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IFR ltd v Federal Trade Spa  [2001] EWHC 519 Queens Bench Division

In 1998 an agreement was entered in to between IFR (English company) and Federal (Italian company) whereby IFR were to distribute and give sole right of resale of certain specified items including radio, electronic and telecommunication equipment. The agreement was to last for 2 years. This succeeded an earlier agreement and contained a jurisdiction clause (stating the agreement would be governed by English law) and an arbitration clause which were not in the earlier agreement. Three months before the contract was due to expire IFR gave notice in writing that they would not be renewing the contract when it expired. Under Italian law this termination would give rise to compensation. However, no such compensation was payable under English law. Federal sought to raise duress to render the 1998 agreement void so as to take advantage of the Italian right to compensation.

The affect of a finding of duress has always been to render a contract voidable as oppose to void, however, a voidable contract would not have aided Federal as they had acted on the contract without protest for nearly 2 years so would most certainly have lost their right to rescind. In their argument they raised the earlier case law relating to vitiating consent (The Sibeon & Sibotre, The Atlantic Baron and Pao On) and stated that where there is no consent the contract must be void ab initio as oppose to voidable.

Held: Following later case law (Universe Sentinel etc) the basis of duress is not the absence of consent; when acting under duress the actor will give consent for the contract. The contract is therefore initially valid. It is the absence of choice that renders the contract voidable.

Back to lecture outline on Duress in Contract Law