Chapter 2

The Doctrine of Economic Duress

1. Introduction

Despite its relatively speculative and early stages,1 during the last decade or so, the
law in regard to economic duress has been developed at a rather rapid pace. There
have been several decisions made by numerous courts and jurisdictions2 which,
jointly validates the existence of the doctrine in the English Law. However, the House
of Lords’s verdict in The Tankship3 case and the Juridical Committee of the Privy
Council in Barton v Armstrong and Pao On case does not seem to be conclusive
which leads to a uncertain clarification and systematisation of the doctrine of
economic duress,4 which leaves the general definition and orientation of economic
duress ambiguous. It is stated that in a situation of economic duress, in essence, the
free will of a party to a contract is overborne by pressure, vitiating their ability to give
a genuine consent.5 In other words, illegitimate pressure is placed on a party which
causes them to enter into a contract and this may even include threats to carry out
lawful acts6 as well as unlawful acts.

For a successful plea of economic duress to succeed, two elements must be

established, (1) an illegitimate pressure,7 and (2) causation. Although the two are
inextricably linked8, what amounts to an ‘illegitimate’ pressure, especially in a
commercial setting, and the correct test for causation are both far from obvious. In
other words, the law of economic duress, enables a contracting party to avoid an
agreement if illegitimate pressure that has been used to induce them to enter into an
agreement. However, illegitimate pressure is yet to be defined. This chapter
examines the historical development of the doctrine of economic duress and argues
1
Corporation v Skibs A/S Avanti, The Siboen and the Sibotre [1976] 1 Lloyd's Rep 293.
2
Alexander Barton v Alexander Ewan Armstrong, [1976] A.C. 104, P.C.; North Ocean Shipping Co Ltd v Hyundai Construction
Co Ltd, The Atlantic Baron, [1979] Q.B. 705; Pao On v Lau Yin Long, [1980] A.C. 614, P.C.; Universe
Tankships Inc of Monrovia v International Transport Workers' Federation, [1983] 1 A.C. 366, H.L.; and B. & S. Contracts and
Design Ltd. v Victor Green Publications Ltd., [1984] I.C.R. 419 C.A.
3
Universe Tankships of Monrovia v I.T.W.F. [1983] 1 A.C. 366.
4
Carty and Evans [1983] J.B.L. 218.
5
Rick Bigwood, 'Coercion In Contract: The Theoretical Constructs Of Duress' (1996) 46 The University of Toronto Law Journal.
6
CTN Cash and Carry Ltd v Gallaher Ltd [1993] EWCA Civ 19.
7
Lord Hoffmann stated, in R v AG for England and Wales [2003] UKPC 22, [2003] EMLR 24.
8
In Huyton v Peter Cremer [1999] 1 Lloyd’s Rep 620 at 637. Rick Bigwood, Exploitative Contracts (OUP 2003) 291-4.
that the doctrine emerging from the cases may be difficult to merge with the
established contractual principles. The jurisprudence of economic duress will be
further analysed, and the chapter will end with a brief justification of the need to
establish a line between acceptable and unacceptable pressure in commercial
contract negotiations along with a summary of this chapter.

1.1. Historical Development

Economic duress is said to be the unlawful use of economic pressure and/or threats
intended to overcome the free will of a person, in order to force him or her to an
involuntary agreement or to do something that he or she would not otherwise do.
There was an early attempt to create economic duress in Stilk v Myrick,9 but this did
not happen as the claimant had not provided any consideration for the promise for
extra money. More than a decade after this, in Skearte v Beale10 it was held that
threats to goods can be economic duress, but the court was still unwilling to create a
doctrine of economic duress. It was only in 197611 that economic duress was
recognized under English common law as an acceptable ground, under the general
area of duress, to avoid an agreement.12 This case was decided on the fact that the
threats made by the charterers were false and fraudulent and so the owners were
entitled to avoid the renegotiated terms. However, Kerr J. accepted that, in principle,
relief on the ground of economic duress was available to the owners. Kerr J. stated
“But even assuming, as I think, that our law is open to further development in relation
to contracts concluded under some form of compulsion not amounting to duress to
the person, the Court must in every case at least be satisfied that the consent of the
other party was overborne13 by compulsion so as to deprive him of any animus
contrahendi.”14 It was held that, whilst recognising that it would be possible to render
a contract voidable for economic duress, this case did not amount to economic
duress as there had to be a coercion of the will so as to vitiate consent, therefore,

9
[1809] EWHC KB J58.
10
[1840] 11 Ad & El 983.
11
Occidental Worldwide Investment Corp v Skibs (The Sibeon and the Sibotre) [1976] 1 Lloyds Rep 293.
12
Barton v Armstrong [1976] A.C. 104 and Friedeberg-Seeley v Klass (1957) 101 S.J. 275.
13
Lynch v DPP of Northern Ireland; Pao On v Lau Yiu Long [1980] A.C. 614; Universe Tankships of Monrovia v I.T.W.F. [1983]
1 A.C. 366.
14
The Sibeon and the Sibotre [1976] 1 Lloyds Rep 293 at 336.
commercial pressure was not sufficient. This was the first case where economic
duress was recognised as giving rise to a cause of action.

Following Kerr J's line of reasoning, economic duress was found to exist in The
Atlantic Baron15 where the shipbuilders threatened, without legal justification, to
terminate the contract unless the plaintiff agreed to increase the price by 10 per
cent. The ship owners had chartered the ship to Shell and fearing a loss in the
charter if the ship was delivered late, they agreed to the additional payment. In this
case, Mocatta J. stated that “compulsion may take the form of ‘economic duress' if
necessary facts are proved. A threat to break a contract may amount to such
‘economic duress’”. However, since the claimants had left it so long in bringing their
claim in, they had affirmed the contract and lost their right to rescind.

Similarly, the case of Pao on v Lau Yiu Long16 further helped in developing the
doctrine of economic duress, whereby, although it was held that there was no
economic duress present, Lord Scarman concluded that “there is nothing contrary to
principle to recognising economic duress as a factor which may render a contract
voidable …”.17 The facts involved a complex share transaction in which the
defendants claimed that their consent to a guarantee based on an earlier contract
between themselves and the plaintiffs had been vitiated by economic duress -
specifically by the plaintiffs threatening to break their original contractual obligations.
The Privy Council dismissed the claim, holding, as Kerr J. had done in The Sibeon,
that there had been commercial pressure but no coercion. The trial judge's finding,
that the defendants had “considered the matter thoroughly, chosen to avoid litigation
and formed the opinion that the risk in giving the guarantee was more apparent than
real”, was upheld.18

Furthermore, the Pricy Council established four essential factors to consider in

assessing whether economic duress was present:

1. Did the person claiming to be coerced protest?

2. Did that person have any other available course of action?

3. Were they independently advised?

15
Ocean Shipping Co Ltd v Hyundai Corporation Co [1979] QB 705.
16
[1979] 3 All ER 65 Privy Council
17
Ibid at 636.
18
Pao on v Lau Yiu Long [1979] 3 All ER 65 Privy Council at 450.
 4. After entering into the contract, did they take steps to avoid it?

However, the requirement of vitiation of consent was replaced in The Universe

Sentinel 19 with the absence of choice. In this case, the House of Lords held that
earlier case law had been wrong to look at coercion of the will so as to vitiate
consent. During an analogy with the defence in criminal law where it is recognised
that a defendant acting under duress has the intention to commit the offence but is
excused from the crime because they had no choice but to submit. Accordingly, two
elements of economic duress were identified:

1. Compulsion of the will

2. Illegitimacy of the pressure

Initially, illegitimacy of the pressure was believed that the threat must be unlawful.
However, this is no longer true as the doctrine of economic duress has evolved
further from the trade union decisions such as Universe Tankships v International
Workers Federation (The Universe Sentinel)20 and Dimskal Shipping v International
Works Federation (“The Evia Luck”).21 The ITWF threatened strike action unless
certain demands were met. Considering that the cost of strike action would be
astronomical for Dimskal, they agreed to the demands. They later sought to have the
agreement set aside as being procured by duress. In this case the English law was
applied, and the threat was therefore unlawful and illegitimate which amounted to
economic duress.

Furthermore, in CTN Cash & Carry Ltd v Gallaher Ltd22, Steyn LJ established that
lawful acts are not necessarily beyond the scope of economic duress. Professor
Birks has suggested that the courts could apply generally accepted standards of
impropriety, rather than unlawfulness.23 For example, a threat of lawful action,
coupled with a demand for payment, may be illegitimate, as in the Universe
Tankships24 case. But there is no general principle that a threat not to enter a
contract can be economic duress. He was also of the belief that extending the
categories of duress to include lawful acts in pursuit of a bona fide claim, in a
19
[1983] 1AC 366
20
ibid
21
[1992] 2 AC 152.
22
[1993] EWCA Civ 19.
23
Peter Birks, An Introduction To The Law Of Restitution (Oxford University Press UK 1998).
24
Universe Tankships Inc of Monrovia v ITF [1981] UKHL 9.
commercial context, would be a radical change with far-reaching implications. It
would introduce undesirable uncertainty into the commercial bargaining process and
allow parties who have fallen out to re-open accounts they had settled in good faith.

Nevertheless, economic duress in construction cases have played a pivotal role

developing the doctrine. In the seminal case of Williams v. Roffrey Brothers, 25 the
Court of Appeal, by taking an expansive view of the doctrine of consideration,
established economic duress as the device for policing renegotiation of contracts.
Not long ago, the cases of DSND Subsea v. Petroleum Geo-Services26 and Carillion
Construction Limited v. Felix (U.K.) Limited27 in the Technology and Construction
Court have resulted in further development.

Economic duress was tried as a preliminary issue in the DSND case where Dyson J.
set out the relevant principles relating to economic duress:

"The ingredients of actionable duress are that there must be pressure, (a)
whose practical effect is that there is compulsion on, or a lack of practical
choice for, the victim, (b) which is illegitimate, and (c) which is a significant
cause inducing the claimant to enter into the contract. In determining whether
there has been illegitimate pressure, the court takes into account a range of
factors. These include whether there has been an actual or threatened breach
of contract; whether the person allegedly exerting the pressure has acted in
good or bad faith; whether the victim had any realistic practical alternative but
to submit to the pressure; whether the victim protested at the time; and
whether he affirmed and sought to rely on the contract. These are all relevant
factors."

Dyson J. found that, although suspension of work by DSND was not permitted by the
contract, pending the resolution of the insurance/indemnity issue, this was
nevertheless reasonable behaviour by a contractor acting bona fide in a very difficult
situation. However, the judge then held that a threat of suspension until the
compensation issue was resolved would have been a flagrant breach of contract
amounting to illegitimate pressure.

25
[1991] 1 Q.B. 1 at 21, per Purchas L.J.; Phang, “Consideration at the crossroads” in (1991) 107 L.Q.R. 21.

26
[2000] BLR 530.
27
[2001] Build.L.R. 1, (“Carrillion ”).
The doctrine of economic duress was revised in Carillion where Dyson J. relied on
DSND which he described as an "accurate statement of the law". He held that the
threat to withhold delivery was a threat to commit a clear breach of contract,
especially since Felix did not genuinely believe that it was contractually entitled to
withhold deliveries pending agreement of the final account. He noted that the threat
came at a time when Felix knew that certain works were dependent on Felix
completing the cladding; with which Carillion was becoming increasingly concerned.
On the strength of these facts, the judge held that the pressure Felix placed on
Carillion by threatening to withhold deliveries was illegitimate. Dyson J. then
considered if there were any practical alternatives open to Carillion. He observed
that Carillion had considered various alternatives like substitute suppliers, applying
for an injunction and adjudication--all of which were justifiably rejected. Carillion did
not have any reasonable alternatives open to it but to submit to that pressure. Dyson
J. ruled that the case for economic duress had been made out.

The case of DSND Subsea Ltd v Petroleum Geo-Services ASA, has taught us that
economic duress can be established in circumstances where the pressure applied to
the victim is illegitimate and but for that illegitimate pressure, the victim would not
have entered into the disputed contract. Although there does not appear to be any
judicial authority that undermines Dyson J's test, there is academic criticism of the
test28 and the precise meaning of “illegitimate pressure”.29 For example, Tan
suggests that Dyson J.'s formulation distinguishes between “mere” and “flagrant”
breaches of contract and between bad and good faith. Tan says this is conceptually
incorrect and says a distinction between different types of breach is difficult and
inconsistent with general contract law. Although Tan's “three stage test”30 may
appear to be simpler than the Dyson J. test, it is submitted that the desire to reduce
this complex area into three discrete definable “labels” ignores the fundamental point
that jurisprudential analysis of economic duress leads to the conclusion that each
case is a question of fact and that the courts are generally unwilling to depart from
the freedom of contract ideology. This means that only in the rare cases that satisfy
the various requirements, or factors, in Dyson J.'s test will contracts be avoided. It
may be more beneficial for a victim to plead its case on a basis that does not seek to

28
D. Tan, “Constructing a Doctrine of Economic Duress” (2002) 18 Const. L.J. 87.
29
G. Virgo, The Principles of the Law of Restitution (Clarendon Press, Oxford, 1999).
30
D. Tan, “Constructing a Doctrine of Economic Duress” (2002) 18 Const. L.J. 87 at page 6.
make contracts voidable (undermine the freedom of contract ideology), but instead
reverse unjust enrichment, or opportunistic exploitation.

However, dicta form Lord Hoffman in the Privy Council case of R v Attorney General
for England and Wales31 suggested a different approach in examining the illegitimacy
of pressure:

"The legitimacy of the pressure must be examined from two aspects: first, the
nature of the pressure and secondly, the nature of the demand which the
pressure is applied to support: see Lord Scarman in the Universe Tankships
case, at p 401. Generally speaking, the threat of any form of unlawful action
will be regarded as illegitimate. On the other hand, that fact that the threat is
lawful does not necessarily make the pressure legitimate. As Lord Atkin said
in Thorne v Motor Trade Association [1937] AC 797, 806:

"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.""

Essentially, in this case, it was held that a lawful demand may constitute illegitimate
pressure where the demand is not justified. However, there must still be absence of
choice. R was not acting under military orders to sign the agreement. He may have
been faced with overwhelming pressure, but he still had a choice. The Ministry of
Defence were justified in introducing the confidentiality agreement therefore the
demand was both lawful and justified and thus did not amount to illegitimate
pressure.

In spite of recent developments in the field, which show interesting tempering of the
non-interference rule, the doctrine is still ‘emerging’,32 and still suffers from
‘conceptual confusion’.33 Its precise scope and role are consequently difficult to
identify, which significantly weaken its impact. Therefore, it is vital to explore the
jurisprudential foundations underlying judicial treatment of economic duress.

31
[2003] UKPC 22.
32
Sapporo Breweries Ltd v Lupofresh Ltd [2012] EWHC 2013, [50]; [2013] EWCA Civ 948.
33
Mckendrick (n 10) para 17.2; Capper (n 6), 182.
1.2. State of mind of the party applying pressure

The state of mind (good or bad faith) of the party exerting pressure was regarded as
relevant in determining legitimacy of pressure. With regard to lawful acts, authority
for considering the good faith, or otherwise, of the party applying the pressure may
be gleaned from CTN Cash and Carry v Gallaher Limited34 where there was a
dispute between a distributor and a retailer over a stolen consignment of cigarettes.
The distributor, mistakenly believing that the retailer had the liability to pay for the
consignment, made a demand for payment, saying that if this was not met, it would
refuse to enter into any future contracts with the retailer. After the demand was met,
the retailer attempted to set aside the contract on grounds of economic duress. The
Court of Appeal rejected this and set out several essential characteristics of the
case; firstly, this was a purely commercial relationship; secondly, the distributor was,
in law, entitled to refuse to enter into any future contracts for any reason whatever, or
even no reason at all--this would have been perfectly lawful; and, thirdly, the
distributor bona fide thought that the goods were at the risk of the retailer. In the
same vein, Mance J. in Huyton v Peter Cremer35 opined that in the "rare" case of
lawful act duress, the good or bad faith of the party applying the pressure would be
particularly relevant.36

It is clear that dicta in both CTN and Huyton were directed at pressure consisting of
threats to commit lawful acts. It can be tentatively accepted that where a party was
threatening to do what the law deems him entitled to do, any possibility of this being
labelled "illegitimate" might involve an inquiry into the state of mind of the party
applying the lawful pressure. However, this does not mean that the converse must
necessarily also hold true that the good faith of the party making an unlawful threat
would "absolve" him from the consequences of otherwise actionable economic
duress.

That same passage37 by Dyson J. also indicates that threats to breach a contract
resulting from "reasonable behaviour" of someone acting "bona fide" will not be

34
[1993] EWCA Civ 19.
35
[1999] 1 Lloyd's Rep. 620.
36
Ibid at 637.
37
DNDS [2000] BLR 530.
regarded as actionable pressure. This appears difficult to reconcile with the general
contractual principle that the reasonableness of the party in breach is not a defence
in an action for breach of contract. In examining the issue of economic duress in
cases of contractual renegotiation, one must not lose sight of the larger contractual
matrix of which it is a part.38 A threat to breach the contract, usually by threatening
not to perform, will often place the party applying the pressure in repudiatory
anticipatory breach of contract. Under general contractual principles, this gives the
"victim" of the pressure the right to terminate and sue for damages forthwith. 39
Therefore, if a plea of economic duress fails on the basis of the state of mind or
reasonableness of the party applying the pressure, then the state of mind or
reasonableness of the party in breach in effect also excuses the breach of the initial
contract. As the law stands, the state of mind, whether good or bad faith, or
reasonableness of the party in breach is largely irrelevant and offers him no defence
to an action for breach of contract.40 Accordingly, as believed by Tan, if the law is to
be principled and consistent, the state of mind or reasonableness of the party
applying the pressure should similarly not be relevant in refuting a plea of economic
duress.41

1.3. Legitimacy as determined by lawfulness

It has been suggested by commentators that the most sensible way of dealing with
the puzzling problem of defining "illegitimacy" of pressure is to peg the issue of
illegitimacy to the (un)lawfulness of the threatened act.42 Originally, the requirement
that pressure be "illegitimate" as opposed to unlawful stemmed from a desire to
expand the scope of the doctrine of economic duress to deal with threats of lawful
acts as well as unlawful ones.43 This tension between the desire for a wide and
supposedly more effective doctrine and that for a narrower but more predictable one
was implicitly alluded to by Birks when he asked:

"Can lawful pressures also count? This is a difficult question, because, if the
answer is that they can, the only viable basis for discriminating between
38
D. Tan, “Constructing a Doctrine of Economic Duress” (2002) 18 Const. L.J. 87.
39
Universal Cargo Carrier Corporation v. Citati [1957] 2 Q.B. 401 at 436 and 437.
40
Raineri v. Miles [1981] A.C. 1050 at 1086.
41
D. Tan, “Constructing a Doctrine of Economic Duress” (2002) 18 Const. L.J. 87 at page 4.
42
Graham Virgo, The Principles of the Law of Restitution (1999, Clarendon Press, Oxford) at 208; Goff and Jones, The Law of
Restitution (Sweet & Maxwell 1998) at p. 329; Peter Birks, An Introduction to the Law of Restitution (Clarendon Press, Oxford
1988) at p. 177.
43
Rick Bigwood, "Economic duress by (threatened) breach of contract", in (2001) 117 L.Q.R. 376 at 379.
 acceptable and unacceptable pressures is not positive law but social morality.
In other words, the judges must say what pressures (though lawful outside
the restitutionary context) are improper as contrary to prevailing standards.
That makes the judges, not the law of the legislature the arbiters of social
evaluation. On the other hand, if the answer is that lawful pressures are
always exempt, those who devise outrageous but technically lawful means of
compulsion must always escape restitution until the legislature declares the
abuse unlawful."44

It is therefore argued that the solution is to pin the legitimacy of pressure to the
lawfulness of the threatened act. Where unlawful acts are concerned, if one starts
from the premise that "unlawful" conduct is conduct that the law deems one should
not engage in, it follows that pressure should be "illegitimate" whenever unlawful
conduct is threatened.45 The law should provide relief in respect of contracts entered
into due to such impermissible conduct. At least where unlawful acts are concerned,
there is no reason why this proposition should be clouded by doubts which may exist
in relation to threats of lawful acts.

Moreover, if lawful acts, though morally wrong, fall outside the concept of illegitimacy
and accordingly, the scope of economic duress, this suggests that the law is
somehow deficient or at the very least "outdated". The appropriate course of action,
would be to revise the law and clarify the difference between lawful and unlawful
pressure that leads to economic duress.

1.4. The need for the line to be drawn between Economic Duress and
Commercial Pressure.

It is generally accepted that “every contract we make is made under some form of
pressure, every contractual offer is made backed by some sort of threat”,46 because

44
Ibid at 177.
45
Stephen Smith, "Contracting Under Pressure: a Theory of Duress", in [1997] 56 C.L.J. 343 at 348; Graham Virgo, The
Principles of the Law of Restitution (1999, Clarendon Press, Oxford), 200.
46
PS Atiyah An Introduction to the Law of Contract (5th ed Clarendon Oxford 1995) p 266.
“every offeror threatens that unless the offeree accepts the terms offered, he will not
get the benefit of the offer.”47 Therefore, economic duress helps parties to avoid an
agreement if illegitimate pressure has been used to induce them to enter into an
agreement. However, it has been proven very difficult in the past for the courts to set
aside a contract for economic duress as difficulty exists in establishing where normal
business pressure in commercial dealings becomes an actionable threat.48

Negotiations in commercial contracts are often based on exploiting financial

weaknesses of the other party or extracting the very best deal due to a need to sell
goods quickly and raise funds immediately. These types of negotiations are quite
legitimate and hence some clear criteria it’s necessary to give greater guidance as to
the point where economic pressure amounts to duress. Therefore, it is important to
distinguish between legitimate commercial pressure and economic duress because,
economic duress is a potential weapon that individuals or businesses can use to set
aside an unimpeachable contract49 since there are no clear and principled guidelines
as to what constitute exactly to illegitimate pressure and what is acceptable
commercial pressure.

Consequently, looking at Wertheimer's 'two-prong' analysis,'50 one can argue that it is

a mistake to look at the quality of coercing conduct in contracting as theoretically a
matter of causation. Instead, any analysis of the acceptable limits of unlawful
pressure in the contractual context requires an empirical and normative account of
what it means in law to be pressured, and thus the need for the true distinction
between legitimate and illegitimate exercises of contracting pressure in a negotiation
is crucial.51 Essentially, there are clearly limits to the use of proportional pressure in
contract negotiations. However, in today’s competitive and to some what extent
manipulating society, these limits have to be clearly stated to avoid any confusion
and to minimise risks of becoming a victim of economic duress. It has been stated
that strong parties to be occasionally subject to checks on the exercise of their
economic strength, where the exercise of such strength or power (through the use of
'threats') can be said to actively 'exploit' the weak or vulnerable and to jeopardize the
47
Chitty General Principles (28th ed Sweet & Maxwell 1999) 7-006.
48
James Marson, Business Law (Oxford University Press 2013).
49
Daniel Tan, 'GROUNDS OF ECONOMIC DURESS – FURTHER CLARIFICATION OR FURTHER CONFUSION?' [2001]
Singapore Journal of Legal Studies.
50
A. Wertheimer Coercion (Princeton University Press 1987).
51
Rick Bigwood, 'Coercion In Contract: The Theoretical Constructs Of Duress' (1996) 46 The University of Toronto Law
Journal.
integrity of the bargaining process itself,52 Bigwood argues that this is a method that
could capture the distinction between illegitimate and legitimate commercial
pressure. Therefore, it is important to first understand what legitimate commercial
pressure is before attempting to assess whether a line is drawn or could be drawn
between illegitimate and legitimate commercial pressure.

1.5. Chapter Summary

Few doctrines have, in recent times, undergone rapid and radical changes as
duress, which has evolved and developed the doctrine of economic duress which in
turn continues to evolve, primarily as a product of our attempt to deal with the vast
range of different pressures and coercive behaviour in modern commercial and
consumer dealings. It is clear that the open-ended and fact-dependent nature of the
economic duress inquiry means that a numerous of factors has to be taken into
account. However, the challenge is to articulate a clear and practical test, which
allows principled consideration of relevant factors, for the benefit of future cases and
the commercial community at large.

Even so, as the law stands now, when establishing economic duress, the threat must
be illegitimate and must compels the will of the other party to enter a contract.
Nonetheless, lawful acts can also be illegitimate and can also give raise to economic
duress if the demand that follows is not justified. As the Universe Tankships53 case
has established, demanding payment while lawfully threatening the other party, is
illegitimate and therefore, economic duress. Furthermore, freedom of contract
ideology means that the courts are reluctant to interfere in commercial contracts.
Only the most extreme factual circumstances may succeed to avoid the contract.
The practical problem of affirmation, however, remains.

When it comes to illegitimacy of pressure, Mance J. believes that the state of mind,
good or bad faith, of the party exerting pressure is important in determining
legitimacy of pressure.54 Contradictorily, Tan argues that if the law is to be principled

52
Ibid at 202.
53
Universe Tankships Inc of Monrovia v ITF [1981] UKHL 9.
54
Huyton v Peter Cremer [1999] 1 Lloyd's Rep. 620.
and consistent, the state of mind or reasonableness of the party applying the
pressure should similarly not be relevant in disproving a plea of economic duress.55

Economic duress is a very grey area in the law and this only begs the question as to
where the line is between legitimate and illegitimate pressure in commercial
negotiations? Although it is normal for business to apply some sort of pressure or
threat to reach a favourable outcome, difficulty exists in establishing where normal
business pressure in commercial dealings becomes an actionable threat.56 Hence,
the need for the true distinction between legitimate and illegitimate exercises of
contracting pressure in a negotiation is crucial57 as economic duress is a potential
weapon that individuals or businesses can use to set aside an unimpeachable
contract.

The next chapter will be investigating the threats that are deemed as acceptable
commercial pressure which in turn do not lead to economic duress. Th chapter will
also analyse how the bargaining position of parties can encourage the powerful party
to exploit the weaker party, followed by a chapter summary.

55
D. Tan, “Constructing a Doctrine of Economic Duress” (2002) 18 Const. L.J. 87 at page 4.
56
James Marson, Business Law (Oxford University Press 2013).
57
Rick Bigwood, 'Coercion In Contract: The Theoretical Constructs Of Duress' (1996) 46 The University of Toronto Law
Journal.