Duress in contract law relates to where a person enters an agreement as a result of threats. Where a party enters a contract because of duress they may have the contract set aside. Originally, the common law only recognised threats of unlawful physical violence, however, in more recent times the courts have recognised economic duress as giving rise to a valid claim. Where the threat is to goods the courts have been less willing to intervene, although analogous claims in restitution suggest that this position of the law may change. The basis of the duress as a vitiating factor in contract law is that there is an absence of free consent. Duress operates at common law. Pressure not amounting to duress may give rise to an action for undue influence in equity. The affect of a finding of duress and undue influence is that the contract is voidable. The innocent party may rescind the contract and claim damages. The normal bars to rescission operate (see misrep lecture).
Duress to the person
Where a person enters a contract as a result of threats of physical violence, the contract may be set aside providing the threat was a cause of entering the contract. There is no need to establish that they would not have entered the contract but for the threat:
It is thought that the position in relation to duress to goods is unlikely to survive if it is tested in the higher courts, particularly given the more liberal position that has taken hold in response to claims for economic duress.
Economic duress
The doctrine of economic duress was first canvassed by Kerr J in The Sibeon and the Sibotre. Whilst the contract was not held to be voidable for duress, Kerr J did state that where there exists coercion of the will so as to vitiate consent it should be possible to set the contract aside. However, commercial pressure was not enough.
Occidental Worldwide Investment Corporation v Skibs (The Sibeon & The Sibotre) [1976] 1 Lloyds Rep 293 Case summary
Following Kerr J's line of reasoning, economic duress was found to exist in The Atlantic Baron, however, the claimant lost their right to rescind:
North Ocean Shipping v Hyundai Construction (The Atlantic Baron) [1979] QB 705 Case summary
"The classic case of duress is, however, not the lack of will to submit but the victim's intentional submission arising from the realisation that there is no other practical choice open to him."
Accordingly two elements of duress were identified:
1. Compulsion of the will - absence of choice
2. Illegitimacy of the pressure
Illegitimacy of the pressure
Initially it was thought that the threat must be unlawful:
Dimskal Shipping v International Transport Workers Federation (The Evia Luck) [1991]4 All ER 871 Case summary
"The ordinary blackmailer normally threatens to do what he has a perfect right to do - namely, communicate some compromising conduct to a person whose knowledge is likely to affect the person threatened ... What he has to justify is not the threat, but the demand of money.""
Since duress operates to deflect the will of the party rather than vitiate consent, the effect of a finding of duress is always to make the contract voidable not void:
