Duress in Contract Law

Duress is a means by which a person or party can be released from a contract, where that person or party has been forced or coerced into the contract. If this coercion can be shown to be true then the contract entered into cannot not be considered a valid agreement.

Traditionally Duress only related to Duress to the person, which in effect required actual violence or threatened violence against the person or party to the contract. The application of Duress has since expanded and it is now recognised that duress may be economic in nature and deal with threats of damage to property / goods and also threats or demands for money . It has been recognised that where Duress has been shown, that any money paid over where there was no obligation to pay it and the person was under threat of damage to goods that it may be recovered. The courts would state that in such circumstances the person should make it clear that the payment was being made under protest. See case Atlas Express v Kafco (1989).

To be successful in a claim for duress there must be effectively no choice for the party other than to comply with the demand.

The basic principle in this is that the courts will not enforce a contract or alter a term in an existing contract where the party can establish that they were forced or coerced into entering the contract.

In Pao On v Lau Yiu Long (1979) Lord Scarman stated

“there must be coercion of will such that there was no true consent ….. it must be shown that the contract was not a voluntary act”.

This raises other questions:

• What degree of coerecion is deemed acceptable?
• What amounts to duress?
• Does duress make a contract void or voidable?

In Barton v Armstrong (1976) AC 104

The parties (A & B) were the major shareholders in a company. A, the chairman of the company threatened B that he would have him killed if he did not agree to buy A’s shares in the company. B executed a deed on behalf of the company and carried out the agreement. There was some evidence that that the primary motive in doing so was commercial necessity rather than the threats directed against him.

The trial judge held therefore that B could not plead duress since he had not established that he would not have entered the agreement without the threats being made .

However, on appeal the privy council held that if A’s threats were one reason for B to enter into the contract (even if it was not the only reason) that he was entitled to relief in equity. The court therefore allowed B to avoid the contract.

The court held that the contract was void.

Later cases have since taken the view that duress in equity will make a contract voidable rather than void.

As highlighted in the above case Duress makes a contract voidable.

The next question that arises is what degree of coercion makes a contract voidable. The threat must be to such an extent that the pressure is unlawful and be a significant cause to the inducing the person to accept the contract. The threat must also be of some significance and cause a threat to the economic interest of the party and a reasonable alternative must not be available at the time to the person.

Other cases which detail duress to the Person while not as extreme as Barton v Armstrong would be-

Griffin v Griffin.

In this case a young man was threatened with imprisonment and that both he and his father would lose their jobs if he did not marry a young girl he was alleged to have made pregnant while on holiday in Howth Head.

He caved in to the pressure and married the girl . Later it transpired that he was not in fact the father of the child and he successfully claimed that his contract of marriage was void for Duress.

In Rourke v Mealy Palles CB indicated that a person threatened with the prosecution of a near relative unless he / she undertook to pay the debt owed by the relation may in certain circumstances be able to plead duress in equity.

Duress of goods is another form of Physical duress-

In the case of Skeale v Beale (1840) the court decided that since the threat had been directed toward property that this did not constitute Duress . In this case a tenant was threatened by his Landlord that if he did not agree to pay rent owed that he would retain and sell his possessions / goods. The tenant promised to pay part immediately and the balance later. The rent was not paid and the landlord took an action for the monies owing to him. The tenant pleaded duress as he only consented to the agreement as the Landlord had threatened to sell his goods immediately.

This plea was rejected.

In the case of Sibeon & The Sibotre (1976) the court decided that serious threats that consisted of threats to burn down a house and damaging expensive paintings should be considered as Duress.

Kerr J stated

“ if I should be compelled to sign a lease or some other contract for a nominal but legally sufficient consideration under an imminent threat of having my house burnt down or a valuable picture slashed through without any threat of physical violence to anyone . I do not think that the law would uphold the agreement ….. The true question is ultimately whether or not the agreement in question is to be regarded as having been concluded voluntarily.”

Coercion of will depends on the individual circumstances in each case. However Lord Scarman did suggest that the following factors should be considered:

• Did the person have an alternative course available?
• Did the person protest?
• Did the person get independent advice?
• Did the person take steps to avoid the contract?
• The pressure applied must be illegitimate

It is not sufficient that there is exertion of mere pressure & the illegimitate pressure must be of a gravitas to distinguish from the rough and tumble of the pressure of normal commercial bargaining (Dyson J)

In the case of Universal Tankerships of Monrovia v ITWF (1983) a union threatened to black a ship until the ship owners agreed to sign a collective agreement with the Federation . The ship owners paid the lump sum to lift the blacking and subsequently claimed that this sum should be returned as it was paid under duress. The House of Lords held that this amounted to illegitimate pressure and thereby amounted to economic duress.

The concept of Duress in Contract Law is expansive and the definitions and examples quoted above would be only a brief analysis of the topic.

References

Contract Law Paul A. McDermott

Contract Law in Ireland , Robert Clarke , 3rd Edition

Lecture Notes , Cliodna McAleer BL

NFTs, Gambling or an Investment?, Scott Lawson, [online] Available at: https://www.online-casinos.com/guide/nfts/

2. Consideration

Consideration is an essential element to the creation of a valid contract.

The consideration must be of some value that can be objectively determined. Consideration is often defined as a benefit or detriment. A person will be found to have provided consideration if he can show he has conferred a benefit on the other party in return for that party’s promise or that he has incurred a detriment for which the other party’s promise was intended to compensate.

The case of Currie v Misa ( 1875) offers a defination of consideration as –

“some right, interest , profit or benefit accruing to the one party or some forbearance , detriment, loss or responsibility given, suffered or undertaken by the other.”

There are three types of consideration, executory, executed and past consideration. Past Consideration is some act carried out before a promise is made. Past consideration does not amount to sufficient consideration. See Roscorla v Thomas (1842) 3 QB 234

The Common Law takes the view that not all promises are enforceable . For a promise to be enforceable it must be shown that the person to whom the promise is made has given something in return for the promise i.e a quid pro quo.

One exception to the general rule is that a promise contained in a deed under seal does not require consideration.

If there is no consideration a promise will be unenforceable at Law.

In Aga Khan v Firestone and Firestone (1992) Morris J found that a promise of first refusal on the sale of a property was unenforceable for want of consideration:

Also see Allied Irish Bank v Fagan (1995) – A company called Greendale had given an undertaking to Taafe & Co solicitors to pay legal fees due to them out of proceeds of the sale of a named property. Costello J held that the undertaking was unenforceable against Greendale because Greendale had given no consideration for it.

Consideration in a Contract must not be illegal.

It is a basic principle of Contract Law that while consideration must be sufficient it need not be adequate .

Adequacy means the value of the consideration provided in the context of the economic value of the transaction .

However this is not something that can affect the validity of the consideration. The only legal requirement is that the consideration involves a minimum economic value. The Courts presume that the parties to the contract are the best judges of their own interests..

In Kennedy v Kennedy (1984) Ellis J stated

“ once there is consideration its adequacy in this sort of case is irrelevant to its validity and enforceability if the agreement itself has been proved”

The effect of this rule is that worthless consideration will not be regarded as insufficient merely because it is worthless.

In Haugh v Brooks (1839) the defendant received , as per his request , a worthless piece of paper in return for a promise made by him to pay £10,000. It was held to be sufficient consideration.

Whilst the adequacy of the consideration is not relevant to whether it is a valid consideration, the requirement that consideration be sufficient means that it must be something of value in the eyes of the law ( Furmston & others, The Law of Contract ( 1999) para 2.42).

Sufficiency means that the consideration is of a type recognised by the law as effective to enforce a promise given in return.

O’Neill v Murphy (1936) N.I 16.

The plaintiff builder sued the defendant a canon, for payment in respect of works done to the parish buildings. The defendant claimed that a contract existed between the parties whereby the defendant would offer prayers for the benefit of the plaintiff in return for the work done on the buildings. The N I Court of Appeal found that saying prayers could not be said to be sufficient consideration.

In Re Wilson (1933)IR 729 Johnston J held there was no agreement for valuable consideration where a father made over a property to a son ‘for natural love and affection’ and then promised an allowance to the son to assist in maintaining the property.

The performance of a duty already owned cannot constitute consideration

In Stilk v Myrick (1809) – two seamen deserted on a voyage, the Captain agreed with the rest of the crew that if they worked to get the ship back to London without the two seamen being replaced that he would divide the two extra wages with the crew. On arrival the extra pay was refused. The Court held that there was no consideration for the extra pay promised.

Also in Collins v Godefroy ( 1831) 1B & A.950

The court held that the court held that the plaintiff was merely fulfilling a duty already owned by him and therefore it was not sufficient consideration

However an agreement to do something over and above the call of duty can amount to consideration

In Glasbrook Brothers v Ganmorgan County Council (1925) A.C 270

The owners of a coal mine requested static police protection for their mine during a strike. However the police authority took the view that the mine could be adequately protected by patrolling the area. The static police presence was agreed in return for payment of the extra cost involved. The owners refused arguing that the police were under a public duty to provide the protection. The House of Lords rejected this argument and held that the police providing more protection than they deemed necessary was capable of amounting to consideration.

An exception under which performance of an existing contractual duty can amount to consideration can be seen in the Rule in Pinnels case

-If a liquidated sum is owed by A to B , a promise by B to take a lesser sum in full satisfaction of the larger debt will not bind B

There are a number of exceptions to this rule summarised below

Introduction of a new element

Additional payment to get work completed –see Williams v Roffery Brothers & Nichols Ltd ( 1990) 1 All E.R 512

Promissory Estoppel – When one person makes a promise to another and that person acts of the foot of that promise the person who made the promise will be prevented or estopped from denying the truth of that promise

See – Central Bank Trust v High Trees House ( 1947) KB 130

Partial payment of a debt by a third party – when a creditor accepts partial payment of a debt from a third party in full settlement, the debt is discharged and an action cannot succeed against the original debtor for the balance. See Welby v Drake ( 1825) 1 Car & P557

The doctrine of consideration is expansive and the rules and examples quoted above would be only a brief analysis of the topic.