Melbourne University Law Review v14, no

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Melbourne University Law Review v14, no. 3 June 1984

ECONOMIC DURESS – LEGAL REGULATION OF COMMERCIAL PRESSURE, Andrew Stewart

The article gives a history of the concept of economic duress in Australia and England:

Development in England

1976 – abolished idea that there should be any distinction between actual payments and an agreement to pay.

1976 – The Siboen v The Sibotre

Rejected the proposition that "English law only know duress to the person and duress to goods"
That English law was "open to further developments in relation to contract concluded under some form of compulsion not amounting to duress to the person."
But "the Court must in every case be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of any animus contrahendi.
On the facts of this case the duress argument failed.

1978 – North Ocean Shipping Co Ltd v Hyundai Construction Co & Another, The Atlantic Baron

Held that even though there had been economic duress, the plaintiff’s had lost their claim by affirming the contract.
Agreed with the Australian authority in Smith v William Charlick Ltd. that "compulsion" "includes every species of duress or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or property or any right of the person who pays."

1979 – Pao On v Lau Yin

Privy Council held that "there is nothing contrary to principle in recognising economic duress as a factor which may render a contract voidable."

|–––– Thus the ground-work was laid ––––|

1982 – Universe Tankships Inc. v International Transport Workers Federation

The question of legitimacy must be determined by reference to what the legislature has authorised.
It is "already established law that economic pressure can in law amount to duress."

Development in Australia

The innovation in Australian cases was largely the inspiration for the decisions in England. However, the Australian courts have not yet formed a conclusive body of law on the subject, leaving instead a fairly hap-hazard trail of cases since the 1920’s. The Courts have not established decisive elements of the law of economic duress, leaving commentators like Stewart to attempt infer a rationale from the decisions:

Elements of economic duress per Stewart

Nature of the pressure exerted
Question of legitimacy

The American Courts appear to have adopted a policy of judicial discretion when deciding between what is legitimate and illegitimate pressure in commercial dealings. They have allowed greater freedom than that offered by drawing the distinction as that of the legality of the actions.

However the Australian Courts have not yet been faced with legal actions that they have considered require remedy, and thus have kept to the narrower test.

The fact of coercion
Mental state of the plaintiff

Necessary in establishing causation. SHIT THIS IS A GOOD SECTION – Keep looking back to the question then re-reading the article!

The Atlantic Baron – Court refused on the basis that there had been no actual coercion because they had affirmed the contract.

Sadler’s case – Court said that even though his conduct appeared to have affirmed the contract there was no evidence that he was not under a continuing threat the whole time.

The Consequence of resisting the threat
Lack of judicial acknowledgement of this factor as a requirement.

Stewart argues that is should be considered as a factor because of it’s considerable evidentiary aid in establishing the previous element. However I would counter that by saying that therefore it should be an evidentiary considerations when deciding that element not a new element all together because if it was it could easily overshadow the other more important considerations.

For example it could be said that a small company who chooses to deal with Microsoft had no alternative because there was no-one else to deal with, therefore Microsoft could be seen to exercising pressure merely because of its size, the important fact that the small company wanted to deal with Microsoft is more easily overlooked. The fact that the alternative (dealing with Apple) was so unpleasant is evidence towards the plaintiff’s state of mind, but assessing it as a separate and distinct element that must be satisfied ignores that question of whether the large company deliberately caused the plaintiff to be in the position where they had to make the choice.