Contract Law: Basic principles of Duress

Duress refers to illegitimate pressure such as physical threats, which is used for an improper objective – sufficiently serious enough to gain the consent of the other party.

Threat of personal injury. Barton v Armstrong [1976] AC 104 concerned threat of death towards the managing director of a company, if he did not arrange for the company to buy shares from the defendant. The court said this was duress and the contract was voidable.

This case said that for duress to be established, it must be shown that the claimant entered into the contract as a result of illegitimate threats from the defendant (at least in part if not wholly).

Attorney General v R [2003] UKPC 22 was concerned with a former SAS solider who published his experiences of the Gulf War despite having signed a confidentiality agreement to say that he wouldn’t. The soldier claimed that he only signed since he was threatened with removal from the SAS. Although he originally won his case, on Appeal to the Privy Council it was held that the Army were within their rights to restrict disclosure of information and the pressure was not improper. Thus the confidentiality agreement was enforceable.

Lord Scarman identified two elements to duress:

                1. Pressure amounting to compulsion of the will of the victim.

                2. The illegitimacy of that pressure.

The threats do not need to be the sole reason for the claimant’s agreement to the contract although they do need to be a part of that reason. It is important to note that if a strong-willed claimant has shrugged off the threats, duress cannot be accepted as a reasonable claim even if a reasonable person might have been affected by them. 

2 QUESTIONS: Were the threats illegitimate? Was the claimant’s behaviour affected by these threats? IF THE ANSWER TO BOTH OF THESE IS YES THEN THE CONTRACT MAY BE SET ASIDE. The claimant may voluntarily enter into the contract, but it is still duress if they have only done so as a result of the threats. 

Did the claimant have any real alternative but to submit? The word ‘threat’ obviously carries some serious connotations suggesting physical harm however its modern usage usually simply means that the claimant is aware that to not enter into the contract will result in a particular action by the defendant. Threat must not be mistaken to mean ‘deliberate wrongdoing’ because in many circumstances, that is not the case.

The terms ‘illegitimate’ and ‘improper’ also carry connotations which suggest some deliberate wrongdoing on the part of the defendant, however a more helpful term is ‘inappropriate’ and this allows us to examine the reasonableness of the defendant’s conduct in the circumstance.

ECONOMIC DURESS – In commercial dealings, threats may often be made as a means of encouraging the other party to contract but this does not mean they will always be ‘improper’. E.g. “if you don’t contract we will take all our business elsewhere.” However for there to be duress, the threat must usually be unlawful. CTN Cash and Carry v Gallaher [1994] 4 All ER 714.

North Ocean Shipping Co v Hyundai Construction [1979] QB 705 was concerned with the devaluation of the dollar and how this led to the demand of more money for the construction of a tanker from the defendants. The court held that this was duress because the defendant’s threat to break the contract had no legal justification and left the claimants with no realistic alternative.

Atlas Express Ltd v Kafco Ltd [1989] QB 883. – Kafco were a tiny company with a valuable relationship with Woolworths. Kafco employed Atlas to deliver goods to Woolworths but Atlas made a miscalculation as to the quantity of goods they could fit onto one lorry. Kafco were demanded to pay more money for the extra journeys Atlas was going to have to make, or else Atlas would not deliver at all. Kafco could not risk their relationship with Woolworths and thus agreed to pay the extra but later refused to give the additional sum under the defence of duress. They succeeded with their claim as the courts held their relationship with Woolworths too valuable to jeopardise, and said they had had no other choice.

Remedies for duress: The remedy the victim will be seeking is ultimately to escape from the contract – RESCISSION (unmaking of a contract or unwinding of a transaction). Damages are never available for duress, even if the contract is rescinded.