975] – A threatened to kill B if he didn’t buy his
shares in a company
o Barton agreed to do so under the fear of the threat to his life
o There was evidence to suggest that he thought it to be a satisfactory business
arrangement in any event, but it was still held that B shouldn’t be bound
Lord Cross of Chelsea made it clear that duress need not be the only reason why the
innocent party entered the contract – if the threats were a reason for entering the contract,
B is entitled to relief even though he may’ve entered into contract without the threats
Threats of physical violence to encourage a person to enter into a contract are quite rare
o In the commercial world, threats to a person’s economic or business interests are
far more common
1.1.2 Economic Duress
Legitimate commercial pressure will not affect the contract
A threat to take business elsewhere, sell to a competitor, or not to give a discount in future,
are all likely to be regarded as legitimate commercial pressure
To amount to economic duress, the threat must be an improper or illegitimate threat
o i.e. a threat to breach a contract or commit a tort if other party doesn’t agree
1
, Contract Law – Prepare 8 14.12.21
It can sometimes be difficult to draw a distinction between legitimate commercial pressure
and illegitimate threats
Atlas Express v Kafco [1989] – there had been economic duress as agreement had been
obtained by illegitimate pressure and Kafco had no alternative but to agree
o Had the goods not been delivered, Kafco would have been sued by Woolworths – so
Kafco had no practical choice but to concede
o Kafco successfully argued that Atlas had given no consideration for its promise to
pay more money on the basis that Atlas was simply performing an existing
contractual duty, as per Stilk v Myrick (1809)
The principle in Williams v Roffey [1991] can only apply where the promise is not obtained
as a result of fraud or duress
o In Williams, D didn’t argue that there had been duress
The fact that Atlas Express had used duress to obtain the promise from Kafco meant that
the principle in Williams v Roffey could not be used to allow Atlas Express to recover the
extra money – the duress made the renegotiation voidable
1.1.3 Concepts on which the doctrine of duress is based
The early cases on economic duress emphasised that there must be coercion of the will so
as to invalidate consent – Pao On v Lau Yiu Long [1980]
o However, it may be misleading to say that duress is based on consent being
impaired so that the resulting act is not voluntary
The person alleging duress does consent – the problem with the contract is not the lack of
consent, but the fact that the consent was obtained by improper pressure
Given that the courts are no longer emphasising consent being invalidated as the key
aspect of duress, more attention may have to be paid to the nature of the pressure in order
to decide whether this pressure is illegitimate
1.1.4 Illegitimate pressure
Illegitimate pressure includes unlawful threats, such as a threat to commit a crime/tort, or
a threat to break a contract
In Atlas Express v Kafco, Atlas Express were threatening to break their contract when they
said they wouldn’t deliver the goods unless they were paid more money
1.1.5 Ingredients for economic duress in Carillion Construction Ltd v Felix Ltd [2001]
The ingredients of actionable duress are that there must be pressure:
o (a) whose practical effect is that there is compulsion on, or a lack of practical choice
for, the victim,
o (b) which is illegitimate, and
o (c) which is a significant cause inducing C to enter into the contract
Dyson J also said that, in determining whether there has been illegitimate pressure, the
court will consider a range of factors, such as:
o Whether there has been an actual or a threatened breach of contract
o Whether the person allegedly exerting the pressure has acted in good or bad faith
2
