Atlas Express v Kafco

Legal Case Summary

Atlas Express Ltd v Kafco (Importers & Distributors) Ltd [1989] 1 All ER 641

Contract – Validity – Economic duress – Agreement

Facts

The Kafco imported basket ware and entered a contract with Atlas to sell and deliver baskets to Atlas retail stores. Atlas tried to negotiate a further term in the contract for a minimum order of £440 per trailer load. Several days later, an Atlas representative turned up to Kafco’s premises with an empty trailer and told Kafco that if the trailer was not returned with £440 worth of goods as the new minimum, the trailer would be driven away unloaded. Kafco reasonably believed they would be unable to negotiate further terms of the contract and thereby sabotaging their opportunity to trade with Atlas, so they felt compelled to sign the agreement and meet the new terms of minimum stock trade. The agreement continued until Kafco sent them money on account and a letter stating they had signed the contract under duress. Atlas sued for the money on account.

Issue

Whether Kafco signed in duress, even though they had honored the contract.

Decision / Outcome

Judgment was awarded in favour of Kafco. Kafco were found to have signed the agreement under economic duress as they felt that in the circumstances they had no alternative but to sign the varied contract. Kafco had not approved the new terms of the agreement (as they had previously rejected the proposed variation) and further, there was no consideration for the new agreement as the variation placed Kafco in a less favourable position financially. Thus, their non-payment of the money of account resulted from the duress.